Abstract
Increasing Number of Collisions is Being Offset by the Influence of Insurance Companies on
Replacement Body Collision Aftermarket
The number of reported collisions has been on the rise, ranging between 9 million and 13 million
annually. Estimates suggest that the number of unreported collisions is also climbing every year and
could represent an additional seven million to eight million annually. Despite this trend, body
collision repair shops report a decline in the frequency of repair jobs, increasing the importance
of the quotation process and tipping the balance of power in favor of insurance companies. Rising
insurance premiums are restraining many people, who have been involved in accidents, from making
claims. The high degree of involvement of insurance companies in the overall dealing is particularly
detrimental to the interests of repair shops, as their position of power creates a highly
competitive bidding situation for each job.
This Frost & Sullivan research service provides an overview of and outlook for the North
American replacement body collision aftermarket. The study focuses on light vehicle applications
including passenger cars and light trucks. The research service covers six product segments
including bumper/bumper fascia, doorframe, front fender, grill, quarter panel, and rear (trunk,
hatch, lift gate, doors). The information in this research service will enable companies to align
their positioning strategies to benefit from the changing market conditions and obtain maximum
return on investment.
Consolidation of Repair Facilities Heightens Competitive Atmosphere
Between 1997 and 2004, the number of body collision repair facilities, either independent or
dealer-affiliated, dropped by approximately 3.5 percent. The main factor behind the decline in the
number of shops is a dramatic market shift toward consolidation. Modern vehicles are manufactured to
exacting specifications, use higher cost components that require expensive equipment and skilled
labor to replicate the original equipment (OE) form, fit, and function of the vehicle. To optimize
equipment and labor investments, shops have shifted their marketing position from emphasizing brand
competence to highlighting repair skills in all makes and models.
"The high cost of equipment, declining availability of skilled workers, and the need to
concentrate on resources to maximize the economies of scale have resulted in the consolidation of
collision repair facilities," says the analyst of this research service.
Repair Market and Component Suppliers Look to Even the Balance of Power with the Insurance
Companies
The goal of insurance companies is to minimize overall repair costs. With insurance companies
representing the majority of automotive collision repair revenues, they have tremendous bargaining
power. Legislation is in place to ensure that the consumers get the type of service and components
they need; however, consumers are still quite complacent when it comes to dealing with collision
repairs. Insurers also hold the upper hand in the relationship between them and repair facilities.
The insurer determines at what cost point vehicles are scrapped.
Through a series of strategies such as increasing company size through consolidation, brand
building for collision repair services, pushing for access to the total repair job, and stronger
commitment to OE components, the repair market and component manufacturers are attempting to
increase the equity of their products and services. | 
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