This report is from Ian Groat of South Africa's Automotive Refinisher.
What are the main challenges/opportunities facing your collision repair market?
Our falling economic currency is placing huge strain on market prices on imported parts. The worst drought in 40 years has placed a great strain on living costs and the repair numbers are down. Insurers are still writing off vehicles at 60% which is hurtingvwork flow.
What trends are evident within the market?
Networks are starting to develop across the country. Small family businesses are struggling to keep up with change and technology and investment required in repairing new vehicles. Although the car parc is ageing.
What specific bodyshop trends are emerging?
Repairer profits are very low and they are looking at ways of increasing their volume and productivity in their shops. There is still a tendency to replace instead of repair as OEMs push their programmes for parts sales.
How are insurers influencing the repair sector? What impact is this having on supply chain relationships?
Relationships are strained between the insurers and collision repairers as they are still squeezing costs to crazy low premiums to curb inflation.
In what way are vehicle manufacturers increasing their involvement/influence in the collision repair sector?
The reality is little to no influence. Mazda SA has taken a stance to do away with the bodyshop approvals programme and allow the already approved shops of CRA and SAMBRA to be able to repair their vehicles as they have already met the standards.
What ‘standards’ are currently in operation within the sector? How are they monitored?
Associational standards, SAIA and DTI and Associations are busy with an industry standard that will be adhered to as a procurement principle for insurers.
What impact/influence is new vehicle technology having on the sector?
It ensures that OEM approved independent shops gain access to the warranty market and some of the smaller players can’t keep up with investments, technology and skills needed to repair these vehicles. There is also a shortage of qualified artisans.
What influence is repair technology (processes, systems, tools etc) having within your market?
Most bodyshops are on Audatex and connectivity is good. Cloud-based technology will play a major role with integration models in the near future.
What is the current status of the next generation/employee/ skills market for the sector?
Skills and training is a major problem with school leavers not being attracted to the trades. Motor body repairers will have to make a special effort in getting new blood into the market and there is a serious need for skilled and trained new artisans in the market. Skills of the current tradesmen are s good, however not being passed on to the newer generation.
What are the likely trends/developments that will impact the sector over the next three to five years?
The Competition Commission has addressed the OEMs, insurers and bodyshops to see about unfair business directive practices, as well as price fixing. They have given the bodies three months to return and show their findings as there has been a lot of complaints from the smaller shops about not getting work. Whether they are able to handle this work with their current equipment will also be shown.
Market facts and figures
Population: 52.98 million (2013)
GDP: US$350.6bn (2013)
Number of people who hold a full driving licence: 11,7 million
Total vehicle parc: Just over 10 million
Total new road vehicle sales:
2014 – 551,450
2015 – 618,000
2016 – N/A
Number of reported road collisions per annum:
1,352 per 100 000
Number of collision repairs per annum: approximately 900,000
Number of vehicle write-off s per annum: 10%
Number of motor insurers: 25
Top three motor insurers by number of vehicles insured:
1 - Santam
2 – Hollard
3 – Mutual and Federal
Average motor insurance premium and excess/deductible:
R800 – R1000 per month, excess varies depending on the
insurance policy taken, can be R2,000 to R5,000
Annual cost of motor insurance fraud: undisclosed
Insurance approved collision repair networks in operation:
No
Insurance owned collision centres in operation: No
Vehicle manufacturer approved collision networks in
operation: Yes
Vehicle manufacturer owned collision networks in operation:
No
Accident management companies active within market: Yes
Accident management company approved collision repair
networks in operation: Repair Solutions
Total number of collision repair operators (all body repair
facilities/types): Approximately 2,000 formal / 2,500 informal
Number of collision repair centres (static sites dedicated to
collision repair): Approximately 4,000
Types of collision repair centres:
Independents: Yes
Dealer: Yes
Networks: Yes
Group/multi-site operators (MSO): Yes
Franchise operators: Yes
Largest operators by number of sites:
1. CRC – 80
2. Automagic – 40
3. Dent Doctor – 30
Average cost of repair: R18,000 – R25,000
Average cycle time of repair (key-to-key): 1-3 weeks
Average labour rate: R280 per hour or $20
Mobile collision repairers in operation (eg panel repair/s
within mobile rig/booth): No
Mobile SMART repairers in operation (eg paintless dent
removal specialists): Yes
Number of mobile SMART repair operators: 200
Total accident repair market value: R18bn