Collision repair components are growing at rate double that of most automotive wear replacement components. In the past, the dealer channel was the avenue of choice for replacement components in North America, but with the establishment of aftermarket certification organizations such as CAPA and MQVP Inc., that have boosted the fit, quality, and durability of aftermarket components, as well as the recent rulings in the Avery versus State Farm case, lower cost aftermarket component sales have flourished.
In key collision replacement product categories, aftermarket channel sales that include both aftermarket and aftermarket certified products, are growing as a percentage of both units and revenues. Installation shops have traditionally pushed for the OE components because of their ease of installation and higher margins. Today’s certification programs have improved aftermarket quality and reduced component costs by 20 to 30% on equivalent parts. This is driving the shift toward aftermarket.
New analysis from Frost & Sullivan (transportation.frost.com) U.S. Automotive Collision Repair Shop Analysis reveals that the U.S. automotive collision repair industry in 2005 is indicating strong avenues for growth. Aftermarket component manufactures have successfully penetrated the collision repair distribution channels through their ability to provide high quality parts at significantly lower costs with impeccable service. This has created a competitive situation which the original equipment manufactures are challenged to meet.
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of the U.S. Automotive Collision Repair Shop Analysis, then send an e-mail to Tolu Babalola - Corporate Communications at tolu.babalola[...]frost.com with the following information: full name, company name, title, telephone number, e-mail address, city, state, and country. The brochure will be e-mailed to you upon receipt of this information.
“The quality and rigor of the testing and specifications laid out by aftermarket certification companies CAPA and MQVP, Inc. resonate well with collision repair shop personnel,” explains Consulting Analyst Mary-Beth Kellenberger. "Installers may have been forced into trying aftermarket components by the insurance companies but now our research indicates that installers are choosing aftermarket parts with increasing frequency without influence from the insurance companies,” states Research Analyst Rick Brown.
Insurance companies still have a great deal of say in what types of parts (OE or aftermarket) are used on a vehicle. Insurance companies validation of the aftermarket components has opened the floodgates as indicated by installation shops strong choice for aftermarket products and aftermarket distributors. Price is important, the dealer excels at availability but its service is not always in line with the service needed at the shop level.
Collision repair jobs are on the decline yet research at this time also indicates that component costs and average cost of repairs are rising further emphasizing the need for shops to quote wisely and win as many jobs as possible. On hand information has become essential to the quotation process and with increasing frequency; shops are turning to supply sources that improve their bottom line through information, service, delivery and costs.
The aftermarket channel has succeeded in many of these areas and poses an ominous threat. Vehicle manufacturers are testing a variety of pricing strategies designed to lower prices, but with aftermarket distributors focused on the high unit volume parts, price is simply not going to be enough to bring customers back to the OE channel.
“Insurance companies have a hand in over 90 percent of reported collision repairs. The insurance companies have fine-tuned the repair process and consumers continue to defer decisions to the insurance companies,” explains Consulting Analyst Mary-Beth Kellenberger. “The complacency of consumers challenges the repair shop’s ability to use more OE parts and seek higher rates for their work.”
As insurance costs rise, vehicle owners are choosing to avoid the repair or are looking to alternative types of repair facilities to provide lower cost work. With the average cost of collision repair work increasing, it is ever more imperative to win that job. Despite the industry’s attempt to push back insurance company pressure, Direct Repair Programs (DPRs) are ingrained in the U.S. collision repair industry and indications show that those who participate in DRPs get more jobs and have higher revenues than non DRP shops. DRPs are here, becoming more sophisticated, and are growing.
U.S. Automotive Collision Repair Shop Analysis, part of the 9801 North American Automotive Aftermarket subscription, provides an overview and outlook for the market. This study has been segmented into bumpers, fenders, hoods, condensers, and radiators, exterior lighting and market metrics. This research includes detailed market opportunities and industry trends that have been evaluated following extensive telephone interviews with a representative sample of collision repair shop managers and owners. The sample consisted of 205 respondents from 4 geographical regions of the US, North, South, East and West. Interviews are available to the press.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.
U.S. Automotive Collision Repair Shop Analysis
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