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The ever-increasing complexity of repair, the ongoing shortage of technicians, the resurgence of miles driven and a recent uptick in claims frequency have been pushing the nationwide length-of-rental (LOR) average higher over the past five years.
Length of rental is viewed as a proxy for cycle times. Based on recent trends, body shops could be facing an uphill climb to keep their cycle times in check.
The ever-increasing complexity of repair, the ongoing shortage of technicians, the resurgence of miles driven and a recent uptick in claims frequency have been pushing the nationwide length-of-rental (LOR) average higher over the past five years, according to Dan Friedman, assistant vice president of collision industry/strategic sales at Enterprise Holdings, parent company of Enterprise Rent-A-Car.
Although there are seasonal fluctuations – winter is a busier month for many shops – the national length-of-rental average for repairable vehicles has been creeping up between 2/10ths and 4/10ths of a day every quarter, Friedman explained during a presentation at the Collision Industry Electronic Commerce Association (CIECA) 2017 Symposium in Cleveland.
If you include total-loss vehicles in the data, “the trend line looks very, very similar: Year-over-year increases, seasonality [and] a general upward trend that doesn’t seem likely to be reversed anytime soon.”
On top of the macro trends, some challenges – like acts of God – are unique to a region. Colorado, already struggling to meet the demands of a growing population, has been smote by a series of hailstorms in recent years, exacerbating the “foundational challenges” that shops are facing everywhere.
“They generally can’t seem to dig out from under the capacity issues that [the hailstorms] created,” Friedman said. “They’re still just trying to play catch-up there.”
Texas – hit by a double whammy of flooding and hailstorms in 2016 – is in a similar boat.
“All of that stuff just piles on top of itself and creates an elevated level of challenge,” Friedman explained. “It’s very difficult to deal with, because you can’t create instant new capacity.
“So as you see driveable appointments that previously were booked maybe a week or two out go to four, six, eight, even more weeks out, that’s going to create some challenges and put some pressure on cycle time as reflected in length of rental.”
More Training, Better Scheduling Can Help
No matter how the LOR data is parsed, Friedman sees a huge gap between the average, best-in-class and worst-in-class performers.
“And all of those people are dealing with the exact same underlying mitigating circumstances,” Friedman added. “So there’s a challenge in Colorado. It’s obviously going to have the highest average length of rental for a market and probably will for some time. But there are shops within Colorado that are two days below that market average, and there are shops in Colorado that are two days above that market average.”
One of the biggest levers that shops can pull to improve cycle time is training. Enterprise, I-CAR and others have looked at what happens when shops embed training into their culture, “and every measurement, every study that we’ve ever done makes it very clear that those who embrace a culture of training outperform the industry by a very, very significant margin,” Friedman said.
Those shops typically see their revenue and customer service scores go up, while their cycle times go down – which has a positive impact on LOR.
“We don’t expect and don’t think it’s a good idea to manage length of rental as a number per say,” Friedman said. “But we think it provides insight into the efficiency and productivity of an operation.”
Among other best practices, research indicates that developing a scheduling strategy – and sticking to it – can improve cycle times and other metrics that affect LOR, Friedman said.
Friedman also encouraged shops to provide consistent, accurate updates to Enterprise’s ARMS (Automated Rental Management System) Automotive Suite.
“Providing good, detailed updates back up to your insurance partners so that they can make good, informed, quick decisions is really critical,” he said.
The more detail that shops provide to the ARMS suite, he added, the less the likelihood that an insurance adjuster will have to follow-up with a phone call or email – “all of which ends up having a negative impact on the whole transaction, including length of rental.”