Trends to Watch for the Second Half of 2021
It is hard to imagine that we are nearly halfway through 2021, and this year has definitely been like no other! So, what industry trends should we keep an eye on for the latter half of the year?
The Microchip Shortage
While not directly limiting collision repair, the impact of the microchip shortage will be felt in the insurance and body shop industries. The curtailing of new car production and the increase in new car transaction prices due to limited microchip supply will affect the claims process. Rental cars are in shorter supply and that might impact daily rental rates. We are also seeing a very strong used car market, which is driving up residual values. This will cause total loss settlements to increase in value and potentially make them more difficult to settle as finding a replacement vehicle in such a strong market is difficult.
Mergers and Acquisitions
Cheap money is available for both collision repairers and carriers to make acquisitions to enhance their businesses. Carriers are chasing a finite number of customers, and as baby boomers age out of the auto insurance market, there isn’t a large incoming group that will be nearly that size. So, carriers can quickly grow market share by acquiring an existing book of business, reducing duplicate job functions in IT and Human Resources, for example, and increasing the company’s profitability. The same applies to collision repairers: buying an existing (or group of existing) body shops increases market share and buying power. Look for the regional midsize MSO shops to expand rapidly this year.
Next Steps in Virtual Estimating
Photo-based estimating was really put to the test during the lockdown, and vehicle owners embraced the touch-free workflow to begin the claims process. Customer satisfaction with this process was high during the lockdown, but will this satisfaction level remain high as we return to a post-pandemic world? Ease of use, the ability to go from photos to repair with accurate results, will be the key to maintaining high levels of satisfaction for carriers, repairers and vehicle owners. Automated Intelligence is the next piece of this puzzle to increase speed of estimate, accuracy and the ability to triage damages.
As you look at the first half of the year, see what you think are other trends we should watch. Then, in December, I’ll revisit this subject and we can see how accurate we both have been in predicting the next six months.
Greg Horn is PartsTrader’s
Chief Innovation Officer.