In a blog on 20 May, Audatex Solera reported. There's no mistaking that the Coronavirus pandemic has impacted all corners of the global automotive industry – and the vehicle repair sector is no exception. We've seen supply chains come quite literally to a standstill, meanwhile many repair sites have been forced to close amid concerns for staff safety. New data from Trend Tracker found that many UK repairs have seen heavy disruptions across many supply chains, from vehicle manufacturers to OEM parts suppliers, and the same can be said for many other regions significantly hit by the outbreak.
We've also seen a natural decline in vehicle usage as people are permitted to work remotely and only leave their homes for essential journeys – creating a combination of challenges that the auto body repair industry hasn't experienced in decades. With such disruption gripping the industry, we've seen an inevitable knock-on effect on the average cost of repairs that are being conducted in bodyshops during this time. This Solera Audatex market insights blog delves into unique data, to explore these changes and share expert thoughts on the main possible causes.
The rising cost of repairs
To understand the market changes, we must first look at just how much repair costs have been affected by the Covid-19 outbreak. Our latest data set indicates that the net average overall cost per repair (excluding VAT) has increased by around £150 in the UK, compared to before the lockdown. At its peak, repair costs rose sharply by as much as nearly £300 in some cases.
The main driver of this uplift appears to be a very logical one. As less people take to the roads and with social distancing at play, it's very likely that the vehicles undergoing repair require more than cosmetic work and instead are either non-driveable or with higher damage severity. Naturally, the greater the damage, the more labour content is driven higher and typically more parts are having to be replaced. These higher damage severity repairs always exist, but they are typically offset by the smaller more cosmetic repairs that make their way through the repair chain driving a lower average repair cost. This demonstrates that average repair cost is an unsafe metric when used in isolation.
Maintaining necessary cleaning standards
Another crucial factor is the stringent, necessary safety measures that must be taken to ensure that all vehicles being repaired do not add to the spread of infections amongst workers and customers. Bodyshops are now having to deep clean and disinfect customers' vehicles before entering the facility, as well as after the repair has been completed and the vehicle is handed back to the driver.
This is also the case for any courtesy vehicles in use during the repair. As you can imagine this is both timely and expensive when conducted at such scale, adding to the total spend on every repair claim for insurers and reducing margins as a result.
Supply chain disruptions
Disruption to global supply chains is a huge challenge for the industry. China is a major player in the automotive supply chain, with 80% of players connected to it. Demand for parts has been high, however the availability is low. Naturally, discounts have dried up and parts are now going sold for the full price. In some cases, repairers have had to engage with different suppliers and adapt means of trading to source correct parts in a short period of time. Although China has recovered significantly and is returning to a new normal, its impact is clear to see.
In addition, a large majority of parts entering Europe are transported via Belgium, which has been in lockdown since the 13th March. Some repair shops have also had to pay for couriers to collect parts for them, adding further costs to the overall repair as a result.
But how do we best navigate these changes? An agile approach is critical during this time of change. As the situation changes each day, operating repairers must adapt their services in the same way in order to stay productive, safe and efficient whilst managing the rises in cost and demand for the correct materials. In light of rising repair costs, communication is another vital factor. Working closely with customers, partners and suppliers and leveraging the correct technology will give people great transparency over the market position, enabling us to withstand these challenges and kickstart an eventual return to 'normal'.
Source: Audatex Solera