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Influence of Insurance Companies Intensifies Competition for Collision Repair Jobs

PALO ALTO, Calif., Oct. 24, 2005 -- The overall outlook in the North American collision replacement parts aftermarket is positive given the increasing number of repairs taking place due to collision rather than wear and tear.

Revenues in this market are increasing at a rate of 4 to 5 percent annually. This is almost double the rate for the majority of the wear replacement components. However, insurance companies' strong influence on vehicle-owners' repair decisions coupled with rising premium rates has created a highly competitive and price sensitive market.

New analysis from Frost & Sullivan, (http://www.transportation.frost.com/) North American Electrical and Mechanical Collision Replacement Parts Aftermarket, reveals that revenues in this market totaled $1.3 billion in 2004 and is projected to reach 1.6 billion in 2011.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of the North American Electrical and Mechanical Collision Replacement Parts Aftermarket, please send an e-mail to Tolu Babalola, Corporate Communications at tolu.babalola@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send the brochure via email upon receipt of the above information.

The power exerted by insurance companies is increasing through the direct repair programs (DRPs). In fact, repair shops that participate in insurance companies' DRP report that they write approximately 42 percent more estimates and perform approximately 56 percent more jobs compared to non-DRP shops.

North American auto insurers are constantly looking to contain repair costs and keep insurance premiums in check. This is reflected in their support for the use of aftermarket components that are priced 15 to 40 percent below original equipment (OE) prices.

"For repair shops the challenge lies in their ability to strategically quote repair jobs in a manner that maximizes their profit margins," explains Frost & Sullivan Consulting Analyst Mary-Beth Kellenberger.

OE parts have historically held the quality advantage. The emergence of aftermarket certification programs has dramatically impacted the revenues and revenue market share held by OE components. Certification programs that ensure compliant products meet or exceed federal regulations and/or OE specifications have severely undermined the position advantage of OEM parts and allowed aftermarket parts to capture increasing proportions of the component market. Certified organizations such as Certified Automotive Parts Association (CAPA) and MQVP, Inc. have created high value in their brands and this has been instrumental to the rising acceptance levels of aftermarket components amongst repair industry professionals.

"Certification programs provided integrity to the products. The integrity combined with the price value pushed many insurance companies to begin the practice of specifying aftermarket certified products as part of the job quotation process," says Kellenberger.

On hand information for efficient quotations is emerging as a key competitive factor for capturing repair jobs. Shops are turning to on-line parts, vehicle valuation, and recent collision repair databases, to guide them through the quotation process and to boost the job win ratio.

In the future, repair shops that have the capabilities to serve all makes and models of vehicles, and keep repair work in-house, are anticipated to be highly successful. Such a business model provides a steady stream of vehicles, maximizes equipment usage, and provides strong control over timing and workflow among the various departments.

North American Electrical and Mechanical Collision Replacement Parts Aftermarket, part of the 9801 automotive aftermarket subscription, offers a comprehensive analysis of the North American electrical and mechanical collision replacement parts aftermarket. It also discusses the various market trends while providing an in-depth analysis of market share, revenue forecasts, market drivers, and restraints. The study includes opportunity analysis and revenue forecasts that can assist participants in pinpointing key growth areas. Executive summaries and interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics and demographics. For more information, visit http://www.frost.com/ .

   North American Electrical and Mechanical Collision Replacement Parts
                               Aftermarket
                                   F331

   
   
   http://www.frost.com/