Company car drivers face longer wait for crash repairs

The latest, 2008 edition of the biennial mfbi study The UK Car Body Repair Market published by UK automotive analysts Trend Tracker forecasts a decline of over one-fifth in the number of bodyshops over the next five years, leading to seasonal shortfalls in repair capacity as soon as 2010. That could lead to more business for credit hire firms, higher repair costs for at-fault drivers’ insurance companies, and higher incident costs for self-insured fleets

While the UK car population increased by 18% between 1998 and 2008, the number of collision repairs has risen by only 1%. The number of repairs expected this year – to 5.78m vehicles – is less than the peak of 5.83m in 1999. Safer cars, fewer miles driven, more cars owned per household and fast-rising insurance write-offs have all dampened collision repair demand, and that has allowed insurers to exert ongoing pressure on repairers’ weak margins, and shrink their approved networks.

As a result, the latest Trend Tracker report estimates that there are now 4,010 specialist body repairers in the UK – 36% fewer than a decade ago. The number operated by franchised dealers has declined faster, from 2,200 to just 870 today.

Annual total losses declared by insurance companies increased by 86% between 1998 and this year, to a total of to 0.79 million, representing 17% of all motor insurance accident damage claims – 24% if claims for theft, glass and personal injury are deducted. This trend is accounted for by a combination of expensive-to-repair car technology and the vehicle depreciation that has accompanied an increasingly competitive car market. It has deprived bodyshops of work, and around 0.5m more modest dent repair jobs each year have migrated to SMART (Small to Medium Area Repair Techniques) specialists.

Trend Tracker forecasts that the declining number of repairers, combined with a projected 2% growth in repair demand, will push UK crash repair capacity into deficit by 2010. But Trend Tracker analyst Robert Macnab says, “While this will mean more drivers are likely to wait longer for their cars to be fixed, the cost of more courtesy car use during the wait will most often be borne by the insurer of the at-fault driver – or by self-insured fleets.

“The problem will boost demand for credit hire firms, but it is only in the winter peak demand period that it will be apparent, as accident repair is a highly seasonal business.”

Current average repair costs of £1,175 are only 3% higher than a decade ago in real terms, and Macnab does not believe seasonal repair capacity shortfalls are likely to drive them up in the near future. “Motor insurers ultimately risk a bigger problem if too many bodyshops go out of business, but so long as their supply problems only appear in the winter months, they will continue to prefer an increase in courtesy transport costs to paying bodyshops more per hour throughout the year.”