Volume Ten Number Three
                                                                 Q3 2010
                         ...
Industry Trends
                                                                                                          ...
Quarterly Feature

Are Hybrids as Green When it
Comes to Their Claims Costs?
BY GREG HORN
Vice President of Industry Relat...
Quarterly Feature: Are Hybrids as Green When it Comes to Their Claims Costs? (con’t.)


What about claims costs?
Our recen...
Quarterly Feature: Are Hybrids as Green When it Comes to Their Claims Costs? (con’t.)


counterparts. The number of
OEM pa...
The Economy & Short-Term Energy Outlook
The Economy
ACCORDING TO A STATEMENT RELEASED ON JULY 14, 2010, THE FEDERAL
OPEN M...
The Economy & Short-Term Energy Outlook (con't.)

in income, wealth, and consumer sentiment. Real disposable personal inco...
The Economy & Short-Term Energy Outlook (con't.)

than in recently projected for 2010. Most of the increase in the price i...
Current Events in the Collision Industry
 Auto Body Employment Report: Decline Continues
                                 ...
Current Events in the Collision Industry (con't.)

The average weekly wage across all employees was $759.22 in April, down...
Current Events in the Collision Industry (con't.)

                           Average Weekly Production Hours

           ...
Current Events in the Collision Industry (con't.)


                       PRODUCTION &
                     NON-SUPERVISO...
Current Events in the Collision Industry (con't.)

that Kitemark has compared to I-CAR. Not many people outside of the col...
Current Events in the Collision Industry (con't.)

Volkswagen Announces Certified Collision Repair Facility Program
      ...
Motor Vehicle Markets
New Vehicle Sales
According to Ward’s Auto, total new light-vehicle sales increased through June, 20...
Motor Vehicle Markets (con't.)

  Ward’s 10 Best Selling                        Cars                                      ...
Mitchell Collision Repair Industry Data
The following information was assembled from industry-wide appraisal data uploaded...
Mitchell Collision Repair Industry Data (con't.)

Collision Losses                                                        ...
Mitchell Collision Repair Industry Data (con't.)

Third-Party Property Damage
In Q2-2010, our initial industry average gro...
Mitchell Collision Repair Industry Data (con't.)

Average Appraisal Make-up
This chart compares the average appraisal make...
Mitchell Collision Repair Industry Data (con't.)

Original Equipment Manufacturer (OEM) Parts Use in Dollars
In Q2-2010, O...
Mitchell Collision Repair Industry Data (con't.)

Paint and Materials
                                                    ...
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
Informe 2 Trimestre de la Industria de la Reparacion en EE.UU
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Informe 2 Trimestre de la Industria de la Reparacion en EE.UU

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
  15. 15. Motor Vehicle Markets New Vehicle Sales According to Ward’s Auto, total new light-vehicle sales increased through June, 2010, a surprising 16.8% compared to the same period last year—with a total of 5,600,937 vehicles sold. Domestic cars sales increased by a healthy 22%—signaling that domestic car offers are what consumers want. Import cars increased by only 1%—a sign that this may be a long-term shift in consumer taste. Light trucks increased by 18%—driven by the domestic truck increase, offsetting a 2.9% import decline. Ward’s U.S. Light Vehicle Sales Summary January-June 2010 Number of Vehicles 0 2m 4m 6m Domestic Cars 1,956,309 22.8 Import Cars 868,554 1.0 Total Cars 2,824,863 15.2 Vol % Change from 2009 Sales Domestic Light Trucks 2,354,076 23.4 Import Light Trucks 421,998 -2.9 Total Light Trucks 2,776,074 18.5 Domestic Light Vehicles 4,310,385 23.1 Import Light Vehicles 1,290,552 -0.3 Total Light Vehicles 5,600,937 16.8 Ward’s U.S. Light Vehicle Sales by Company January-June 2010 Number of Vehicles 0 2m 4m 6m Chrysler 525,523 12.0 Ford 970,884 27.2 GM 1,077,116 14.3 International (Navistar) 493 548.7 North America Total 2,574,016 18.4 Honda 593,909 11.9 Hyundai Group 425,852 20.9 Vol % Change from 2009 Sales Isuzu 904 6.4 Mazda 115,719 15.3 Mitsubishi 26,490 0.1 Nissan 440,332 26.6 Subaru 125,960 35.0 Suzuki 11,549 -48.5 Tata 20,815 14.5 Toyota 846,542 9.9 Asia Total 2,608,072 15.3 BMW 121,585 6.2 Daimler 110,483 17.8 Porsche 10,983 13.7 Saab Spyker 1,346 -75.0 Volkswagen 174,452 29.4 Europe Total 418,849 17.0 Total Light Vehicles 5,600,937 16.8 Source is country of manufacture. Domestics are from U.S., Canada, Mexico. Imports are from overseas. Light vehicles are cars and light trucks (GVW Classes 1-3, under 14,001 lbs.). DSR is daily sales rate. Source: Ward’s AutoInfoBank © Copyright 2010, Ward’s Automotive Group, a division of Penton Media Inc. Redistribution prohibited. Mitchell Industry Trends Report 15
  16. 16. Motor Vehicle Markets (con't.) Ward’s 10 Best Selling Cars Trucks/Vans/SUVs Cars and Trucks 1. Toyota Camry 154,239 1. Ford F Series 240,345 January-June 2010 2. Honda Accord 147,669 2. Chevrolet Silverado 166,782 3. Toyota Corolla/Matrix 140,501 3. Ford Escape 98,980 Note: Table combines imports and domestics. Source: Ward’s AutoInfoBank. 4. Honda Civic 133,601 4. Honda CR-V 86,870 5. Nissan Altima 112,115 5. Dodge Ram Pickup 84,869 © Copyright 2010, Ward’s Automotive Group, 6. Ford Fusion 111,175 6. Toyota RAV4 81,000 a division of Penton Media Inc. 7. Chevrolet Malibu 108,317 7. Chevrolet Equinox 66,990 Redistribution prohibited. 8. Ford Focus 89,783 8. Chrysler Town & Country 60,937 9. Chevrolet Impala 89,491 9. Ford Edge 56,027 10. Hyundai Sonata 89,249 10. Ford Econoline 55,708 Used Vehicle Sales – Current Monthly Index Manheim Used Vehicle Value Index June 2009 – June 2010 BY TOM WEBB 123 Chief Economist – Manheim 121 Manheim Index Declines in June 119 Wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis) slipped 0.7% in June. Before the 117 seasonal adjustment, prices declined by 1.5%. The Manheim 115 Used Vehicle Value Index for June was 120.2, which represented a 5.3% increase from a year ago. 113 The sustained and very strong upward movement in wholesale 111 prices, which began at the start of 2009, appears to have come 109 to a natural end. This was a result of the inevitable, but rather flexible, ceiling imposed by new vehicle prices and the leveling off 107 of retail demand amidst an anemic labor market and increased 105 concern as to the recovery’s strength and longevity. In June, the biggest weakening in demand was for vehicles in the $7,000 to 103 $9,000 price range. 101 99 97 Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun 09 09 09 09 09 09 09 10 10 10 10 10 10 Source: Manheim Consulting Mitchell Industry Trends Report 16
  17. 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. 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. 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. 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. 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. 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

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