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Friday, 22 October 2021 15:46

Enterprise: Collision-Related Length of Rentals Up 3 Days Compared to a Year Ago

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Enterprise released Length of Rental (LOR) data for the third quarter of 2021, which shows overall LOR for collision replacement-related rentals is 15.2 days, an increase of almost three full days compared to the third quarter of 2020.

This includes replacement rentals for both drivable and non-drivable repairs, as well as those for total loss claims.

 

Every state, plus the District of Columbia, saw an increase. On the low end, only two states---Iowa, up 0.4 and South Dakota, up 0.7---saw an increase of less than a day, while three states---Hawaii, Illinois and Wyoming---had increases between one and two days.

 

Twenty-six states, plus DC, saw increases between two and three days, while 19 states had increases of three full days or more.

 

Such a marked increase is based on a myriad of factors, a backlog of repairs being one.

 

According to John Yoswick, editor of the weekly CRASH Network newsletter: “Repairers are reporting the highest backlog in five years. On average, U.S. shops have work scheduled for the next 2.6 weeks, a full week longer than reported three months ago, and in the third quarter of 2020. Only one shop in 20 has reported no backlog, and 55% of shops report having two full weeks or more of work scheduled into the future.”

 

Another potential driver is parts. Enterprise asked PartsTrader’s Chief Innovation Officer Greg Horn for his views.

 

“We track parts delivery days by part type and by vehicle make for more than 1.7 million monthly transactions for all part types and have seen increases,” said Horn. “Interestingly, the number of quotes has remained steady, indicating...


...there are parts available, but they may have to come from a different warehouse or location.”

 

Horn explained further: “We have seen an increase of 1.3 days for both new OEM and aftermarket parts compared to Q3 2020. While that is the highest increase we’ve seen, it doesn’t tell the whole story.

 

"By looking at the median delivery days and using two standard deviations [which captures 95% of the data population] as a measure, we can better capture the impact of individual part delays," Horn said. "We see that OEM parts, in particular for Japanese and Korean makes, have higher delays than for the domestic car makers. OEMs are seeing increasing backordered parts, in addition to longer deliveries, as they fulfill from other parts distribution centers.

 

"The aftermarket parts inventory is also lower than it has been, and that is further complicated by the historically high number of shipping containers [containing both aftermarket and OEM shipments] at the Port of Los Angeles waiting to be unloaded from the cargo ship, and not able to be loaded on trucks to be delivered to parts warehouses.”

 

Horn concluded: “These parts delays and backorders are contributing to an increase in vehicles being declared an economic total loss, and the lack of availability of replacement vehicles coupled with record high prices are likely contributors to length of rental increases.”

 

Drivable Claims

 

LOR for rentals associated with drivable repairs trended the same as overall results, albeit slightly better. LOR was up 2.4 days in Q3 2021 over the previous year’s third quarter.

 

South Dakota had the lowest LOR change, coming in even with 2020, while Iowa was only up 0.2 days.

 

Seventeen states had increases between one and two days, 22 states plus DC increased between two and three days, and nine states saw results increase...


...three days or more, with Louisiana having the highest increase of 3.9 days.

 

Non-Drivable Claims

 

Rentals associated with non-drivable repairs saw an increase of 3.8 days.

 

DC saw the lowest increase, up "only" 1.1 days, while Iowa saw a 1.5-day increase. Eight states’ LOR increased between two and three days, 14 states’ LOR increased between three and four days, 17 states had LOR increases between four and five days, and 10 states had an increase of over five full days, with Alabama and Oklahoma seeing a 5.6-day increase.

 

Higher severity alongside larger repairs are a likely contributor to non-drivable LOR increases, in addition to the repair backlog referenced earlier.

 

According to Yoswick, “Some large, heavy collisions are being repaired rather than being declared total losses. Because of the microchip shortage’s impact on new vehicle availability and price, coupled with the used vehicle price increases, wrecked vehicles that may have been deemed a total loss are now being repaired.”

 

Total Loss Claims

 

Total loss-associated rental results were 2.5 days higher than in Q3 2020.

 

Hawaii saw the only decrease in LOR, coming in 2.3 days lower than 2020. Otherwise, increases were across the board for all other states and DC.

 

Alaska, New Jersey and Wyoming had results increase less than a day, 31 states had increases between one and three days, and 14 states increased LOR between...


...three and four days. DC came in highest with a 6.2-day LOR increase, followed by South Carolina with an increase of 4.8 days.

 

Summary

 

Enterprise explored the large LOR increases with several industry experts. Through these discussions, additional anecdotal considerations were identified.

 

One is the ongoing technician shortage in the collision industry. According to CRASH Network’s quarterly “Who Pays for What” survey, four out of five shops said they would hire a qualified candidate right away, while 29% of shops said they would hire two new employees if they could. Only 21% of shops reported themselves as fully staffed with no openings, compared to the 37% of shops reporting as fully staffed just six months prior.

 

When asked about specific job positions, 51% of shops said they have a current need for at least one body technician.

 

The collision industry, much like many others, is facing a bit of a perfect storm of supply chain disruptions, talent shortages and new processes.

 

In its Q3 2020 LOR analysis, Enterprise mentioned “additional insights that could understand how state, regional and national results have been impacted by the pandemic conditions, and whether or not these results are a new baseline going forward.” Given these market challenges, "expect the unexpected" could be the new normal.

 

Source: Enterprise

 

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