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Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
1. Volume Ten Number Three
Q3 2010
Published by Mitchell International, Inc.
Industry Trends
Report Feature in this issue:
Quarterly Feature:
Are Hybrids as
Green When it
Comes to Their
Claims Costs?
by Greg Horn
Page 3
NEW: Procedure Page Updates
Page 23
2. Industry Trends
Volume Ten Number Three
Q3 2010
Report
Published by Mitchell International, Inc.
Table of Contents The Industry Trends Report is a quarterly snapshot
of the auto physical damage collision and casualty
industries. Just inside—the economy, industry
3 Quarterly Feature: Are Hybrids as Green When it Comes highlights, plus illuminating statistics and measures,
and more. Stay informed on ongoing and emerging
to their Claims Costs? trends impacting the industry, and you, with the
6 The Economy & Short-Term Energy Outlook Industry Trends Report!
9 Current Events in the Collision Industry Questions or comments about the Industry Trends
Report may be directed to:
15 Motor Vehicle Markets
New Vehicle Sales Greg Horn
Used Vehicle Sales Editor in Chief, Vice President of Industry Relations
greg.horn@mitchell.com
17 Mitchell Collision Repair Industry Data
Average Appraisal Values For distribution and circulation questions, or requests
Collision Losses for back issues, please contact:
Facts At-A-Glance: Automobile Sales
Regina Merkey
Comprehensive Losses
Managing Editor, Sr. Marketing Communications
Third-Party Auto Property Damage Specialist
Supplements Distribution and Circulation
Parts Analysis (858) 368-7790
Paint & Materials e-mail: regina.merkey@mitchell.com
Labor Analysis
For data analytics, please contact:
Adjustments
Gail Sloan
23 NEW: Procedure Page Updates Vice President of Licensing and Corporate Accounts
24 Total Loss (858) 368-7869
e-mail: gail.sloan@mitchell.com
25 Canadian Collision Summary
Canada Appraisal Severity Additional Contributors:
Canada Parts Utilization
Manheim analytics provided by Thomas C. Webb,
Vehicle Age and ACV’s Chief Economist at Manheim Auctions. Webb has been
30 Collision Casualty Statistics associated with the used vehicle market for more than
26 years, including serving as Senior Manager at a
31 About Mitchell International, Inc. professional services firm’s global automotive practice,
News Releases Q2-2010 and Chief Economist for one of the industry’s largest
Mitchell Brand Advertising at Work national trade organizations.
The Industry Trends Report is published by Mitchell
International, Inc.
The information contained in this publication was
obtained from sources deemed reliable. However,
Mitchell International, Inc. cannot guarantee the
Mitchell International, Inc., founded in 1946 and headquartered in San Diego, California, is a leading accuracy or completeness of the information provided.
provider of information and workflow solutions to the Property & Casualty Claims and Automotive Collision Repair
industries. The company’s comprehensive solution portfolio streamlines the entire auto physical damage, bodily
injury and workers’ compensation claims processes. Mitchell enables millions of electronic transactions between
more than 30,000 business partners each month to enhance partner productivity, profitability, and customer
satisfaction. For more information on Mitchell International, please visit our website at www.mitchell.com. Mitchell Industry Trends Report 2
3. Quarterly Feature
Are Hybrids as Green When it
Comes to Their Claims Costs?
BY GREG HORN
Vice President of Industry Relations, Mitchell International
A few years ago when a select group of eco-conscious consumers first started to timidly
raise their hands in support of hybrids in the U.S. market, Mitchell explored the difference
in the collision repair costs of hybrids vs. gas powered vehicles. In 2008, these green About the author…
consumers purchased an estimated 350,000 hybrid vehicles, with persistently steep fuel Greg Horn
prices impacting this number over the coming years. Vice President of Industry Relations,
Much has changed in the automotive industry since our initial 2008 study. Now that Mitchell International
consumers are frantically raising their hands due to the continued steep rise in fuel prices, Greg Horn joined Mitchell International
sales of hybrids are experiencing a corresponding rapid rise. This growth has caused two in September of 2006 as Vice President
things to happen: 1.) as the number of hybrids on the road increased, so too did the number of Industry Relations. In this role, Greg
of accidents involving these vehicles, and 2.) the type of buyer has changed. Before the assists the Mitchell sales force in providing
fuel crisis, the only people purchasing hybrids were those concerned with their carbon custom tailored business solutions to
footprint and impact on the environment. While their politics may have been liberal, their the Property and Casualty Claims and
driving habits were conservative, making them a very good risk to insure. Naturally insurers Automotive Collision Repair industries.
incented hybrid owners with discounted rates. He provides guidance to Mitchell’s Product
Management and Business Analytics
The hybrid word made its rounds and spread beyond the traditional green consumer to cost teams, playing an important role in shaping
savvy buyers in the wake of continued rising fuel prices—attracting a new buyer base with Mitchell’s solution portfolio to ensure that
long commutes and therefore an interest in cutting fuel expenses. This shift changed the it meets the evolving needs of current
hybrid driver profile and brought with it a change in the risk profile. and future clients. Greg also presents
Mitchell’s Industry Trends Updates at
A recent study by rating integrity
conferences across the country.
solutions provider Quality Planning
seems to confirm this about-face
Now that consumers are Prior to joining Mitchell, Greg served
in the risk profile. Its study shows frantically raising their as Vice President of Material Damage
Claims at GMAC Insurance, where he
that hybrid owners are significantly
more likely to receive traffic tickets.
hands due to the continued was responsible for all aspects of the
According to Quality Planning’s steep rise in fuel prices, sales physical damage claims process and
the implementation of a unique vehicle
survey, Toyota Prius owners of hybrids are experiencing a replacement program along with serving
received .38 tickets per 100,000
miles driven, versus a non-hybrid corresponding rapid rise. on the GM Safety Committee. Prior
to GMAC, Greg served as Director of
average of .23 tickets per 100,000 Material Damage Processes for National
miles—a 65 percent differential. Grange Mutual in Keene, NH.
A sequence of chain links explains where such a substantial variation could come from.
Experts at Quality Planning believe that one possible explanation for the ticket disparity
correlates with where hybrid owners live. Putting the puzzle pieces together, these folks
found that hybrid owners are more likely to live in an urban setting, where tickets are more
frequently issued.
The Highway Data Loss Institute’s (HDLI) Senior Vice President Kim Hazelbaker also
adds some insight saying, “Urban settings also mean more accidents.” Hazelbaker adds,
“Hybrids typically have higher collision claim frequencies than their non-hybrid counterparts.
This is true both for cars and for SUVs. This may be a reflection of hybrids being used in
longer commutes than their non-hybrid cousins.”
Mitchell Industry Trends Report 3
4. Quarterly Feature: Are Hybrids as Green When it Comes to Their Claims Costs? (con’t.)
What about claims costs?
Our recent study looked at popular hybrids from Domestic and Asian manufacturers and
found that hybrids overall have a 6.5% or $182 higher average claim severity than their gas
powered counterparts. Specifically, the Honda Civic (2007-2009 model years with identical
exterior sheet metal for both gas and hybrid models) has a 6.9% higher severity for the
hybrid than for the gas only powered version.
Domestic hybrids show similar results, with the Ford Escape hybrid generating a 9% higher
average severity than its normally aspirated counterpart. In fact, the only hybrid model that
did not generate a higher repair severity in our study is the Nissan Altima.
Percentage of parts dollars by part type per avg estimate
100%
80%
60%
Gas Only
The hybrid word
40% Hybrid
made its rounds and
20% spread beyond the
0% traditional green
% OEM % AM % LKQ % Reman consumer to cost savvy
buyers in the wake of
Percentage of number of parts by part type per avg estimate continued rising fuel
100%
prices—attracting a
new buyer base with
80%
Gas Only
long commutes and
60%
Hybrid
therefore interested in
40%
cutting fuel expenses.
20%
0%
% OEM % AM % LKQ % Reman
What is driving the difference?
Two interesting clues developed as we examined the make up of the repair estimates
in detail. First, the mechanical labor charges for hybrids are notably higher than the
normally aspirated vehicles—indicating that more mechanical operations are sublet back
to the dealership for completion. Secondly, and more intriguing, the alternate parts use
for hybrids is lower than
for the same body style
of a traditional gas only
According to Quality Planning’s
powered car. survey, Toyota Prius owners
As a group, the vehicles in received .38 tickets per 100,000
our study show that hybrid miles driven, versus a non-hybrid
repair utilizes 91.9% OEM
parts dollars compared average of .23 tickets per 100,000
to 86.8% for gas only miles—a 65 percent differential.
Mitchell Industry Trends Report 4
5. Quarterly Feature: Are Hybrids as Green When it Comes to Their Claims Costs? (con’t.)
counterparts. The number of
OEM parts versus alternate Our recent study looked at
parts installed on hybrids
compared to their gas only popular hybrids from Domestic
powered cousin vehicles is and Asian manufacturers and
higher (92% for hybrid vs 87%
for gas only).
found that overall hybrids have
How can this be if both
a 6.5% or $182 higher average
vehicle types use the same claim severity than their gas
panels, bumpers and lamps? powered counterparts.
One word—loyalty. According
to a study by Experian, 47% of those who bought a hybrid in the past purchased another
vehicle of the same make. Compared to the average consumer who is 35% loyal, drivers
of these green machines are one of the most loyal groups. And when these drivers have
a fender bender, where are they most likely to take their car for repairs…right back to the
dealership.
So it appears from our original study in 2008, and this most recent study where we
examined both severity and frequency, that hybrids represent a more costly overall risk to
insure than their gas only powered cousins. I would imagine there are several insurance
actuaries that have come to
As a group, the vehicles in our the same conclusions, so
study show that hybrid repair owners of hybrids may see
their insurance rates increase
utilizes 91.9% OEM parts if they haven’t already.
dollars compared to 86.8% for
gas only counterparts.
Mitchell Industry Trends Report 5
6. The Economy & Short-Term Energy Outlook
The Economy
ACCORDING TO A STATEMENT RELEASED ON JULY 14, 2010, THE FEDERAL
OPEN MARKET COMMITTEE decided to maintain the target range of 0 to 1/4 percent
for the federal funds rate. Economic conditions—including low levels of resource
utilization, subdued inflation trends and stable inflation expectations—are likely to warrant
exceptionally low levels of the federal funds rate for an extended period.
Labor demand continued to firm in recent months. While the change in total nonfarm
payroll employment in May was boosted significantly by the hiring of temporary workers
for the decennial census, private employment posted only a small increase. This increase,
however, followed sizable gains in March and April, and the average workweek of all
private-sector employees increased over the March-to-May period. The unemployment rate
moved up in April but dropped back in May to 9.7 percent, its first-quarter average.
The labor force participation rate was, on average, higher in recent months than in the first
quarter, as rising employment was accompanied by an increasing number of jobseekers.
Although the number of workers who were employed part time for economic reasons
leveled off in recent months, the proportion of unemployed workers who were jobless for
more than 26 weeks continued to move up. Initial claims for unemployment insurance
remain at a still-elevated level.
A number of business sectors are gaining strength, particularly manufacturing and
transportation. Real spending on equipment and software increased further early in the
second quarter. Business outlays for computing equipment and software continued to rise
at a brisk pace through April, and shipments of aircraft to domestic carriers rebounded.
Orders and shipments of nondefense capital goods excluding transportation and high-tech
equipment stayed on a noticeable uptrend, on net, in March and April, with the increases
broadly based by type of equipment. The recovery in equipment and software spending is
consistent with the relatively strong gains in production in recent months, improved financial
conditions over the first part of the year, and the positive readings from surveys on business
conditions and earnings reports for producers of capital goods.
Business outlays for nonresidential construction appeared to be contracting further, on
balance, in March and April, although the rate of decline seems to be moderating. Outlays
for new power plants and for manufacturing facilities firmed, and investment in drilling and
mining structures continues to rise strongly. However, spending on office and commercial
structures fell steeply through April, with the weakness likely related to high vacancy rates,
falling property prices, and the light volume of sales.
Industrial production rose at a robust rate in April and May, with production increases
broadly based across industries. Firming domestic demand, rising exports, and business
inventory restocking appear to have provided upward impetus to factory production. In
April and May production in high-technology industries again rose strongly, with substantial
gains in the output of semiconductors and further solid increases in the production of
computers and communications equipment.
The production of other types of business equipment continued to rebound, and the output
of construction supplies advanced further. Production of light motor vehicles turned up in
May; nonetheless, dealers’ inventories remained lean. Capacity utilization in manufacturing
rose in May to a rate noticeably above the low reached in mid-2009, but it was still
substantially below its longer-run average.
Although sales of light motor vehicles continued to trend higher, nominal sales of non-auto
consumer goods and food services were little changed in April and May. The moderation in
spending appears, on balance, to be aligning the pace of consumption with recent trends
Information on the economy and short-term energy outlook was obtained from the US Federal Reserve Board,
Federal Open Market Committee (FOMC) and the US Department of Energy, Energy Information Administration
(EIA). For more information, or to view original source materials, visit: www.federalreserve.gov/FOMC or
www.eia.doe.gov Mitchell Industry Trends Report 6
7. The Economy & Short-Term Energy Outlook (con't.)
in income, wealth, and consumer sentiment. Real disposable personal income moved up
at a solid rate in March and April, reflecting increases in employment and hours worked as
well as slightly higher real wages, but home values declined in recent months and equity
prices moved down. Measures of consumer sentiment improved in May and early June but
were still at relatively low levels.
Household spending continues to advance, including the notable increases in auto
sales and expenditures on other durable goods. Going forward, consumption spending
is expected to continue to post moderate gains, with the effects of income growth and
improved confidence as the economy recovers more than offsetting the effects of lower
stock prices and housing wealth. However, continued labor market weakness could
weigh on consumer sentiment, and households are still repairing their balance sheets;
both factors could restrain consumer spending going forward. Although readings from the
housing sector have been strong through mid-spring, the strength likely reflects the effects
of the temporary tax credits for homebuyers. With the expiration of those provisions, home
sales and starts had stepped down noticeably and could remain weak in the near term;
with lower demand and a continuing supply of foreclosed houses coming to market, house
prices are likely to remain flat or decline somewhat further in the near term.
The anticipated expiration of the homebuyer tax credit appears to have pulled home sales
forward, boosting their level in recent months. Sales of existing single-family homes rose
strongly in April, and, although they moved down in May, these sales were still above
their level earlier in the year. Purchases of new single-family homes also jumped in April,
but then fell steeply in May. On net, the upswing in the volume of real estate transactions
in recent months was likely to boost the brokers’ commissions component of residential
investment in the second quarter. However, starts of new single-family homes, which had
trended higher in the first four months of the year, declined sharply in May. In addition, the
number of permits for new homes, which tends to lead starts, fell for a second month in
May. House prices declined somewhat in recent months, reversing some of the modest
increases that occurred in the spring and summer of 2009. After changing little on net
during the preceding year, interest rates for 30-year fixed-rate conforming mortgages
moved lower in May and June.
Short-Term Energy Outlook
Prices of energy and other commodities have declined somewhat in recent months.
However, EIA projects that the West Texas Intermediate (WTI) spot price, which ended
June near $76 per barrel, will average $79 per barrel over the second half of 2010 and $83
per barrel in 2011.
EIA expects that regular-grade motor gasoline retail prices will average $2.80 per gallon
during this summer’s driving season (the period between April 1 and September 30), up
from $2.44 per gallon last summer.
This projection includes EIA’s revised estimates of reductions in production resulting from
the 6-month deepwater drilling moratorium announced by Secretary of the Interior Salazar
on May 27. The reductions in crude oil production resulting from the moratorium are
estimated to average about 31,000 barrels per day (bbl/d) in the fourth quarter of 2010
(compared with an estimated 26,000 bbl/d previously expected)and about 82,000 bbl/d in
2011 (up from 70,000 bbl/d). EIA will continue to refine its estimated moratorium impacts
as additional information becomes available.
EIA expects the Henry Hub natural gas spot price to average $4.70 per million Btu (MMBtu)
this year, a $0.75-per-MMBtu increase over the 2009 average and $0.22 per MMBtu higher
Information on the economy and short-term energy outlook was obtained from the US Federal Reserve Board,
Federal Open Market Committee (FOMC) and the US Department of Energy, Energy Information Administration
(EIA). For more information, or to view original source materials, visit: www.federalreserve.gov/FOMC or
www.eia.doe.gov Mitchell Industry Trends Report 7
8. The Economy & Short-Term Energy Outlook (con't.)
than in recently projected for 2010. Most of the increase in the price is expected to occur
in the third quarter of this year, due to projections of increased hurricane activity in the Gulf
of Mexico this season, which pushed spot prices higher. EIA expects the Henry Hub spot
price to average $5.17 per MMBtu in 2011, up $0.11 per MMBtu from previous forecasts.
The annual average residential electricity price is expected to change only moderately,
averaging 11.6 cents per kilowatthour (kWh) in 2010, up slightly from 11.5 cents per kWh
in 2009, and rising to 12 cents per kWh in 2011.
Estimated U.S. carbon dioxide (CO2) emissions from fossil fuels, which declined by 7.0
percent in 2009, are expected to increase by 3.2 percent and 1.6 percent in 2010 and 2011,
respectively, as economic growth spurs higher energy consumption.
Overall, the economic outlook has softened somewhat, and the risks to the outlook have
shifted to the downside. Economic expansion is likely to be strong enough to continue
raising resource utilization, albeit more slowly than previously anticipated. Inflation is likely
to stabilize near recent low readings in coming quarters and then gradually rise toward
more desirable levels.
Information on the economy and short-term energy outlook was obtained from the US Federal Reserve Board,
Federal Open Market Committee (FOMC) and the US Department of Energy, Energy Information Administration
(EIA). For more information, or to view original source materials, visit: www.federalreserve.gov/FOMC or
www.eia.doe.gov Mitchell Industry Trends Report 8
9. Current Events in the Collision Industry
Auto Body Employment Report: Decline Continues
Excerpted From: CollisionWeek—June 2010
April preliminary data shows further declines in total repair industry production.
The latest preliminary data available from the U.S. Department of Labor Bureau of Labor
Statistics (BLS) shows the continued decline in employment in auto body repair facilities
across production & non-supervisory employees as well as the total number of employees
in these establishments.
The BLS preliminary estimate of production employees at independent auto body repair
AN EDITOR’S NOTE…
facilities for April, 2010 was 161,000, a decline of 1500, or 0.9 percent, from March. The This is an indicator that recovery in
April estimate is down 8800, or 5.2 percent, from April 2009. Production employment the collision repair sector will take
peaked in February 2007 at 183,000, and the April 2010 preliminary estimate would longer than the general economy
represent a decline of 22,000, or 12 percent, from the peak. because new automobile sales are
not fully recovered.
The average weekly hours for April declined to 38.3 hours per week, compared to 38.6
hours in March.
The average weekly wages of production & non-supervisory employees also declined in
April to $688.25, a decline of $16.20, or 2.3 percent, compared to March. The average
weekly wages are up $4.80, or 0.7 percent, in April 2010 compared to April 2009.
Production and non-supervisory employees accounted for 79.9 percent of total employees.
Employment 2000-2010
260
240
220
Thousands
200
180
160
All Employees (Thousands)
Production Employees (Thousands)
140
Jan-00
Sep-00
May-01
Jan-02
Sep-02
May-03
Jan-04
Sep-04
May-05
Jan-06
Sep-06
May-07
Jan-08
Sep-08
May-09
Jan-10
Mitchell Industry Trends Report 9
10. Current Events in the Collision Industry (con't.)
The average weekly wage across all employees was $759.22 in April, down $11.67,
or 1.5 percent, compared to March. Average weekly wages in April 2010 were up
$10.72, or 1.4 percent, from April 2009.
Average Weekly Wages
$850
$800
$750
$700
$650
$600
All Employees Avg Weekly Wages
$550
Production Avg Weekly Wages
$500
Jan-00
Aug-00
Mar-01
Oct-01
May-02
Dec-02
Jul-03
Feb-04
Sep-04
Apr-05
Nov-05
Jun-06
Jan-07
Aug-07
Mar-08
Oct-08
May-09
Dec-09
Average Weekly Production Hours by Month
The chart on the following page details the total number of production employees
multiplied by their average weekly hours. This combination of hours and employees
creates a view into the total number of production hours amassed by the collision
repair population as a whole.
As the chart shows, the trend in overall production hours ran upward from January
2000 through February 2008 when it peaked at 7.241 million production hours per
week. The total production hours stood at 6.166 million per week in April 2010, a
decline of 1.075 million hours per week, or 14.8 percent, from the peak in February
2008.
Mitchell Industry Trends Report 10
11. Current Events in the Collision Industry (con't.)
Average Weekly Production Hours
7.4
7.2
7.0
Millions of Hours
6.8
6.6
6.4
6.2
Hours x Employees
6.0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
The chart, though not painting a pretty picture of the health of the industry currently,
shows that collision repair facility operators have responded to the declines in
business volume by decreasing capacity and cost. These statistics do not address
any increases in productivity that would mitigate some of the declines in hours worked
such as increases in labor units produced per clock hour. (See chart on next page.)
Mitchell Industry Trends Report 11
12. Current Events in the Collision Industry (con't.)
PRODUCTION &
NON-SUPERVISORY ALL EMPLOYEES
Avg Avg Avg Avg Avg Avg
Count Weekly Hourly Weekly Count Weekly Hourly Weekly
Month (x1000) Hours Earn Wages (x1000) Hours Earn Wages
Apr-09 169.8 37.8 18.1 683.4 209.0 37.5 20.0 748.5
May-09 167.4 37.7 18.1 683.5 206.7 37.6 19.8 745.2
Jun-09 166.9 38.1 18.0 686.2 206.7 37.9 19.7 747.8
Jul-09 164.9 38.2 18.0 688.0 204.6 38.0 19.9 755.8
Aug-09 164.3 38.3 18.2 697.8 204.4 38.0 20.0 760.8
Sep-09 164.6 37.8 18.4 695.9 203.7 36.9 20.2 746.5
Oct-09 162.6 38.5 18.3 703.4 202.3 37.8 20.2 761.7
Nov-09 162.1 38.4 18.6 713.5 202.4 37.8 20.5 773.4
Dec-09 161.6 38.4 18.6 714.6 202.5 37.6 20.5 770.4
Jan-10 162.0 38.4 18.6 712.3 202.6 38.2 20.6 786.5
Feb-10 162.1 38.2 18.4 704.0 202.5 37.6 20.4 767.0
Mar-10 162.5 38.6 18.3 704.5 203.0 37.9 20.3 770.9
Apr-10 161.0 38.3 18.0 688.3 201.5 37.4 20.3 759.2
Will Collision Repair Have a Certification in the Future?
By: Greg Horn
Excerpted From: ABRN—July 2010
With the technological advancements that automakers are using when it comes to new
vehicle construction and mechanicals, shops are increasingly challenged to stay on top
of the latest technology. Shops are rightfully proud to display their training certificates,
which help show customers that they are serious about maintaining their knowledge and
providing quality repairs.
But how can a vehicle owner know which shops keep up with the latest repair technology
before they see those certifications? The answer may come from the United Kingdom.
®
®
In the U.K., the British Standards Institution (BSI) established the Kitemark standard for
A IR
VE H
the collision repair industry to indicate which shops adhere to its rigorous certification
standards. The Kitemark standard is well known in the U.K, similar to the Underwriters
EP
LE
IC
Laboratories “UL Listed” certification for products in the United States. R
BO DY
The National Institute for Automotive Service Excellence (ASE) fulfills the mission of
Logomark Courtesy of BSI
certification of mechanical shops in the U.S., but some have challenged its effectiveness
in the collision repair industry. You may be asking, “Isn’t that what I-CAR does?” Well yes
and no, with the key difference being that Kitemark is a recognized brand by 82 percent of
consumers in the U.K. Just as important, the Kitemark logo has become a symbol of trust
and respected brand values.
A survey of more than 1,000 U.K. consumers found that of those aware of Kitemark, more
than 80 percent believed that they would put greater trust in a product carrying the mark
– essentially stating that a product carrying the Kitemark symbol represents higher quality
than other brands. There is a noticeable difference between the level of brand recognition
Mitchell Industry Trends Report 12
13. Current Events in the Collision Industry (con't.)
that Kitemark has compared to I-CAR. Not many people outside of the collision industry
recognize the importance of I-CAR or what it represents. I am not saying that I-CAR does
not fulfill a very valid need in the industry because it does. The fact is, it just doesn’t have
widespread consumer recognition.
We need this type of certification for collision repairers in the U.S. I am surprised that we
haven’t come up with a consumer-recognized certification for collision repair. With our
business overly dependent on word-of-mouth advertising and insurer recommendation,
the ability to demonstrate your certifications to potential consumers before they select a
repair shop is critical to growing your collision business. Shops that choose to become
direct repair shops have a way to distinguish themselves from others when approaching
insurance companies.
How does a shop become Kitemark certified? Kitemark addresses the program in the three
parts that make up collision repair: man, method and machine. Man ensures that a shop’s
personnel are fully trained and maintain required competencies. Method ensures that the
body shop has demonstrable use of recognized crash repair methods. Machine verifies that
repairers have the correct equipment for doing the job and that all equipment is properly
calibrated and implemented.
Our industry needs this type of certification in the U.S. With the number of shops shrinking
and a reduced number of repairs in the market, competition is increasing. To compete
in this market and move forward, shops need a way to stand out to vehicle owners and
insurers to show that they have the right stuff to safely repair today’s vehicles. Shops need
an instantly recognizable, credible way to communicate their expertise in repairing vehicles.
Imagine you are in your local home improvement center looking to buy an appliance for
your home, with limited knowledge of appliances. You would certainly appreciate the ability
to know that if a certain appliance failed, it could cause a fire and risk your family’s safety.
So while you are shopping, you find two similar appliances, with the same features. One is
“UL Listed” and one is not. Which one would you buy? Can you imagine a vehicle owner
choosing their collision repair shop the same way?
Chrysler Group to Establish U.S. Fiat Dealer Network
Excerpted From: CollisionWeek—July 2010
Chrysler Group LLC has begun the dealer selection process for the reintroduction of the
Fiat brand in the United States.
Chrysler Group expects to select dealers in about 125 markets identified for growth
potential in the small-car segment. Fiat dealers will be located in approximately 41 states.
“The Fiat dealer network will be appropriately sized to serve the market opportunity,” said
Peter Grady, Vice President of Network Development and Fleet, Chrysler Group LLC. “Our
vision is to establish a dealer network that will reflect and enhance the brand’s reputation
for innovation and fun, and will offer a unique, personalized customer experience.”
Chrysler Group will send Dealer Application Guides to dealers in the identified markets
containing specific Fiat dealer requirements and instructions on submitting a proposal.
Chrysler Group plans to officially announce its U.S. Fiat dealer network locations in
September. AN EDITOR’S NOTE…
The Fiat brand in the U.S. will feature the New Fiat 500, which recently celebrated the 53rd This means that we’ll be seeing
anniversary of its introduction in Europe. Dealers will begin selling the Fiat 500 late this year Fiats, and because Alfa Romeo
and the Fiat 500 Cabrio in 2011. is owned by Fiat, sleek new Alfa
Romeos on U.S. roads again.
Mitchell Industry Trends Report 13
14. Current Events in the Collision Industry (con't.)
Volkswagen Announces Certified Collision Repair Facility Program
Excerpted From: CollisionWeek—July 2010
Volkswagen of America, Inc. announced the launch of a VW-Certified Collision Repair
Facility program for U.S. dealer-affiliated and independent body shops. This program
provides VW-certification for collision repair facilities performing repairs in accordance with
Volkswagen’s high safety standards and specifications.
Volkswagen conducted a pilot with a group of fifteen repair facilities to maximize program
benefits for body shops before launching the program nationally.
Technicians at Volkswagen Certified Collision Repair Facilities must undergo training in
the proper use of the factory-approved repair equipment, tools, and technologies to meet
Volkswagen’s exact safety standards and specifications. Repair facilities must also use
Volkswagen-approved tools. Volkswagen will visit repair facilities to provide annual program
certification and will list VW-Certified Collision Repair Facilities as they become certified on
AN EDITOR’S NOTE…
www.vw.com. The VW’s high-tech construction
methods assure better control over
Volkswagen will provide collision repair facilities access to marketing materials to promote
repair quality.
their certified status, in addition to exclusive access to vehicle specific-, structural material-,
and collision industry-training on a dedicated program website.
Volkswagen will also provide customers with free 24-hour towing of vehicles under warranty
exclusively to VW-Certified Collision Repair Facilities as part of the Roadside Assistance
program, when they simply call (800) 411-6688.
Volkswagen will allow dealers to either nominate their own collision repair facility to be
certified by Volkswagen or to nominate an independent collision repair facility that meets
Volkswagen standards. Additionally, dealers will benefit from additional genuine Volkswagen
Collision Parts sales to their sponsored collision repair facility.
“Volkswagen is excited to partner with both dealer-affiliated and independent collision
repair facilities to increase repair quality and customer satisfaction with the Volkswagen
brand,” said Matthew McCauley, Collision Program Manager for Volkswagen of America.
“This program benefits Volkswagen owners by providing the peace of mind that comes
from knowing that when a vehicle is involved in a collision, VW-Certified Collision Repair
Facilities will maintain the brand’s safety standards and specifications.”
Repair facilities interested in participating in this program or dealerships wishing to
nominate independent collision repair facilities should contact Volkswagen of America at
vwcollisionparts@vw.com.
Mitchell Industry Trends Report 14
17. Mitchell Collision Repair Industry Data
The following information was assembled from industry-wide appraisal data uploaded from
participating insurance carriers, body shops, and independent appraisers, processed by Mitchell Product Solution:
Mitchell International and compiled through Mitchell’s AIM™ (Advanced Information
Management) system.
AIM
AIM™ features immediate online data access,
With the obvious exception of the Total Loss section, all data in this section, including ACV custom report construction, ad-hoc query
benchmarks, relate to repairable vehicle appraisals only. capabilities, weekly updates, and the ability to
accept and consolidate detailed appraisal data
Sections included in the Mitchell Collision Repair Industry Data: from all major estimating platforms. For more
information on AIM, visit Mitchell’s website at
• Average Appraisal Values • Collision Losses www.mitchell.com.
• Comprehensive Losses • Third-Party Auto Property Damage
• Supplements • Parts Analysis
• Paint & Materials • Labor Analysis
• Adjustments • Total Losses
Development Explained
The following data points are dynamic and subject to change from on-going supplement
and total loss designation activities amending original appraisal values. Average appraisal
values submitted in June, for example, will likely increase by several dollars over the next
few months, then stabilize as all supplements are factored into the final value for the period.
Raw values are provided, and then adjusted based on the observed six-month change
behavior from prior data to produce a projected final or “developed” value. Adjusted values
may therefore be considered reliable approximations of the eventual, industry value for
any given datum. As supplement frequency and severity, as well as total loss designation
activities vary by carrier, we suggest that each company isolate their own development
factors to apply to their own unique data sets.
Average Appraisal Values
The average initial appraisal value, calculated by combining data from all first- and third-
party repairable vehicle appraisals uploaded through Mitchell systems in Q2-2010, was
$2,456—a $12 increase from the previous year’s Q2-2009 appraisal average of $2,444. Mitchell Product Solution:
Applying the prescribed development factor to these data points produces an anticipated
average appraisal value of $2,560 on a relatively older vehicle.* UltraMate
UltraMate is Mitchell’s advanced estimating
®
system, combining database accuracy,
Average Appraisal Values, ACVs and Age
All APD Line Coverages automated calculations, and repair
procedure pages to produce estimates that
$14,000 are comprehensive, verifiable, and accepted
throughout the collision industry. UltraMate
$12,729 $12,693 $12,447
$12,000 is a central component of Mitchell’s all-in-
$11,981
$11,773 $11,325 one estimating, imaging, and claims workflow
$10,000
management solution, UltraMate Premier
Suite. For more information on UltraMate
$8,000
and UltraMate Premier Suite, visit Mitchell’s
$6,000 website at www.mitchell.com.
$4,000
$2,565 $2,621 $2,444 $2,608
$2,000 $2,472 $2,456/
2,560
Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010
Avg. Unit Age 6.07 5.95 6.33 6.26 6.79 6.70
Appraisals ACV’s
*NOTE: Values provided from Guidebook benchmark averages, furnished through Mitchell UltraMate®.
Mitchell Industry Trends Report 17
18. Mitchell Collision Repair Industry Data (con't.)
Collision Losses Hybrid:
Mitchell’s Q2-2010 data reflect an average gross Collision appraisal value of $2,782—$5 Facts At-A-Glance…
less than this same period last year. Applying the indicated development factor suggests a
• 1900 marked the introduction of
final Q2-2010 average gross Collision appraisal value of $2,937. At $13,201, the average
the first hybrid car in the world—the
Actual Cash Value (ACV) of vehicles appraised for Collision losses during Q2-2010 reflects
Lohner-Porsche Mixte. Inventor
an increase in value despite the increase in age of those vehicles.*
Ferdinand Porsche is credited
with designing the wheel power
Average Appraisal Values, ACVs and Age generators used in today’s hybrids.
Collision Coverage*
• In 1997, over 90 years after the debut
$14,000
$13,648 $13,398 $13,201
of the Mixte, the world witnessed the
$12,453 $12,698
$12,000
$11,989
launch of the first commercial hybrid
car—Toyota’s Prius.
$10,000
• The term hybrid generally refers to
$8,000
hybrid electric vehicles (HEVs),
$6,000 which feature an internal combustion
engine as well as an electric motor.
$4,000
$2,941 $2,802 $2,987
$2,787
$3,001 $2,782/ • Hybrid cars like the Toyota Prius
$2,000 2,937
produce 90% less pollutants than
comparable gas-only cars
Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010
• Most of the hybrids available today
Avg. Unit Age 5.72 5.58 5.93 5.84 6.34 6.22 use gasoline as the primary source
Appraisals ACV’s of power. However, they have the
ability to switch to electric mode when
needed.
Comprehensive Losses • Many of today’s hybrids don’t require
any plug-in charging. They recharge
The initial average gross appraisal value for Comprehensive coverage estimates processed
on their own when the car is in
through our servers was $2,569—a $193 increase from Q2-2009. Applying the prescribed
motion.
development factor for this data set produces a final anticipated average severity of $2,628.*
• Hybrid cars are very economical. On
Average Appraisal Values, ACVs and Age the average, these vehicles achieve
Comprehensive Losses about 50 miles per gallon and
require just one-third of gas used by
$14,000
their conventional counterparts.
$12,789 $12,916 $12,719
$12,000 $12,397
$11,953
$11,517
$10,000
$8,000
$6,000
$4,000
$2,000 $2,438 $2,479 $2,376 $2,558 $2,569/
$2,367
2,628
Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010
Avg. Unit Age 6.28 5.99 6.40 6.26 6.79 6.75
Appraisals ACV’s
*NOTE: Values provided from Guidebook benchmark averages, furnished through Mitchell UltraMate®.
Mitchell Industry Trends Report 18
19. Mitchell Collision Repair Industry Data (con't.)
Third-Party Property Damage
In Q2-2010, our initial industry average gross Third-Party Property Damage appraisal
was $2,192, compared to $2,187 in Q2-2009—reflecting a $5 increase between these
respective periods. However, adding the prescribed development factor for this coverage
type yields a Q2-2010 adjusted appraisal value of $2,261—an overall $74 increase
from the same period in 2009. In Q2-2010, the average PD appraised vehicle ACV was
$11,812—one of the highest ACV’s we’ve seen on Third-Party vehicles since 2008,
showing a strengthening in used car values.*
Average Appraisal Values, ACVs and Age
Auto Physical Damage APD
$12,000
$11,957 $12,069
$11,812
$11,131 $11,329
$10,000 $10,736
$8,000
$6,000
$4,000
$2,000 $2,292 $2,222
$2,337
$2,187 $2,313 $2,192/
2,261
Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010
Avg. Unit Age 6.27 6.15 6.59 6.52 7.10 6.96
Appraisals ACV’s
Supplements
Editors Note: As it generally takes at least three months following the original date of
appraisal to accumulate most supplements against an original estimate of repair, we report
(and recommend viewing supplement information) three months after-the-fact to obtain the
most accurate view of these data.
In Q2-2010, 27.62% of all original estimates prepared by Mitchell-equipped estimators
during that period were supplemented one or more times. In this same period, the pure
supplement frequency (supplements to estimates) was 47.29%—reflecting a 2.35 point or
5% relative increase from that same period in 2009. The average combined supplement
variance for this quarter was $586.99—$36.67 lower than in Q2-2009.
Average Supplement Frequency and Severity
Date Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10 Pt/$ Change % Change
% Est. Supplement 34.83 31.98 33.91 31.8 34.41 27.62 -4.18 -13%
% Supplement 47.25 45.71 46.5 44.94 44.66 47.29 2.35 5%
Avg. Combined Supp. Variance 645.44 635.63 653.27 623.66 678.4 586.99 -36.67 -6%
% Supplement $ 25.17 25.71 24.92 25.52 26.01 23.9 -1.62 -6%
*NOTE: Values provided from Guidebook benchmark averages, furnished through Mitchell UltraMate®.
Mitchell Industry Trends Report 19
20. Mitchell Collision Repair Industry Data (con't.)
Average Appraisal Make-up
This chart compares the average appraisal make-up as a percentage of dollars, constructed
by Mitchell-equipped estimators. These data points reflect no change in the use of parts or
labor but a small increase in paint and materials.
% Average Appraisal Dollars by Type
Date Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10 Pt/$ Change % Change
% Average Part $ 45.66 41.02 44.76 41.6 44.67 41.54 -0.06 0%
% Average Labor $ 43.48 48.08 43.99 47.09 43.86 47 -0.09 0%
% Paint Material $ 9.47 10.19 9.97 10.54 10.29 10.87 0.33 3%
Parts Analysis
Editor’s Note: While there isn’t a perfect correlation between the types of parts specified
by estimators and those actually used during the course of repairs, we feel that the Mitchell Product Solution:
following observations are directionally accurate for both the insurance and auto body Mitchell
repair industries. This segment illuminates the percentage of dollars allocated to each Alternate
unique part-type. Parts Program
As a general observation, recent data show that parts make up 41.34% of the average Mitchell Alternate Parts Program (MAPP™)
value per repairable vehicle appraisal—5.99 points less than the average allocation of offers automated access to nearly 30,000,000
labor dollars. In addition, the overall trend continues to reflect a decrease in the use of Remanufactured, Aftermarket, and OEM
OEM parts—due in part to several vehicle manufacturers increasing collision part prices. Discount parts from over 2,000 suppliers,
ensuring shops get the parts they need
However, it appears that OEM parts use seems to be seasonally affected in the second
from their preferred vendors. MAPP is fully
quarter of each year, which can likely be attributed to hail storms impacting overall OEM use. integrated with UltraMate for total ease-of-use.
Designated company administrators are also
provided the MAPP Matrix Manager application
Parts Type Definitions free of charge—allowing clients the ability
• Original Equipment Manufacturer (OEM): Parts produced directly by the vehicle to manage their MAPP matrices, run four
different matrix reports, add new suppliers/
manufacturer or its authorized supplier, and delivered through the manufacturer's
parts, all from their local platform without the
designated and approved supply channels. This category covers all automotive parts, need for Mitchell support/intervention.
including sheet metal and mechanical parts.
• Aftermarket: Parts produced and/or supplied by firms other than the Original Equipment
Manufacturer’s designated supply channel. This may also include those parts originally
Mitchell Product Solution:
manufactured by endorsed OEM suppliers, which have later followed alternative
distribution and sales processes. While this part category is often only associated with Quality
crash replacement parts, the automotive aftermarket also includes a large variety of Recycled
mechanical and custom parts as well. Parts (QRP)
Mitchell Quality Recycled Parts (QRP™) is
• Non-New/Remanufactured: Parts removed from an existing vehicle that are cleaned,
the most comprehensive source for finding
inspected, repaired and/or rebuilt, usually back to the Original Equipment Manufacturer’s recycled parts. It gives online access to a parts
specifications, and re-marketed through either the OEM or alternative supply chains. database compiled from a growing network of
While commonly associated with mechanical hard parts such as alternators, starters and more than 3,300 of the highest quality recyclers
engines, remanufactured parts may also include select crash parts such as urethane and in the U.S. and Canada, covering more than
400 part categories representing access
TPO bumpers, radiators and wheels as well.
to nearly 44,000,000 parts from recyclers’
• Like Kind and Quality (LKQ): Parts removed from a salvaged vehicle and re-marketed parts inventories—updated daily. QRP is fully
through private or consolidated auto parts recyclers. This category commonly includes all integrated with UltraMate for total ease-of-use.
In addition, for selected QRP parts, UltraMate
types of parts and assemblies, especially body, interior and mechanical parts. automatically applies Mitchell’s Assembly Time
Editor’s Note: It is commonly understood within the collision repair and insurance industries that a Guide labor allowances and P-pages specific to
very large number of LKQ “parts” are actually “parts-assemblies” (such as doors, which in fact include LK parts replacement.
numerous attached parts and pieces). Thus, attempting to make discrete comparisons between the
average number of LKQ and any other parts types used per estimate may be difficult and inaccurate.
Mitchell Industry Trends Report 20
21. Mitchell Collision Repair Industry Data (con't.)
Original Equipment Manufacturer (OEM) Parts Use in Dollars
In Q2-2010, OEM parts represented a mere 67.9% of all parts dollars specified by Mitchell-equipped
estimators. This is yet another decline from previous quarters and reflects a continuing trend.
OEM Parts, as a % of Total Parts Dollars per Appraisal
74.4% 74.4% 72.8% 70.7% 68.8% 67.9%
Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10
Aftermarket Parts Use in Dollars
In Q2-2010, 12.8% of all parts dollars recorded on Mitchell appraisals were attributed to Aftermarket
sources—up significantly from Q2-2009. Aftermarket parts use has now topped 12% for the last few
quarters and may soon hit a record 13%.
Aftermarket Parts, as a % of Total Parts Dollars per Appraisal
10.6% 10.4% 11.0% 11.7% 12.7% 12.8%
Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10
Remanufactured Parts Use in Dollars
Currently listed as “Non-New” parts in our estimating platform and reporting products, Remanufactured
parts currently represent 5.8% of the average gross parts dollars used in Mitchell appraisals during
Q2-2010. This reflects another increase, offsetting the decrease in OEM parts use.
Non-New/Remanufactured Parts, as a % of
Total Parts Dollars per Appraisal
4.6% 4.7% 4.8% 5.2% 5.4% 5.8%
Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10
Like Kind and Quality Parts Use in Dollars
LKQ parts constituted 13.4% of the average parts dollars used per appraisal during Q2-2010—
reflecting a .9 point relative increase from this same period last year. LKQ parts use continues to
benefit from OEM’s decline.
LKQ Parts, as a % of Total Parts Dollars per Appraisal
10.4% 10.5% 11.4% 12.5% 13.1% 13.4%
Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10
Mitchell Industry Trends Report 21
22. Mitchell Collision Repair Industry Data (con't.)
Paint and Materials
Mitchell Product Solution:
During Q2-2010, Paint and Materials made up nearly 10.9% of our average appraisal Refinishing
value—representing a .4-point relative increase from Q2-2009. Represented differently, the Materials
average paint and materials rate—achieved by dividing the average paint and materials Calculator
allowance per estimate by the average estimate refinish hours—yielded a rate of $29.56 (RMC)
per refinish hour in this period, compared to $28.57 in Q2-2009.
Mitchell’s Refinishing Materials Calculator™
Editor’s note: The chart shown now excludes comprehensive estimates in the calculations (RMC) provides accurate calculations for
to avoid seasonal hail related swings in the data reported. refinishing materials costs by incorporating
a database of over 10,000 paint codes from
Paint and Materials, by Quarter eight paint manufacturers. It provides job-
specific materials costing according to
10.9% $29.56
color and type of paint, plus access to the
10.5% $28.87
10.2% 10.0%
$28.57 10.3% only automated, accurate, field-tested, and
$27.30 $27.56 industry-accepted breakdown of actual costs
9.5%
$26.13 of primers, colors, clear coats, additives, and
other materials needed to restore vehicles
Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 to preaccident condition. RMC is now also
fully integrated with UltraMate and UltraMate
Premier Suite for total ease of use. For more
% of Appraisal $ Rate = Average P&M $/Average Refinish Hours/Estimate information on RMC, visit Mitchell’s website
at www.mitchell.com.
Labor Analysis
Average body labor rates rose in some of our sample states when Average Body Labor Rates and Change by State
comparing the average labor rate from the first half of in 2009 to the
same period of 2010. First Half First Half $ %
2009 2010 Change Change
% Average Labor Dollars by Type Arizona 47.00 48.46 1.46 3%
California 49.18 49.87 0.69 1%
Refinish (32.7%)
Florida 41.78 41.80 0.02 0%
Hawaii 43.31 43.75 0.44 1%
Parts Replacement (25.8%) Illinois 47.08 47.52 0.44 1%
Michigan 41.75 42.24 0.49 1%
New Jersey 44.76 44.22 -0.54 -1%
Parts Repair (41.5%) New York 46.01 46.10 0.09 0%
Ohio 42.58 42.80 0.22 1%
Rhode Island 44.73 44.69 -0.04 0%
Texas 42.70 42.43 -0.27 -1%
Adjustments
In Q2-2010, the percentage of adjustments made decreased from the same quarter in the previous year. The dollar amount
of betterment taken increased a mere $1.81 compared to Q2-2009 levels. Average appearance allowances in Q2-2010 were
$1.27 higher than in the same period of 2009.
Adjustment $ and %’s
Date Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10 Pt$/Change % Change
% Adjustments Est 4 3.42 2.84 3.52 3.71 3.44 -0.08 -2%
% Betterment Est 3.21 2.59 2.02 2.67 2.87 2.6 -0.07 -3%
% Appear Allow Est 0.56 0.57 0.58 0.6 0.62 0.57 -0.03 -5%
% Prior Damage Est 4.52 4.55 4.74 5.2 5.13 5.38 0.18 3%
Avg. Betterment $ 114 116.66 123.06 121.1 117.42 122.91 1.81 1%
Avg. Appear Allow $ 168.81 177.87 185.35 184.68 183.9 185.95 1.27 1%
Mitchell Industry Trends Report 22