Drivers could spend more time in courtesy cars

A new industry report from analysts Trend Tracker forecasts a shortfall in accident repair capacity in just two years, as cost pressures, write-offs, congestion and safer cars drive hard-pressed bodyshops out of business. Although the UK car population has increased by 18% over the last decade, the number of collision repairs to cars rose only 1%, and Trend Tracker forecasts a decline of over a fifth in the number of bodyshops over the next five years.

This, says Trend Tracker analyst Robert Macnab in the latest, 2008 edition of the biennial mfbi study The UK Car Body Repair Market just published by the independent research firm Trend Tracker Limited, could mean more drivers spending more time in courtesy cars waiting for repairs in the winter months from 2010 onwards.

“The cost,” says Macnab, “will be partly carried by bodyshops themselves, whose insurance company customers insist on them providing courtesy cars, and partly by the at-fault drivers whose insurers face courtesy car bills from credit hire firms – in the form of increased premiums.”

Why the number of repairs has fallen away in relation to the car population is partly due to an astonishing rise in insurance write-offs. Total losses declared by insurance companies each year have increased by 86% since 1998, to a total of to 0.79 million cars, representing 17% of all motor insurance accident damage claims. If claims for theft, glass and personal injury are deducted, write-offs account for virtually a quarter (24%) of claims. Insurance write-offs are caused when the cost of fixing expensive items such as airbags exceeds the value of cars hit by rising rates of depreciation.

Other key facts and figures from the Trend Tracker report include:

Current repair costs average £1,175 (including, excess payments and VAT, but excluding claims for motor theft, glass and personal injury) - only 3% higher than a decade ago.

The Trend Tracker report estimates that there are now 4,010 specialist bodyshops still in business - 36% fewer than in 1998.

Many bodyshops have lost business – half a million minor repairs a year - to SMART (Small to Medium Area Repair Techniques) repairers.

The report says insurers, which have exerted so much pressure on their authorised bodyshops that their labour charges are about half those of garage workshops, will prefer to fund extra courtesy cars during the winter peak demand period for repairs than to face a fixed cost increase from higher labour rates through the year which would enable more repairers to stay in business.

Comparing accident repair costs by make, Jaguar tops the bill at an average of £2,528 per repair - over twice the £1,208 average cost of fixing a damaged Proton.

Motor insurance premiums will have to rise, but not because of repair costs so much as to compensate for underwriting losses which in recent years have been made up by investment income which is now harder to assure.