The increasing number of total losses – heightened by increased repair
costs – has bolstered the salvage industry and will likely drive down
repair costs and total loss numbers in the future, analysis firm Frost
& Sullivan says.

According to the firm’s research, high raw material costs have made
parts and supplies for collision repairs more expensive, driving
insurers to declare more vehicles as total losses. This has been a boon
to the salvage industry, which reported $3.2 billion in earned revenue
in 2008.

The firm says that the prices of salvage parts have been driven down by
increased availability thanks to increased total losses and reduced
dealer demand for wholesale used vehicles. The increase in available
salvage parts and reduction in salvage parts prices will help insurers
control repair prices, Frost & Sullivan says.

“More insurance companies are advocating the use of salvage parts as
they try to control collision repair costs, thereby driving unit
shipment of salvage parts,” Frost & Sullivan Industry Manager Avijt
Ghosh said.

For more information on Frost & Sullivan, click HERE.