Reporte de la Industria de la Reparacion de Mitchell en EEUU


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Reporte de la Industria de la Reparacion de Mitchell en EEUU

  1. 1. Volume Ten Number Four Q4 2010 Published by Mitchell International, Inc.Industry TrendsReport Feature in this issue: Quarterly Feature: The Trend in Estimate Severity is Part Inflation and Part Parts. by Greg Horn Page 3
  2. 2. Industry Trends Volume Ten Number Four Q4 2010Report 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: The Trend in Estimate Severity is highlights, plus illuminating statistics and measures, and more. Stay informed on ongoing and emerging Part Inflation and Part Parts. trends impacting the industry, and you, with the Industry Trends Report! 6 The Economy & Short-Term Energy Outlook 8 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 Editor in Chief, Vice President of Industry Relations Used Vehicle Sales 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: Labor Analysis For data analytics, please contact: Adjustments Gail Sloan 23 Procedure Page Updates Vice President of Licensing and Corporate Accounts 24 Total Loss (858) 368-7869 e-mail: 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 associated with the used vehicle market for more than 30 Collision Casualty Statistics 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 theMitchell 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 Repairindustries. The company’s comprehensive solution portfolio streamlines the entire auto physical damage, bodilyinjury and workers’ compensation claims processes. Mitchell enables millions of electronic transactions betweenmore than 30,000 business partners each month to enhance partner productivity, profitability, and customersatisfaction. For more information on Mitchell International, please visit our website at Mitchell Industry Trends Report 2
  3. 3. Quarterly FeatureThe Trend in Estimate Severityis Part Inflation and Part Parts.Study Reaffirms Unexpected:When OEM part prices increase, estimate severity decreases.By GReG HoRNVice President of Industry Relations, Mitchell International About the author…In last year’s Q4-2009 issue of the Industry Trends Report, we explored different slices Greg Hornof parts pricing data by vehicle origin and part type via a new mechanism—the Mitchell Vice President of Industry Relations,Collision Parts Price Index (MCPPI). As you may recall, we created the MCPPI using the Mitchell InternationalConsumer Price Index (CPI) as our model since the CPI is a widely recognized gauge used Greg Horn joined Mitchell Internationalby many consumers to monitor the general rate of inflation. It is one of the most closely in September of 2006 as Vice Presidentwatched economic indicators because it tracks the rate of inflation for a wide sampling of Industry Relations. In this role, Gregof goods we routinely buy like food and clothing and services we regularly use such as assists the Mitchell sales force in providingtransportation and medical care. custom tailored business solutions to the Property and Casualty Claims andJust in the same way the CPI measures a vast “basket” of goods and compares the prices Automotive Collision Repair industries.month to month, our collision parts basket measures the average collision parts inflationary He provides guidance to Mitchell’s Producttrends. This array ranges from the inexpensive to pricier items and represents the top 20 Management and Business Analyticsmost replaced collision parts for categories including hoods, fenders, headlamps, turn teams, playing an important role in shapingsignals, and side marker lamps. Mitchell’s solution portfolio to ensure that it meets the evolving needs of currentHow did we get everything into our basket? We pulled data from 2003 through the first and future clients. Greg also presentshalf of 2010 and used the results to create weighted average prices for these parts in Mitchell’s Industry Trends Updates ataggregate, setting the base year conferences across the 2003 and equal to 100. Data for Just in the same way Prior to joining Mitchell, Greg servedall OEM part types reflects retailprices, and in the case of LKQ/used the CPI measures a vast as Vice President of Material Damageparts, markups are included in the “basket” of goods and Claims at GMAC Insurance, where he was responsible for all aspects of thepricing. This technique allows us tocompare inflationary trends by part compares the prices month physical damage claims process and the implementation of a unique vehicletype. to month, our collision replacement program along with servingBy once again looking at the top parts basket also measures on the GM Safety Committee. Prior to GMAC, Greg served as Director of20 part types replaced—as we did the average collision parts Material Damage Processes for Nationallast year—we are able to not onlyreaffirm the relationship between inflationary trends. Grange Mutual in Keene, prices and inflation, we canalso get a clear picture of how the recession continues to affect alternate part selectionbehavior. Parts repair also needs to be included in the basket, so to assess how a tougheconomy is affecting parts repair, (a less expensive alternative for insurers and a largermargin operation for shops) we revisited the notion of “substitution”—selecting to repair apart rather than replace it.Chart 1 on the next page shows some rather positive findings, indicating that the overallinflation rate for the first half of 2010 is a modest 1.21 compared to the steady increasefrom 2005-2009.Continued… Mitchell Industry Trends Report 3
  4. 4. Quarterly Feature: Revisiting the Mitchell Collision Parts Price Index (con’t.)Chart 1MCPPI by Year (all part types)125120 118.71 117.50115 114.46 111.92110 107.78105 104.64 100.00 100.841009590 2003 2004 2005 2006 2007 2008 2009 1H10Breaking out the MCPPI by vehicle country of origin in Chart 2 below shows us thatthe value of European cars has increased by 5.20 points respectively from the previousyear—a dramatic increase compared to Domestic and Asian parts indices, which eachincreased less than one point. If you look at the 2008-1H10 time span, you might suspectthat exchange rates are responsible for some of this hike, but the dollar has an almostdirect inverse relationship to the yen against the euro exchange rate, so the Asian partsmanufacturers barely registered an increase. The most likely cause is pricing actions. Useof new OEM parts is much higher for European vehicles than it is for Asian, so any pricingaction taken by the European OEM’s would have a greater effect on the market basket ofdefined parts in the MCPPI.Chart 2MCPPI by Vehicle Origin 137.43135130125120 120.73115 112.78110 asian105 european 100.00100 domestic9590 2003 2004 2005 2006 2007 2008 2009 1H10When we take it to a more granular level and split the data out by part type in Chart 3 onthe next page, we see a continuation of the trend first noticed when we initially created theMCPPI. The LKQ/used parts price index has actually decreased and has continued to doso in the 2009-2010 time span, with the aftermarket price index continuing to increase ata rapid rate. However, the increase of market basket prices for new OEM parts slowed in2009-2010 from 2008-2009’s pace, increasing only 3.02 points. Mitchell Industry Trends Report 4
  5. 5. Quarterly Feature: Revisiting the Mitchell Collision Parts Price Index (con’t.)Chart 3MCPPI by Part Type135 132.83130 128.06125 126.39 oem120 aftermarket115110 lkq105 remanufactured 100.0010095 94.2990 2003 2004 2005 2006 2007 2008 2009 1H10 NEW!If we leverage the data further, there are also a few more conclusions that we can drawfrom the newest look at the MCPPI in terms of LKQ/used parts. For one, the increasing Industrynumber of overseas buyers of salvage vehicles has not restricted the use of salvage parts,nor has it caused the price of those salvage parts to increase as evidenced by Chart 3 (seepage 21 for the latest US parts trends data). Secondly, LKQ/used parts index performancehas softened the overall inflation rate of all parts, keeping the index for 2010 at 94.29 whenthe most used part type, new OEM parts, came in at 126.39. TrendsWith parts representing approximately 42 percent of the average repairable estimatedollars, you better believe they have a significant influence on the overall cost of a collisionrepair estimate. If you take the time to understand parts use and how inflation affects this Liverate, you will also understand where estimate severity is trending and why—another critical Visit www.mitchell.comelement that impacts your business. to sign up for these free educational webinars. YOUR KEY TAKEAWAY: If you The subjects range from take the time to understand parts roundtable discussions use and how inflation affects this with industry experts to live rate, you will also understand presentations of the studies where estimate severity is trending presented in our Industry and why—another critical element Trends Report. that impacts your business. Mitchell Industry Trends Report 5
  6. 6. The Economy & Short-Term Energy OutlookThe EconomyACCoRDING To A STATeMeNT ReLeASeD oN oCToBeR 12, 2010, THe FeDeRALoPeN MARKeT CoMMITTee decided to maintain the target range for the federal fundsrate at 0 to 1/4 percent, anticipating that economic conditions, including low rates ofresource utilization, subdued inflation trends, and stable inflation expectations, are likely towarrant exceptionally low levels for the federal funds rate for an extended period.The labor market situation continues to improve only slowly. The unemployment rate tickedup in August and remained close to the level that has prevailed since the beginning of thisyear. Initial claims for unemployment insurance remain at an elevated level. In addition,other indicators of labor demand, such as measures of hiring and job vacancies, have notimproved.Industrial production increased solidly in July and then rose more moderately in August.Manufacturing production was boosted in July by a pickup in motor vehicle assemblies asautomakers replenished lean stocks at dealers. However, the production of motor vehicleswas pared back in August. More broadly, the output of high-technology items and otherbusiness equipment expanded at a solid pace in July and August.Real personal consumption expenditures rose modestly in July, similar to the averageincrease over the preceding two months. Data for retail sales and the sales of light motorvehicles pointed to a moderate gain in real consumer spending in August. Real disposablepersonal income declined a bit in July after increasing at a solid pace in the second quarterof this year. The personal saving rate edged down in July but remained near the high levelregistered in the second quarter. Indicators of household net worth are mixed; home pricesmoved down in July, while equity prices inched up. After falling back in July, consumerconfidence remained downbeat in August and early September, with households morepessimistic about the outlook for their personal financial situations and general economicconditions.Housing activity, which had been supported earlier in the year by the availability ofhomebuyer tax credits, softened further in July. Sales of new single-family homes remainat a depressed level. Sales of existing homes fell substantially in July, and the index ofpending home sales suggests that sales were muted in August. Starts of new single-familyhouses in July and August were below the low level seen in June, and the number of newpermits issued in August appeared to signal little improvement in new homebuilding. Houseprices declined modestly in July after changing little, on net, in recent months.Inflation is projected to remain subdued, with headline and core inflation little changedfrom previous expectations. The current and projected wide margins of economic slack areexpected to contribute to a small slowing in core inflation in 2011, which is anticipated to betempered by stable inflation expectations. Inflation is projected to change little in 2012, asconsiderable economic slack is expected to remain even as economic activity is anticipatedto strengthen.The U.S. international trade deficit narrowed in July after widening in June. The rise inexports in July more than offset their decline in June, as overseas sales of capital goodsrose sharply. Most other major categories of exports were little changed in July, althoughexports of automotive products posted their first decline since May 2009. The narrowingof the trade deficit in July also reflected a broad-based decline in imports following theirlarge increase in June. Imports of consumer goods fell substantially in July, while imports ofindustrial supplies, capital goods, and automotive products also moved down. In contrast,imports of petroleum products remained about flat in July.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: Mitchell Industry Trends Report 6
  7. 7. The Economy & Short-Term Energy Outlook (cont.)Increases in foreign economic activity appear robust, on average, for the second quarterof 2010. In particular, gross domestic product (GDP) grew strongly in the emerging marketeconomies, even though gains in China apparently moderated. Among the advancedforeign economies, Europe posted a notable rise in economic activity in the secondquarter; rapid expansion in Germany more than offset weaker outcomes in other euro-area economies, particularly those experiencing financial stress related to concerns abouttheir fiscal situations and potential vulnerabilities in their banking sectors. In Canada andJapan, the rise in real GDP slowed noticeably in the second quarter. Recent indicators offoreign economic activity for the third quarter, including data on exports, production, andpurchasing managers indexes, generally pointed to a slowing in the pace of expansionin economic activity abroad. Headline inflation rates in foreign economies generally wererestrained in the second quarter by a deceleration in food and energy prices, but pricesappeared to be rising a bit more rapidly of late.Overall, projections for the increase in real economic activity over the second half of 2010are expected to be lower than previously anticipated. The forecast for growth next yearis also slightly lower than initially projected, although a moderate strengthening of theexpansion in 2011, as well as a further pickup in economic growth in 2012, is expected.Economic data suggests that the underlying level of demand is weaker than previouslyprojected. Moreover, the outlook for foreign economic activity also appears a bit weakerthan originally anticipated. In the medium term, the recovery in economic activity isexpected to receive support from accommodative monetary policy, further improvements infinancial conditions, and greater household and business confidence. The increase in realGDP is projected to be sufficient to slowly reduce economic slack, although resource slackis anticipated to still remain elevated at the end of 2012.Short-Term Energy OutlookThe U.S Energy Information Administration (EIA) projects average household expendituresfor space-heating fuels will total $986 this winter (October 1 to March 31), an increaseof $24, or 2.5 percent, from last winter. The Administration is also projecting higherexpenditures in all fuels except electricity, where expenditures are expected to declineby 2 percent. This forecast reflects moderately higher prices for all the fuels, althoughslightly milder weather than last winter for much of the Nation should contribute to lowerconsumption in many areas.EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $80per barrel this winter, a $2.50-per-barrel increase over last winter. The forecast for averageWTI prices rises gradually to $85 per barrel by the fourth quarter of 2011 as U.S. andglobal economic conditions improve. EIA’s forecast assumes U.S. gross domestic product(GDP) grows by 2.6 percent in 2010 and 2.1 percent in 2011, while world oil-consumption-weighted GDP grows by 3.8 percent and 3.3 percent, respectively, in 2010 and 2011.Estimated U.S. carbon dioxide (CO2) emissions from fossil fuels, which declined by 7.0percent 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 haveshifted to the downside. Economic expansion is likely to be strong enough to continueraising resource utilization, albeit more slowly than previously anticipated. Inflation is likelyto stabilize near recent low readings in coming quarters and then gradually rise towardmore 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: Mitchell Industry Trends Report 7
  8. 8. Current Events in the Collision IndustrySmall Business optimism Index Remains at Recessionary Level Excerpted From: CollisionWeek—October 2010The National Federation of Independent Business Index of Small Business Optimismgained 0.2 points in September, rising to 89.0. The Index has been below 93 every monthsince January 2008 (32 months), and below 90 for 26 of those months, all readings typicalof a weak or recession-mired economy.“The downturn may be officially over, but small business owners have for the most partseen no evidence of it,” said NFIB Chief Economist Bill Dunkelberg.Average employment growth per firm was negative 0.26, and has been negative in all buttwo months since January 2008. Eleven percent (seasonally adjusted) reported unfilled job AN eDIToR’S NoTe…openings, unchanged from August and historically very weak. Over the next three months, These are signs that the recovery8 percent plan to increase employment (unchanged), and 16 percent plan to reduce their may be stalling for the collisionworkforce (up three points), yielding a seasonally adjusted net-negative 3 percent of business, and business owners needowners planning to create new jobs, down four points from August, an unexpected reversal to prepare for such a job creation prospects.The frequency of reported capital outlays over the past six months rose one point to 45percent of all firms, a point above the 35-year record low.The net percent of all owners (seasonally adjusted) reporting higher nominal sales inthe past three months lost a point, falling to a net-negative 17 percent, 17 points betterthan June 2009 (the recession bottom) but still indicative of very weak customer activity.Unadjusted, 23 percent of all owners reported higher sales (last three months compared toprior three months, down two points) while 34 percent reported lower sales (up one point).Widespread price cutting continued to contribute to reports of lower nominal sales.The net percent of owners expecting higher real sales lost three points from August,falling to a net-negative 3 percent of all owners (seasonally adjusted)—a dismal outlook.Not seasonally adjusted, 26 percent expect improvement over the next three months, 37percent expect declines.earningsA net-negative 33 percent of owners reported positive profit trends, deteriorated threepoints in September and 29 points worse than the best expansion reading reached in 2005.The persistence of this imbalance is bad news for the small business community. Profitsare important for the support of capital spending and expansion. Not seasonally adjusted,16 percent reported profits higher (down two points), but 45 percent reported profits falling,a three point increase.Owners continued hold the line on compensation, with 7 percent reporting reduced workercompensation and 10 percent reporting gains. Seasonally adjusted, a net 3 percentreported raising worker compensation, only five points better than February’s record lowreading of negative 2 percent.CreditOverall, 91 percent of small business owners reported that all their credit needs weremet or that they were not interested in borrowing. Nine percent reported credit needs notsatisfied, and a record 53 percent said they did not want a loan.“Members of Congress fled with no action on important issues such as extending currenttax rates, leaving the cloud of uncertainty larger and darker,” said Dunkelberg. “In response,consumer sentiment fell and owner optimism remained anchored solidly in recessionterritory. Owners won’t make spending commitments when sales prospects remain weakand decisions such as tax rates and labor costs remain so uncertain.” Mitchell Industry Trends Report 8
  9. 9. Current Events in the Collision Industry (cont.)Defining Like Kind and Quality Excerpted From: CollisionWeek—October 2010What does it mean when an aftermarket part is said to be ‘equivalent’ to OEM?The July Collision Industry Conference presentations on various aftermarket partsheightened the call to mandate that aftermarket structural parts manufacturers ensure thatthey produce safe, quality parts to a standard specification that includes proper material,dimensions and form process. A case was presented at that meeting indicating that the useof material, form and thickness different than the OEM original part could lead to increaseddamageability or affect the vehicle’s restraint systems. The conclusion to be drawn wasthat aftermarket structural parts must be manufactured to be of like kind and quality, or“equivalent,” to OEM in order to perform like OEM.Equivalent to OEM, or like kind quality with respect to replacement parts, is specified inregulations in 20 states, and in defining the term like kind quality, the OEM representativeat CIC stated that in order to qualify as like kind and quality, a replacement aftermarket partmust be “equivalent” to the OEM branded part. But what does equivalent mean? AN eDIToR’S NoTe…“Which parts are being referenced, the original production parts or OEM service parts? The term equivalent in the case ofThese questions are raised by Diamond Standard after a study of four OE manufacturers’ manufacturing variances meansdata for front bumper weight, thickness, tensile and yield strength properties to gauge their that the equivalent part should fallinterpretation of equivalency in creating a certifiable alternative part,” said Mike O’Neal, in the same engineering ranges asPresident of Diamond Standard. those established by the original equipment parts. The issue is thatAftermarket parts manufacturer Diamond Standard has published the results of a series of some of today’s aftermarket partstests on OEM parts conducted to measure their characteristics including dimensions and do not fall in those ranges and thenmaterial strength, in order to illustrate the variances that exist in OEM factory parts. cannot truly be called “like kind and quality.” Weight (lb.) Current High Low Average Service Part 37.78 35.35 36.56 37.75 Material Thickness Current High Low Average Service Part 0.0790 0.0714 0.0752 0.0761 yield (psi) Current High Low Average Service Part 44800 34700 39750 40400 Tensile Current High Low Average Service Part 57000 45400 51200 52300In this example, the weight of the OEM part falls within a range that can vary by plus orminus 3.3 percent. The material thickness varies by five percent, and the tensile strengthshows a variance of plus or minus 11 percent from average.The examination of OEM parts shows that there is no single measurement of strength ordimension but there is a definite range in the parts that must be viewed as equivalent oracceptable and would not affect part performance, restraint systems and vehicle safety.Diamond Standard explains that the ranges are the realities of the initial production run on Mitchell Industry Trends Report 9
  10. 10. Current Events in the Collision Industry (cont.)the part moving to the shorter runs of service parts or even the use of different tier 2 or3 suppliers to manufacture the parts. Raw material spot buying, the state of the economyand volatility of the steel market can also contribute to normal and acceptable variancesin material.Equivalency is shown by this study to have a definite range. According to DiamondStandard, these results are not meant to imply that OEM manufacturers or their suppliersare in any way not diligent in their pursuit of safe, reliable and consistent quality replacementparts. Nor does it attempt to defend those aftermarket manufacturers who are knowinglynot diligent in replicating the quality or safety of structural replacement parts.“The charge for Diamond Standard is to follow the criteria built within the original part andfall within the ‘acceptable’ mean values of the production and service parts,” said O’Neal.Achieving that mark of quality through vigorous third party testing provides the industry atrue alternative to the part it replaces. “This is our assurance to the industry that DiamondStandard parts are safe and reliable alternatives to use,” said O’Neal.Download charts that show a sampling of the results obtained by Diamond Standard’sexamination of OEM parts across multiple lot numbers, years and manufacturers fromproduction parts to current service parts.Deer-Vehicle Collision Frequency Up 21 Percent in Five years Excerpted From: CollisionWeek—October 2010While the number of miles driven by U.S. motorists over the past five years has increasedjust two percent, the number of deer-vehicle collisions in this country during that time hasgrown by ten times that amount.Using its claims data, State Farm, the nation’s leading auto insurer estimates 2.3 millioncollisions between deer and vehicles occurred in the U.S. during the two-year periodbetween July 1, 2008 and June 30, 2010. That’s 21.1 percent more than five years earlier.The average property damage cost of these incidents was $3,103, up 1.7 percent from ayear ago.For the fourth year in a row, West Virginia tops the list of those states where a driver is mostlikely to collide with a deer. Using its claims data in conjunction with state licensed drivercounts from the Federal Highway Administration, State Farm calculates the chances of a AN eDIToR’S NoTe…West Virginia driver striking a deer over the next 12 months at 1 in 42. Deer hits drive average severity upIowa is second on the list. The likelihood of a licensed driver in Iowa striking a deer within for comprehensive claims aroundthe next year is 1 in 67. Michigan (1 in 70) is third. Fourth and fifth on the list are South this time of year, so if you find yourDakota (1 in 76) and Montana (1 in 82). comprehensive severity has spiked,Pennsylvania is sixth, followed by North Dakota and Wisconsin. Arkansas and Minnesota do a little research—this may be why.round out the top 10.The state in which deer-vehicle collisions are least likely is still Hawaii (1 in 13,011). Theodds of a Hawaiian driver hitting a deer between now and 12 months from now are roughlyequivalent to the odds of finding a pearl in an oyster shell.U.S. map showing likelihood of deer-vehicle collision by stateChart listing likelihood of vehicle-deer collision by state Mitchell Industry Trends Report 10
  11. 11. Current Events in the Collision Industry (cont.)BRIC countries are developing into economic powerhouses of automobileproduction By: Greg Horn Excerpted From: ABRN—August 2010I have talked a lot about the looming arrival of Chinese cars in the United States, but thereare other countries that could be importing cars here—countries that are developing quicklyinto economic powerhouses of automobile production.As a group, the term BRIC refers to the related economies of Brazil, Russia, India andChina—an acronym coined by Jim O’Neill of Goldman Sachs back in 2001. GoldmanSachs argues that these countries are developing so rapidly that by 2050 their combinedeconomies could eclipse the world’s current richest countries. Together they account formore than a quarter of the world’s land area and more than 40 percent of its population.China already is the world’s largest automobile producer, with India hot on its heels. Inthe U.S., we haven’t seen much from Brazil and Russia. The Volkswagen Fox was the lastBrazilian-made car on U.S. roads, imported from 1987 to 1993 as an inexpensive optionamid rising costs of Volkswagen’s other offerings.Outside of that budget-conscious car, Brazil is home to production facilities for someof the world’s largest automakers. General Motors, Ford, Fiat and Nissan/Renault allhave significant plants in Brazil – making it the world’s sixth largest vehicle producer. Acombination of tax breaks, easier loan terms, and low interest rates have jump-starteddomestic demand for Brazilian cars this year. Brazil also can play the fuel card. Since mostBrazilian vehicles run on “flex fuel,” an ethanol or sugar cane derived alcohol fuel calledalcool, U.S. automakers could look here for help in meeting strict CAFE standards.Thousands of miles away, Russia, even with its existing auto manufacturing infrastructure ina shambles that has not recovered since the break up of the Soviet Union, is a contender.After the dissolution of the Soviet Union, Russia was stuck producing antiquated poorlymade cars like Lada, which bravely exported its cars to Europe and Canada where ownersinevitably waited to see if the body would corrode before the drive train blew up. Today, atrimmed down Russian car industry is ripe for expansion, making strides by partnering withEuropean and Asian manufacturers and banking on the Russian government’s possible$21-billion investment.India and China will be neck and neck in the race to the U.S. finish line. Despite several falsestarts, India’s Mahindra is primed to bring pick ups to 400 U.S. dealers. We’ll see whetherour market embraces a $20,000 mid-size turbo diesel pick up. China’s edge is in entry leveleconomy cars, a market segment that launched most of the imported car makers stake inthe U.S. from Volkswagen to Kia. China’s major stumbling block is its inability to pass safetycrash tests, but with Geely buying Volvo, that problem may be quickly resolved. Brazil isnext in line, hard at work leveraging world partnerships with existing major manufacturersand low assembly labor costs to produce competitively priced entry level B segments.So what should collision repairers expect from the BRIC? Entry level vehicles will hit theWest Coast and Southwest first. Depending on their dealer network, the lack of a parts Mitchell Industry Trends Report 11
  12. 12. Current Events in the Collision Industry (cont.)network infrastructure could cause a collision part shortage. History has taught us thatparts stock and delivery are keys to a successful vehicle brand entry. Just ask formerSterling and Daihatsu dealers.Daihatsu has a great worldwide reputation as a premium Japanese car, but they area forgotten footnote in the U.S. because of parts availability issues. Sterling, a NorthAmerican division of the U.K.’s Rover in collaboration with Honda in the late 1980s andearly 1990s, also met its demise due to parts issues. Dealers I spoke with at the time saidanything Honda assembled was reliable while anything that Rover produced broke, with noreplacement parts available.A lack of reputation will quickly depreciate these new entrants, much like the originalHyundai Excel or Kia Sephia with their dismal resale values. These newbies may benothing but headaches for repairers because they will be more likely to total, and if they arerepairable, you may tie up a bay waiting on parts. Remember this when one of those newbrands asks if you want to become their collision repair partner.Making lean work in the real worldAdopting lean requires more than just process improvements By: Brian Albright Excerpted From: ABRN—October 2010Deploying lean management principles in the autobody repair industry has been a hot topicfor years, but some owners struggle with successfully adopting these techniques. That’sbecause many consultants and managers fail to address the cultural aspects of adoptingthis approach, says Joe Murli, principal at consulting firm Murli & Associates.Murli was originally exposed to lean principles when he was working in the aerospace WASTEmanufacturing industry.“I was wrestling with the question of, how do we keep making these technical improvements,but we come back a year later and things have degenerated, or there was some kind ofbacklash to what we were trying to do?” Murli says. “Our Japanese coaches, while they AN eDIToR’S NoTe…were exceptional teachers on the technical aspects of how you flow work, they were really I truly believe that adopting leanill-equipped to talk about the cultural aspects and a human resources strategy.” practices will make the differenceOne big stumbling block in the collision repair industry is the collaborative nature of lean. between thriving or just surviving inAutobody techs are highly individualistic. “This is very much a ‘lone ranger’ type of industry,” the next five years.Murli says. “You have to get the body techs to collaborate with the front office and themechanical guys and the painters. How do you get the whole value stream really thinkingtogether and flowing the vehicle through the entire system so you have a satisfied customeron the other end?”Murli also says that most people tend to minimize problems in their daily work interactions—the opposite of what lean requires, which is a frequent discussion about problems and howto solve them.“There’s also an issue with leadership modeling,” Murli says. “In autobody shops, themangers who get promoted have worked their way up through the organization by beingseen as a person who can fix problems. In lean, the leadership model is not focusedon that, but on how well managers help build the problem-solving muscle of the wholeorganization. They have to train the employees how to think critically.”There are misalignments between the lean model and how the typical body shop operatesthroughout the repair process. Estimates are written before vehicles are torn down, andparts are ordered after repairs have already begun.“You keep going down the line, and you find that everybody is incentivized to do what’sbest for them individually, but there’s nobody really incentivized to take that customer’s car Mitchell Industry Trends Report 12
  13. 13. Current Events in the Collision Industry (cont.)all the way through the repair process and make it whole, and get them back in their owncar again,” Murli says.To re-align with the lean model, Murli says shops should establish relationships withinsurance companies based on credibility. “The insurance carrier needs to know that whenthe car comes out, the shop will have provided a high-quality repair in the shortest cycletime possible,” he says.Shops also have to align incentives with their parts suppliers so that repairs don’t begin(and parts don’t arrive) until every part needed is available.Pay structures also have to be revisited. “You really have to get out of the percentage of paymethod of paying the technicians,” Murli says. “That’s a tough one with lot of cultural andhistorical barriers. One way to go is to establish an hourly pay rate with team incentives,where they get a basic wage for showing up at work, and the entire team gets an incentivebased on how well cars are flowing through the process.”Blueprinting (or damage analysis) is another important step, but Murli emphasizes thatother improvements also have to happen, like establishing community tools, providingvisual feedback on performance and other tactics.“You can’t let the major breakthrough of damage analysis overshadow other improvements,”Murli says. “You can’t forget that daily reflection process. Every day the team comes togetherand spends 15 minutes talking about how you did and where there are opportunities orimprovement. Those opportunities are small ones, but there are many of them. That’swhat distinguishes mature lean organizations from those that have just put in some basicprocess improvements.”New steels, anti-collision systems will impact reparability and total losses By: Brian Albright Excerpted From: ABRN—October 2010Changes in vehicle designs, structural materials and onboard technology will have asignificant impact on the way collision shops operate. That’s why Jason Bartanen, technicaldirector for I-CAR, and Bob Keith, co-owner of Silver Hammer Body Co. in Omaha andsenior director of education and training at CARSTAR, emphasized the need forongoing training in their Tuesday session, “Vehicle Technology Influences onCollision Repair.”According to the presenters, repairers can expect to see more high-strength and ultra-high-strength steels, as well as aluminum, on higherproduction vehicle models.New metals have already had an impact on collision repair, since most OEMshave introduced advanced steels into their vehicle frames. Repairers often don’tknow these metals are present until they encounter them during a repair. AN eDIToR’S NoTe…“You don’t know it’s there, and then you don’t know what to do with it once you’ve got itin front of you,” Keith says. “You can’t cut it or drill it, and heat can affect the strength of This article mirrors and reaffirmsthe steel. Many of these steels have no potential for reparability, and repairers are still what we have been saying forstruggling to find out where it’s located.” awhile…advanced steels will continue to be a challenge for thisSince OEMs recommend that repairs not be made on many of these new metals, that will industry—increasing costs andmean more replacement of structural components. “If you look at something like the new potential total losses.Ford Fiesta, I’m not sure how much that car is valued at, but if you have to replace structuralcomponents to make it drivable we’re going to look at more total losses,” Keith says.While OEs have made information on the placement of these metals available (in somecases, for a price) and the database vendors are doing a better job of providing information Mitchell Industry Trends Report 13
  14. 14. Current Events in the Collision Industry (cont.)during the appraisal, Keith says it is the shop’s responsibility to stay on top of these designchanges.“It’s up to use from the repairer side to look at these vehicles and create a repair plan,” hesays. “How are we going to repair this thing correctly based on the OE specifications andprocedures? You have to do that research before you ever start the job.”Crash avoidance technologies, like cameras and sensors mounted in the front and rearends of the car, have pushed up repair prices and total losses, too.“You get into the job, and you start encountering these cameras and sensors,” Keith says.“There are high-end headlight systems where if you unplug them, they have to go back tothe OE to have the codes cleared.”That also means there may be fewer collisions, which does not bode well for the industry.“You have to think about what that will do to us 10 or 20 years down the road,” Keith says.Some changes in vehicle design that are meant to improve survival rates in the event ofa collision also have created challenges for repairers. “Honda has come up with a designthat protects the occupants, but it’s doing some strange things as far as creating secondarydamage elsewhere in the vehicle,” Keith says. “Some of these cars are designed to drivethe damage completely through the vehicle.”That’s why education is important; repairers have to be on top of new technologies, and bealert for unexpected secondary damage.And there are even more changes coming. BMW hopes to develop a vehicle built withcarbon fiber, for instance. Shops will need to make an investment in new tooling, scanningequipment and training to continue to provide reliable repairs.“We need to have our folks out there consistently being trained on these new technologies,”Keith says. “Because that’s going to be a key element, not only to having the right toolingand equipment, but having that knowledge base to know where we are going with this stuff.The slightest misstep might affect airbag timing and who knows what else, the way someof these vehicles are designed.” Mitchell Industry Trends Report 14
  15. 15. Motor Vehicle MarketsNew Vehicle SalesAccording to Ward’s Auto, total new light-vehicle sales showed a strong increase this September at 28.5%more than September 2009. Year-to-date sales are up over 10.3% from 2009, and that is remarkable since2009 sales take Cash For Clunkers into account Ward’s U.S. Light Vehicle Sales Summary January-September 2010 Number of Vehicles 0 2m 4m 6m 8m domestic cars 2,917,681 8.7 import cars 1,376,117 -3.4 total cars 4,293,798 4.5 Vol % Change from 2009 Sales domestic light trucks 3,647,401 21.2 import light trucks 657,301 -3.1 total light trucks 4,304,702 16.7domestic light Vehicles 6,565,082 15.3 import light Vehicles 2,033,418 -3.3 total light Vehicles 8,598,500 10.3 Ward’s U.S. Light Vehicle Sales by Company January-September 2010 Number of Vehicles 0 2m 4m 6m 8m Chrysler 816,824 14.7 Ford 1,419,260 21.0 GM 1,634,884 6.8 International (Navistar) 1,118 265.4 north america total 3,872,086 13.4 Geely (Volvo) 41,118 -12.0 Honda 912,436 3.2 Vol % Change from 2009 Sales Hyundai Group 678,072 16.8 Isuzu 1,351 7.5 Mazda 174,770 9.1 Mitsubishi 41,392 -3.4 Nissan 673,701 16.1 Subaru 193,614 22.2 Suzuki 16,972 -49.4 Tata 32,037 18.4 Toyota 1,311,316 1.1 asia total 4,076,779 7.0 BMW 192,052 7.2 Daimler 170,381 15.1 Porsche 17,689 23.6 Saab Spyker 3,233 -53.3 Volkswagen 266,280 21.4 europe total 649,635 14.4 total light Vehicles 8,598,500 10.3Source 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 (cont.) Ward’s 10 Best Selling Cars Trucks/Vans/SUVs Cars and Trucks 1. Toyota Camry 250,830 1. Ford F Series 385,879 January-September 2010 2. Honda Accord 214,827 1. Chevrolet Silverado 267,715 3. Toyota Corolla/Matrix 209,186 1. Honda CR-V 144,286 Note: Table combines imports and domestics. Source: Ward’s AutoInfoBank. 4. Honda Civic 198,272 1. Ford Escape 142,820 5. Nissan Altima 168,897 1. Dodge Ram Pickup 140,889 © Copyright 2010, Ward’s Automotive Group, 6. Chevrolet Malibu 163,246 1. Toyota RAV4 126,391 a division of Penton Media Inc. 7. Ford Fusion 161,581 1. Chevrolet Equinox 99,055 Redistribution prohibited. 8. Hyundai Sonata 149,123 1. GMC Sierra 90,235 9. Ford Focus 134,253 1. Chrysler Town & Country 87,493 10. Chevrolet Impala 133,585 1. Ford Edge 87,135Used Vehicle Sales – Current Monthly Index Manheim Used Vehicle Value Index September 2009 – September 2010By ToM WeBB 123Chief Economist – Manheim 121Manheim Index Declines in August 119Wholesale used vehicle prices (on a mix, mileage, and seasonallyadjusted basis) slipped marginally in August. The Manheim Used 117Vehicle Value Index reading was 118.8, which represented a 0.1% 115decline from July, but a 2.1% increase from a year ago. 113Given the bleak economic backdrop of the past several months, it isnoteworthy that retail used vehicle sales volumes have held up and 111that dealer margins and inventory turns remain supportive to profits. 109Although new vehicle sales remain in a stall, manufacturers anddealers continue to practice inventory and pricing discipline. That will 107serve them well when unit sales begin to recover over the next year. 105 103 101 99 97 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept 09 09 09 09 10 10 10 10 10 10 10 10 10 Source: Manheim Consulting Mitchell Industry Trends Report 16
  17. 17. Mitchell Collision Repair Industry DataThe following information was assembled from industry-wide appraisal data uploaded fromparticipating insurance carriers, body shops, and independent appraisers, processed by Mitchell Product Solution:Mitchell International and compiled through Mitchell’s AIM™ (Advanced InformationManagement) 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 querybenchmarks, 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 • Comprehensive Losses • Third-Party Auto Property Damage • Supplements • Parts Analysis • Paint & Materials • Labor Analysis • Adjustments • Total LossesDevelopment explainedThe following data points are dynamic and subject to change from on-going supplementand total loss designation activities amending original appraisal values. Average appraisalvalues submitted in June, for example, will likely increase by several dollars over the nextfew 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 changebehavior from prior data to produce a projected final or “developed” value. Adjusted valuesmay therefore be considered reliable approximations of the eventual, industry value forany given datum. As supplement frequency and severity, as well as total loss designationactivities vary by carrier, we suggest that each company isolate their own developmentfactors to apply to their own unique data sets.Average Appraisal ValuesThe initial average appraisal value, calculated by combining data from all first- and third-party repairable vehicle appraisals uploaded through Mitchell systems in Q3-2010, was$2,450—$43 less than the previous year’s Q3-2009 appraisal average of $2,493. Applying Mitchell Product Solution:the prescribed development factor of 2.16% to these data produces an anticipated averageappraisal value of $2,503.* 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 $12,736 $12,696 $12,000 $12,315 $12,335 is a central component of Mitchell’s all-in- $11,630 $11,503 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 $4,000 $2,531 $2,529 $2,493 $2,544 $2,000 $2,490 $2,450/ 2,503 q1 2008 q3 2008 q1 2009 q3 2009 q1 2010 q3 2010avg. unit age 6.00 6.20 6.28 6.53 6.72 6.83 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 (cont.)Collision Losses Hybrid:Mitchell’s Q3-2010 data reflects an initial average gross Collision appraisal value of Facts At-A-Glance…$2,748—$69 less than this same period last year. Applying the indicated development • While the Chevy Volt has both anfactor of 2.4% suggests a final Q3-2010 average gross Collision appraisal value of $2,814. electric power train and a gasolineThe average Actual Cash Value (ACV) of vehicles appraised for Collision losses during engine, it is not a gas-electric hybridQ3-2010 was $13,417—up significantly from the same quarter in 2009, reflecting strong in the traditional sense. The Volt is aused car values.* plug-in electric vehicle (EV) propelled only by a powerful electric motor. The Average Appraisal Values, ACVs and Age small gasoline engine works strictly Collision Coverage* as a range-extending generator $14,000 to recharge batteries and provide $13,422 $13,417 $12,000 $13,017 $12,249 $13,021 current to the electric motor. $12,193 $10,000 • In the Volt’s current configuration, a full charge from household current $8,000 will provide a maximum EV range $6,000 of 40 miles. So, if your commute is shorter than that, the gasoline $4,000 engine may not need to run at all. $2,906 $2,825 $2,902 $2,944 $2,748/ $2,000 $2,817 2,814 • The Chevy Volt has a 400-mile total range after battery power is depleted. q1 2008 q3 2008 q1 2009 q3 2009 q1 2010 q3 2010 The Volt should offer another 360 miles of range with the gasolineavg. unit age 5.63 5.78 5.88 6.10 6.25 6.34 engine/generator providing the juice, appraisals acV’s for a total of 400 miles. • Nissan’s Leaf is unique in itsComprehensive Losses innovative use of multiple stacks ofIn Q3-2010, the average initial appraisal value for Comprehensive coverage estimates laminated compact battery modulesprocessed through our servers was $2,505—compared to $2,521 in Q3-2009. Applying integrated beneath the floor. Thesethe prescribed development factor of 2.2% for this data set produces an adjusted value lithium-ion batteries can be readilyof $2,561—a $40 increase from this same period last year. Q3-2010’s average appraised configured in ways that accommodatevehicle value (ACV) for comprehensive losses was $13,404—an increase of $1,562 over the needs of different vehiclevehicles appraised during this same period in 2009.* platforms. • Nissan says these batteries provide Average Appraisal Values, ACVs and Age Comprehensive Losses the Leaf a real-world 100 mile driving range. More modules could $14,000 conceivably provide that same kind of $13,404 $13,164 $12,000 $12,386 $12,921 range in a larger sedan or crossover. $11,791 $11,842 $10,000 • Southern California-based Coda Automotive is also set to bring an all $8,000 electric car to California in December $6,000 2010. This vehicle also features a 100 mile range and is priced competitively $4,000 to the Leaf. $2,521 $2,357 $2,505/ $2,000 $2,241 $2,356 $2,349 2,561 q1 2008 q3 2008 q1 2009 q3 2009 q1 2010 q3 2010avg. unit age 6.18 6.37 6.39 6.55 6.77 6.79 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 (cont.)Third-Party Property DamageIn Q3-2010, our initial average gross Third-party Property Damage appraisal was $2,185compared to $2,203 in Q3-2009—reflecting an $18 initial decrease between theserespective periods. Adding the prescribed development factor of 1.64% for this coveragetype yields a Q3-2010 adjusted appraisal value of $2,221—an increase of $18 overQ3-2009.* Average Appraisal Values, ACVs and Age Auto Physical Damage APD $12,000 $12,047 $11,702 $11,700 $11,986 $11,052 $10,000 $10,863 $8,000 $6,000 $4,000 $2,000 $2,269 $2,229 $2,241 $2,203 $2,258 $2,185/ 2,221 q1 2008 q3 2008 q1 2009 q3 2009 q1 2010 q3 2010avg. unit age 6.24 6.39 6.55 6.79 7.05 7.09 appraisals acV’sSupplementsEditors Note: As it generally takes at least three months following the original date ofappraisal to accumulate most supplements against an original estimate of repair, we report(and recommend viewing supplement information) three months after-the-fact to obtain themost accurate view of these data.In Q3-2010, 25.37% of all original estimates prepared by Mitchell-equipped estimatorsduring that period were supplemented one or more times. In this same period, the puresupplement frequency (supplements to estimates) was 47.95%—reflecting a 3.30 pt, or7%, relative increase from that same period in 2009. The average combined supplementvariance for this quarter was $566.70—$71.39 lower than in Q3-2009.Average Supplement Frequency and SeverityDate Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Pt/$ Change % Change% Est. Supplement 35.17 32.84 34.71 32.25 35.06 25.37 -6.88 -21%% Supplement 49.86 46.38 50.87 44.65 55.55 47.95 3.30 7%Avg. Combined Supp. Variance $644.70 $648.41 $617.29 $638.09 $664.95 $566.70 -71.39 -11%% Supplement $ 25.47 26.05 24.41 25.59 26.14 23.13 -2.46 -10%*NOTE: Values provided from Guidebook benchmark averages, furnished through Mitchell UltraMate®. Mitchell Industry Trends Report 19
  20. 20. Mitchell Collision Repair Industry Data (cont.)Average Appraisal Make-upThis chart compares the average appraisal make-up as a percentage of dollars constructedby Mitchell-equipped estimators. These data points reflect a slight decrease in the use ofparts, while the percentage of paint material and labor dollars used in the average appraisalhave increased between these respective periods.% Average Appraisal Dollars by TypeDate Q1/08 Q3/08 Q1/09 Q3/09 Q1/109 Q3/10 Pt/$ Change % Change% Average Part $ 45.00 42.62 44.32 41.93 44.38 41.72 -0.21 -1%% Average Labor $ 44.08 46.10 44.34 46.62 44.08 47.69 1.07 2%% Paint Material $ 9.63 10.24 10.13 10.50 10.40 10.74 0.24 2%Parts AnalysisEditor’s Note: While there isn’t a perfect correlation between the types of parts specified Mitchell Product Solution:by estimators and those actually used during the course of repairs, we feel that the Mitchellfollowing observations are directionally accurate for both the insurance and auto body Alternaterepair industries. This segment illuminates the percentage of dollars allocated to each Parts Programunique part-type. mitchell alternate parts program (mapp™)As a general observation, recent data show that parts make up 41.34% of the average offers automated access to nearly 30,000,000value per repairable vehicle appraisal—5.99 points less than the average allocation of Remanufactured, Aftermarket, and OEMlabor dollars. In addition, the overall trend continues to reflect a decrease in the use of Discount parts from over 2,000 suppliers,OEM parts—due in part to several vehicle manufacturers increasing collision part prices. ensuring shops get the parts they need from their preferred vendors. MAPP is fullyHowever, it appears that OEM parts use seems to be seasonally affected in the second integrated with UltraMate for total ease-of-use.quarter of each year, which can likely be attributed to hail storms impacting overall OEM use. Designated company administrators are also provided the MAPP Matrix Manager application free of charge—allowing clients the abilityParts Type Definitions to manage their MAPP matrices, run four different matrix reports, add new suppliers/• original equipment Manufacturer (oeM): Parts produced directly by the vehicle parts, all from their local platform without the manufacturer or its authorized supplier, and delivered through the manufacturers need for Mitchell support/intervention. designated and approved supply channels. This category covers all automotive parts, including sheet metal and mechanical parts.• Aftermarket: Parts produced and/or supplied by firms other than the Original Equipment Mitchell Product Solution: Manufacturer’s designated supply channel. This may also include those parts originally manufactured by endorsed OEM suppliers, which have later followed alternative Quality distribution and sales processes. While this part category is often only associated with Recycled crash replacement parts, the automotive aftermarket also includes a large variety of Parts (QRP) mechanical and custom parts as well. Mitchell quality recycled parts (qrp™) is the most comprehensive source for finding• Non-New/Remanufactured: Parts removed from an existing vehicle that are cleaned, recycled parts. It gives online access to a parts inspected, repaired and/or rebuilt, usually back to the Original Equipment Manufacturer’s database compiled from a growing network of specifications, and re-marketed through either the OEM or alternative supply chains. more than 3,300 of the highest quality recyclers While commonly associated with mechanical hard parts such as alternators, starters and in the U.S. and Canada, covering more than 400 part categories representing access engines, remanufactured parts may also include select crash parts such as urethane and to nearly 44,000,000 parts from recyclers’ TPO bumpers, radiators and wheels as well. parts inventories—updated daily. QRP is fully• Like Kind and Quality (LKQ): Parts removed from a salvaged vehicle and re-marketed integrated with UltraMate for total ease-of-use. In addition, for selected QRP parts, UltraMate through private or consolidated auto parts recyclers. This category commonly includes all automatically applies Mitchell’s Assembly Time types of parts and assemblies, especially body, interior and mechanical parts. Guide labor allowances and P-pages specific toEditor’s Note: It is commonly understood within the collision repair and insurance industries that a LK parts replacement.very large number of LKQ “parts” are actually “parts-assemblies” (such as doors, which in fact includenumerous attached parts and pieces). Thus, attempting to make discrete comparisons between theaverage 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 (cont.)original equipment Manufacturer (oeM) Parts Use in DollarsIn Q3-2010, OEM parts represented only 67.4% of all parts dollars specified by Mitchell-equippedestimators. These data reflect a 3.0 point relative decrease from Q3-2009. The trend in lower OEM partsuse seems to be leveling off in 2010. OEM Parts, as a % of Total Parts Dollars per Appraisal 73.9% 73.9% 71.7% 70.4% 67.9% 67.4% Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10Aftermarket Parts Use in DollarsIn Q3-2010, 13.1% of all parts dollars recorded on Mitchell appraisals were attributed to Aftermarketsources—up significantly from Q3-2009. Aftermarket as well as LKQ/Used parts have been thebeneficiary of decreased OEM usage. Aftermarket Parts, as a % of Total Parts Dollars per Appraisal 10.7% 10.2% 11.4% 11.7% 13.2% 13.1% Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10Remanufactured Parts Use in DollarsCurrently listed as “Non-New” parts in our estimating platform and reporting products, Remanufacturedparts currently represent 6.1% of the average gross parts dollars used in Mitchell appraisals duringQ3-2010. This reflects a 0.7 point relative increase over this same period in 2009. Non-New/Remanufactured Parts, as a % of Total Parts Dollars per Appraisal 4.8% 4.8% 5.0% 5.4% 5.7% 6.1% Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10Like Kind and Quality Parts Use in DollarsLKQ parts constituted 13.5% of the average parts dollars used per appraisal during Q3-2010—reflecting a 0.9 point relative increase from this same period last year. LKQ Parts, as a % of Total Parts Dollars per Appraisal 10.7% 11.1% 11.9% 12.6% 13.2% 13.5% Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Mitchell Industry Trends Report 21