Is there a potential silver lining for collision repairers in the current trade war between the United States and China?
Greg Horn, former analyst with Mitchell International, believes there is. Horn, who joined The Hartford as assistant vice president of claims strategy in 2016, said it could result in fewer vehicles being declared total losses.
Horn spoke at the Automotive Body Parts Association (ABPA) convention this past May in Fort Lauderdale, FL, and said the percentage of vehicles declared total losses varies by insurer. The Hartford’s book of business, which includes a marketing partnership with AARP, includes “a lot of older vehicles, so we do tend to total out on a higher frequency than a lot of carriers do,” Horn commented. But total losses are rising across all insurers, he said, and he doesn’t think it has hit a ceiling yet.
One potential bright spot for shops, however: China is the largest purchaser of scrap vehicle steel from the United States, and the trade war has led China to impose tariffs on the import of such scrap metal.
“That is causing the price to go down,” Horn said.
The resulting drop in salvage value may mean more cars are repaired and put back on the road.
“It gives us a little more play in the repair calculation,” Horn said.
During the convention, Horn was also asked about the use of non-OEM sensors for advanced driver assistance systems (ADAS). Horn said on a trip to Taiwan last year he looked at the validation testing of some back-up cameras.
“We found the aftermarket camera actually performed better than the OEM camera,” Horn said. “That was an eye-opener to me. Now when we looked at the front stuff – the lidar and the radar – that’s sophisticated stuff. But the technology is very easily replicated.”
He said as he looks at it, the automakers are saying the parts need to be put on and calibrated.
“So if I put on an aftermarket part that is able to be calibrated completely, how is that not an acceptable part,” Horn said. “The validation is that the sensor is working correctly, and it resets the system. It doesn't throw an error code. I think that’s a quality replacement part, and is able to get the car back on the road with the pre-accident functionality.”