Friday, 12 December 2014 00:00

Using Industry Statistics to Your Advantage with Mike Anderson

Statistics are a great way for any business, organization, or industry to figure out what areas need growth and improvement, and why. Mike Anderson of CollisionAdvice presented statistics helpful to every corner of the collision repair industry during his SCRS seminar at SEMA 2014. The following industry statistics, both regional and national, were taken from Anderson’s PowerPoint. The original sources are credited in each section.  

Click HERE to download a PDF of this article.

Mike Anderson of CollisionAdvice.com updates his packed seminar on the recent industry statistics.

 

Studies by The Romans Group found:

  • There are 13.3 million insured auto accidents annually
  • Customers pay $3.2B (10.2% of total shop $)
  • Insurers paid  $28.2B
  • Total repair revenue is $31.4B
  • Up 2.2% from $30.7B in 2013“A lot more people coming to your shops are paying out of their pocket,” said Anderson. “There are people in the industry looking to capitalize on that.”

Trends- Higher deductibles and more customer-pay work means shops are:

  • Offering no-interest financing
  • Offering 90 days same-as-cash
  • Suggesting gap insurance  (www.4ubenefits.com)
  • Using tools to show how claim may impact rates
  • Offering good-better-best options

“According to a focus group study by 3M Automotive, the biggest complaint customers had was a lack of options,” said Anderson. “People want to feel like they have a part in the decision making. For example, a guy comes in with his 16-year-old who just crashed her car and needs the headlight fixed. Say, ‘we can fix it for $100, and it will still be safe and effective, but won’t look as good. The best option would cost $200.’”

Collision Shop Population Stats:
(US Census Bureau, U.S. BLS, and Crash Network)

  • Preliminary government data indicates 2014 will be third year in a row with growth in number of shops
  • Still down from  5.7% peak in 2005, but up 3.1% from 2011
  • The 34,430 total does not include more than 6,300 dealership body shops, nor small shops without payroll“Since 2011, we’ve been seeing an increase in shops and the number of people working in the collision repair industry,” said Anderson. “The biggest area of increase is the office – we now have more people working in administration than ever before.”

‘Backyard’ Competition Stats:
(U.S. BLS, CollisionWeek)

  • In 2011, 83,721 individuals reported wide variation in annual wages
  • Top painters average $70,420 compared to $25,700 for lowest 10%
  • Top body techs average $66,870 compared to $22,970 for lowest 10%
  • Top estimators average $83,990 compared to $32,390 for lowest 10%

Leasing Continues to Grow

(Edmunds.com)

  • Upside for shops: Leased vehicles tend to get repaired
  • Potential downside for shops: Rising numbers of off-lease return vehicles in the coming years can drive down used car prices, which can drive up total losses

Labor Rates vs. Overall Inflation

(Crash Network)

  • When looked at nationally, labor rates have not kept up with inflation.
  • Overall U.S. inflation 2006-2013 was 15.6%.
  • The national average rates for body/paint, frame and mechanical rose 14% or less during that period.
  • The national average rate for paint materials went up 19.7% from 2006-2013

Average Labor Hours per Claim:

(Mitchell International)

  • 2011: Avg. repair labor hours - 8.8, avg. removal of labor hours- 6.54, avg. refinish hours- 9.19
  • 2012: 8.78 hours, 6.85 hours and 9.23 hours
  • 2013: 8.74 hours, 6.94 hours, and 9.25 hours
  • 2014 (1Q): 8.31 hours, 6.94 hours, 9.13 hours

Uninsured Drivers

(Insurance Research Council)

  • All but one state (New Hampshire) requires drivers to have insurance
  • Percentage of uninsured motorists rises or falls with unemployment (so percentage has fallen since 2009)
  • About 29.7 million drivers  (12.6%) of drivers nationally lack insurance, down from 14.9% in 2003

Inflation Comparison

(Collision Week)

  • Over the last 12 months, price of auto insurance and body work increased above the rate of inflation
  • And since 2009, body work has risen 13.11%, slightly ahead of the overall inflation rate of 12.65% during that period
  • But auto insurance costs have risen considerably higher, up 24.53% since 2009Anderson says insurance companies need “service, speed, and accuracy” from body shops, in order to be as effective as possible.  

“Body shops should give extraordinary service, fix the car fast with quality, which is possible with a team system, allowing for more hands on deck and be accurate - know when the car is going to be returned to the customer, and stick with that time.”

The Romans Group studies show:

  • Of the largest 68 MSOs, almost 28% are in the West, and almost 26% are in the Southeast
  • The Northeast has the lowest MSO representation (just 5.6%)
  • Of the largest 68, more than half (39) do business in only one state

The 68 MSOs with annual sales over $20 million:  
(The Romans Group)

  • Processed 15.5% of the $31.4 billion in collision revenue (up from 14.7% the prior year)
  • When combined with four largest franchise branded consolidators, they processed 19% of all collision revenue
  • Had sales of about $4.9 billion in 2013 (up $400 million from 2012
  • Have annual average sales of $3.5 million per location
  • The top 10 MSOs include four dealer-owned and six independent MSOs

CCC information services answers the question, “Why aren’t MSOs adding DRPs as much as they did 2000-2009?”

  • As larger insurers gain market share, more claims are going through fewer DRPs
  • One major insurer replaced traditional DRP by placing adjusters in shops, reducing many shops’ DRP counts by one
  • Some insurers are allowing more shops to write and upload an initial estimate even if not part of the insurer’s formal DRP program
  • During recession, drop in claims may have allowed insurers to process higher percentage of claims through staff appraisers rather than through DRP shops
  • Some of the “regional MSOs” with higher DRP counts may have expanded across state lines, shifting them into “national MSOs” and thus leading to reduction in the average DRP count for regional MSOs

“I think DRPs have made body shops lazy,” said Anderson. “What happens is once they’re certified by the DRPs, they stop worrying about servicing the customer, building that rapport, and marking their business, and then when things don’t work right and the DRP wants possession, the body shop gets all mad. At the end of the day, we need to take responsibility.”  If you’re not happy with the way your shop is performing, Anderson says, “take responsibility – it’s not ‘we’ it’s ‘I;’ what can I do differently as a shop owner to impact my community and the industry?”

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