Parts and bodyshop profits have come under threat from a sharp fall in the number of car accident repairs.
An estimated 4.55 million car body repairs will have been carried out in 2012 by year-end, down 22% from a peak of 5.81 million in 2006.
Researchers at Trend Tracker believe this is partly due to high fuel prices causing a decline in car use.
The automotive research company’s biennial report on the UK car body repair market shows that average annual car mileage has fallen 6% from 8,770 miles in 2006 to 8,240 in 2011.
Over the same period, the number of insurance claims reported to car insurers as a proportion of all cars insured - known as the “claims frequency” - has fallen from 18.0% to 13.9%.
In 2012 insurance companies are estimated to have paid for 2.01 million car body repairs, 27% fewer than the 2.75 million repairs they paid for in 2006.
Yet the Trend Tracker research shows that despite that fall, average private motor premiums have risen by 24%, from £349 in 2006 to an estimated £434 in 2012, due, insurers argue, to rising claims costs.
A recent OFT (Office of Fair Trading) enquiry acknowledged the rising cost of personal injury claims, as a contributing factor to rising premiums, but also that the rising costs of third party (non fault) accident repair claims, including credit vehicle hire and inflated non-fault third party repair costs were also a significant factor contributing to higher premiums.
Motorists have increasingly opted for higher voluntary excesses on their insurance policies to reduce premiums. But such excesses may leave drivers unwilling to pay for relatively minor repairs.
This year’s average accident repair cost is £1,297.
Trend Tracker’s lead analyst Robert Macnab says, “This trend is of concern, as it may mean that some cars are being unprofessionally repaired and may be dangerous.”
A hitherto growth segment of the repair market had been SMART (Small to Medium Area Repair Techniques) repairs.
Demand for SMART repairs grew strongly to reach 1.49 million in 2007. However, pressure on motorists’ pockets resulted in demand falling for SMART repairs to an estimated 1.16 million in 2012.
An award-winning journalist and editor, with two decades of experience covering the motor retail industry, and accredited by the Institute of Leadership and Management (ILM) plus the National Council for the Training of Journalist (NCTJ)
As editor of AM since 2016, Tim is responsible for its media content, planning and production across AM's multiple channels, including the website, digital reports, webinars, social media and the editorial content of AM's events, Automotive Management Live and the AM Awards. His focus is on interviewing senior leaders of franchised dealer groups and motor manufacturer national sales companies to examine latest developments in UK motor retail.
M David - 17/12/2012 13:03
parts and bodyshop profits are under bigger threat from the fact that Insurers have consistantly drove labour rates down, to the point where the specialist repairing a structurally damaged car earns 50% less for a business than an apprentice carrying out an oil and filter change . . . how can that be right??