Much as been reported about people driving fewer and fewer miles due to steep gas prices, which of course hits the collision repair industry hard. One expert believes that those miles lost probably won’t come back.
“People are being sensitized to not driving,” Sam Malatesta told a crowd at the recent Paint, Body and Equipment Specialists Spring Conference in Phoenix, Ariz. “People started carpooling and looking at alternative vehicles and said, ‘This isn’t so bad.’”
Malatesta is president of Malatesta Capital Corp. in Toronto, Ontario, Canada, and a leading authority on the North American auto claims economy. According to his statistics, the decrease in miles driven breaks down as follows in these regions:
• -5.4% South Atlantic
• -4.7% West
• -4.6% South Central
• -4.4% South Gulf
• -3.9% Northeast
Other observations he made about the current collision repair industry climate are:
• 5 of the Top 10 MSO’s (multiple store operators) in the U.S. are dealer groups – consolidation continues.
• Auto insurance prices will go up because insurers’ investments are hurting and there are less claims.
• The collision repair facility that can predict its performance will get more vehicles.
• There is lower accident frequency due to less miles being driven and the ratio of used cars to new is increasing, with total losses on the rise due to a decline in wholesale used car prices.
• 18 percent of shops control 73 percent of receipts.
• 90 percent of fraud happens from the time of the accident to when the vehicle goes to a shop, which is why we pay more for auto insurance.
• The consumer mindset is rapidly changing – they want to be influenced by brands/people they trust. Also, they want to buy in “bundles”.
• Technology may be the key to engaging, as auto consumers, the estimated 80 million people who are part of the “millenial generation”.
• “Green” is not a fad.
While noting that most collision repairers say now is not a
good time to expand, gross sales and net earnings continue to drop, and
that there’s an increased feeling that things will get worse before
they get better, Malatesta said a positive outlook will rule the day.
“This is a time to be opportunistic and positive,” he said. “All you need is a mindset change.”
