Deficit growing in body repairs

New report highlights the issues faced as more repair centres close

Published:  24 February, 2015

A deficit in the UK repair capacity will dent insurance company profits, warns independent research company Trend Tracker.

According to the UK Car Body Repair Market report published by the company, the number of body repair workshops has declined by 32% in the last decade, with a further 9% decline predicted by 2020. Combined with an expected 2% increase in the number of vehicle repairs, the company expects an 11% repair capacity shortfall by this time.

With insurance companies financing around 70% of all accident repairs, bodyshop owners have long bemoaned the lack of profit in insurance-funded repairs. This, coupled with a fall in the number of accident repairs since the 2006 peak, has led to many bodyshop closures.

Robert MacNab, lead analyst at Trend Tracker, comments: "As recently as 2004 there was a repair capacity excess of 50%. Insurers were spoilt for choice in terms of who to give work to and could dictate terms. The increasing repair capacity deficit will put quality bodyshops in a much stronger position to secure a better deal from insurers.

"We will see more repairers negotiating or simply rejecting the least profitable insurance contracts, particularly where there is an open-ended obligation for them to provide courtesy cars at their own expense. The hourly labour rate is also likely to rise, further denting insurers' profits.

Trend Tracker, which has been analysing the market since 1991, notes that the UK car accident repair market has historically been very stable and resistant to macro-economic trends. The recent upheaval is unprecedented. Now the market seems set for a period of sustained, albeit modest, growth as lower fuel costs encourage greater car use, resulting in an increase in the number of accidents and the number of car body repairs.

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