We’ve all been there – dealing with repairs after a vehicle collision is not an ideal situation. And unfortunately, it’s getting more challenging. New data we just released from Enterprise (in USA) shows that collision-related repair times are going up – way up.
Mary Mahoney Vice President, Replacement & Leisure Division at Enterprise Holdings Inc.
You can see Mary's full article by following the link. For now her analysis of the reasons for longer repair times deserve attention.
Supply chain issues “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,” he said. “We have seen an increase of 1.3 days for both new OEM and aftermarket compared to Q3 2020.”
PartsTrader’s Chief Innovation Officer, Greg Horn
It’s tempting to blame impacts of COVID-19 that arose in 2020, but the data doesn’t back a direct connection between the two. Enterprise’s third-quarter LOR numbers between 2019 and 2020 were very similar.
Mahoney continues "The other factors are people driven, and they’ve been building for decades. Automotive technology is rapidly changing, requiring skill sets to evolve for those who repair those vehicles. At the same time, demand is significantly outpacing the supply of postsecondary collision technicians entering the workforce. "
The TechForce Foundation estimates that nearly 80,000 new collision technicians will be needed between 2020 and 2024 to meet demand and turn around attrition in the industry. The CRASH Network’s quarterly “Who Pays for What” survey confirms the trend, with four out of five shops surveyed saying they would hire a qualified candidate right away, and 29% of shops saying they would hire two new employees if they could.
This talent shortage is a critical issue that will require efforts from throughout the industry to address. Enterprise is doing its bit with a major initiative- see the full article.
A similar situation is developing in the UK and reported in the Insurance Times on 8th November, 2021
"The annual Auto Body Professionals Club’s (ABP) report on the state of the UK body repair industry was published in September 2021 – this highlighted that there is a lack of young people coming into the industry, leading to a bidding war between repairers.
A shortage of skilled labour is now the second biggest threat to the industry – compared to being ranked 10th last year – while losing staff to other industries due to pay levels was the fourth placing industry threat identified by the report." Insurance Times 8th November 2021.
"Nationwide supply chain issues are a further industry problem - difficulties in sourcing parts and materials is having a knock-on effect on customer experiences.
In a world where speed is of the essence, many customers are expecting instant responses, short claim lifecycles and quick repairs. When that simply isn’t possible due to external factors, effective communication becomes the most important component to the claims journey.
Effective communication in the same way that Amazon and other online retailers inform customers automatically what to expect. Motor claims are far more involved and complicated of course so automated alerts whenever a claim status changes is essential backed by webchat and personal communication. A core essential of all digital claims platforms.
But what about the much vaunted "touchless claims" that we have all read about this year. Virtual inspections and AI analysis of the images to speed up time and repair estimation, make the repair or Total Loss calculation quicker and speed up claims acceptance by carriers?
First there is a lag between pilots and full implementation, second these best cover simpler damage and there is evidence of increasing severity of road-traffic accident collision damage and third, even when the claim process is speeded up that only adds to the backlog at the repair shop.
Hiring more repair technicians is vital as is reskilling existing ones. Especially as repairing EVs becomes more like software engineering- see "The software engineer will fix your car now"
One other trend can help- the increasing adoption of electric vehicles (EV).
Fewer moving parts mean less wear and tear, there will be no oil or spark plug changes and servicing revenues will fall by around 40% according to McKinsey. At the same time GM has reportedly told its dealerships they will have to invest circa $200k in new equipment and training at the same time as revenues and dealership visits drop. As vehicle technology advances beyond ADAS level two the connected vehicle, telematics data from the EV technology stack will fuel predictive maintenance analytics and even automatic booking of vehicles into workshops when necessary.
Technological disruption like this does, though, provide an opportunity for new entrants. Elon Musk, after all, was an industry outsider when he set up Tesla, his (for now) Californian carmaker, which launched its first EV, the Roadster, in 2008. Already there are signs that companies from other areas are looking to enter the EV-servicing business.
"After buying a Roadster, Pete Gruber started repairing them in 2013. His company, Gruber Motor, based in Phoenix, Arizona, has grown into an independent Tesla service centre. The firm has developed its own tools and test equipment to repair the individual components in the electronics and batteries of Tesla cars. This is possible, says Mr Gruber, because he has also had more than 30 years experience running a company that repairs high-voltage power systems in data centres, meaning the technology was familiar."
The Economist 23rd October 2021
Auto OEMs moving into insurance, new entrants into the EV repair business and the slow but steady move to autonomous vehicles with even more software innovation. Combine this with the evolution of digital auto claims platforms and "touchless claims" by the likes of Verisk, LexisNexis, CCC, Mitchell, Audatex, Tractable and combinations of these with insurtechs and the traditional ICE repairer will become a specialist serving a reducing parc of ICE vehicles- particularly after 2030.
Motor insurers need to factor this into strategy and planning.
Whether it be embedded insurance at point of sales and lease, the validation, triage and estimating of damage, total loss or repair decisioning, and supply chain management and the upskilling and technology support of claims adjusters . Don't forget there is an exodus of retiring adjusters that makes this a critical issue if carriers are going to be able to manage costs and premiums rather than leave it to the repair network and auto OEMs to call the shots.
More reading:
We’ve all been there – dealing with repairs after a vehicle collision is not an ideal situation. And unfortunately, it’s getting more challenging. New data we just released from Enterprise shows that collision-related repair times are going up – way up. Our analysis of overall Length of Rental (LOR) for collision replacement-related rentals showed an average rental of 15.2 days in the third quarter of 2021, an increase of nearly three days compared with the third quarter of 2020. It’s an unprecedented jump, with rental times increasing in every U.S. state, as well as the District of Columbia.
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