Tuesday, 19 May 2015 00:00

Mitchell’s Q2 Industry Trends Report Addresses Increase in Average Collision Repair Severity

In the latest edition of Mitchell’s Q2 Industry Trends Report released in May, Greg Horn addressed the driving factors behind rising collision repair costs. Horn, Mitchell’s VP of Industry Relations, looked at the increase in average repair severity in terms of an estimate, parts, labor, paint and materials.

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Horn’s feature article, “What’s Driving the Costs to Repair Today’s Top Selling Car,” examined four top-selling mid-size sedans in the United States to find out if the design lifespan of the vehicles affects parts utilization and overall repair costs. The 2012 mid-size vehicles included a new Volkswagen Passat, a midcycle Toyota Camry, as well as a Ford Fusion and Chevy Malibu that were both in the last years of their design cycle.

“We found that the vehicles that were the oldest had absolutely the lowest use of new OEM parts,” said Horn. The new 2012 Passat had the highest use of OEM parts and the Camry had substantially more OEM utilization than both the Fusion and the Malibu. “When it gets to the end of the lifecycle the more opportunity the aftermarket has to replicate the part and the more potential salvages out there.”

Horn said what he found interesting was that the midcycle for the Camry was surprisingly still high, around 80 percent OEM utilization.

“The takeaway for shops is that it changes so quickly,” said Horn. “There may be more alternative parts available than there were the last time you repaired that vehicle on the salvage side and on the aftermarket side."

He said that by conducting a good diligent search of alternative parts, it could potentially help shops repair more cars due to an increase in the parts supply.

The second quarter industry trends report also included information about average length of rental, current events in the collision repair industry and highlighted new vehicle sales data.

“When you look at the big picture, we process almost seven million estimates a year,” said Horn. “When you look at robust new car sales, that lowers the value of the cars in off road today.”

He said there is a downward trend of the actual cash value of vehicles being appraised and repaired.

“When you start to see falling actual cash values and rising repair costs, that means that we’re going to see more cars being totaled out,” said Horn. “Rising costs and lower values equal more total losses.”

This can be attributed to more complex vehicles being built and added technology, which both add to the overall cost of the repair. The complete report is available at www.mitchell.com/industry-trends-report.

Mitchell will also host a webinar on June 2: Industry Trends Live. Horn will provide a deeper look into the trends, information and studies highlighted in this quarter's industry report. In addition, Horn will discuss other current events of interest such as Google’s self-driving cars.

“I think this industry is changing at a faster rate than I’ve seen changes in the 27 years I’ve been involved in it,” said Horn. To sign up for the webinar, visit go.mitchell.com/register.For further collision repair and property casualty industry updates and perspectives, follow Mitchell on Twitter: @MitchellClaims and @MitchellRepair

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