(last updated July 2019)
What has been happening in the car repair sector
Demand for car body repairs depends to a large extent on the accident rate. The number of cars on the road in the UK continued to rise until 2016 but then fell back slightly in 2017 and again in 2018. Despite the small fall in the number of new registrations, there were nevertheless more new car registrations in the year to February 2018 than there had been in any previous year since 2004, so accident damage is likely to remain a big source of work for the foreseeable future. According to the National Association of Bodyshops, insurance work accounts for around 80% of repairers' workload.
Demand for other types of repair work is not necessarily so dependable. In particular, repairs to corroded panels and floor pans, dented bumpers and so on has fallen for a number of reasons including:
- greatly improved corrosion protection of newer cars
- more widespread use of plastic or composite materials for panels - especially for bumpers
- increasing use of replacement panels rather than making repairs
The level of demand is also affected by the state of the economy. As a result of the economic slowdown of the late 2000s/early 2010s, many motorists looked to cut costs by avoiding having body damage repaired. The economy started to pick up in 2013 and continued to improve throughout 2014 and into the first half of 2015. However it slowed again in the second half of 2015 and into 2016, with further economic uncertainty arising out of the vote in June 2016 to leave the EU.
The economy performed better than expected in 2017, although growth for the year was slightly down on 2016. Growth is expected to slow further in 2018 and 2019 due to public spending cuts and the continuing uncertainty surrounding the Brexit negotiations. Unemployment is expected to remain low but wage increases are also expected to be subdued, resulting in falling real wages once inflation is taken into account. Little change is expected in 2018 and 2019.
People are likely to remain careful with their money because of rising inflation and falling confidence in the economy. There is concern that slower growth will lead to an increase in unemployment and lower wage increases.
Most accident damage work is paid for by insurance companies. Some companies now operate their own workshops, while others use lists of approved repairers. Becoming an approved repairer may result in a steady stream of work, but profits on these jobs can be slim as insurance companies aim to keep their costs down.
Developments in 'SMART repairs' (small to medium area repair techniques) have given bodyshops the opportunity to carry out a range of small repairs in addition to larger jobs. Minor damage such as chipped paintwork, small windscreen cracks, bumper scuffs, dashboard and upholstery damage can be repaired quickly and effectively without the need for replacement parts. Portable equipment is used, so repairs can be carried out at the customer's home or workplace if required. The appeal from the customer's point of view is that mobile SMART repairs generally take much less time to carry out and are cheaper as a result. Tools, materials and initial training are needed, but the market for SMART repairs has expanded quickly and has undermined the market for traditional bodyshop repairs to a certain degree.
Independent bodyshops also face increasing competition from insurance company owned workshops and franchised motor dealers - the aggressive business practices adopted by some insurance companies were highlighted as being damaging to the independent sector by both the Vehicle Builders and Repairers Association and the National Association of Bodyshops in their submissions to a Competition Commission investigation into the motor insurance market that began in 2012. The Competition Commission (now the Competition and Markets Authority - CMA) found in late 2013 that the insurance market wasn't working well for motorists. It found that there was a complex chain for settling non-fault claims which increased the cost of repairs and it also found that many repairs were not carried out to the required standard. Possible remedies suggested by the CMA included placing caps on repair costs and introducing compulsory auditing of repair work. The CMA's final report was published in late September 2014 and, although many such remedies were considered, in the event the CMA didn't put forward any measures that would change the post-accident repair sector. Traditionally, franchised dealers targeted mostly the owners of nearly new cars (up to three years old) but have fairly recently taken steps to attract owners of older cars - at the expense of smaller businesses. The number of independent bodyshops has fallen as a result of these factors.
In the three years to 2016, a report by the Auto Bodies Professional Club (ABP Club) found that results from the 28 largest bodyshop groups in the UK showed a steady increase in the average gross profit rate and in the average pre-tax profit margin. It also found that while inflation in the period from 2006 to 2016 ran at the rate of 32%, the average estimate for repairing vehicle damage over that period increased by 34.1%. The indications, therefore, are that the bodyshop sector is soundly based and can look forward to a healthy future.
Keep up to date with developments
Joining a trade association can help you to keep up to date with what is happening in the car body repair sector as well as offering other benefits including advice, information and training.
In March 2017 the National Body Repair Association (NBRA) was formed under the umbrella of the Retail Motor Industry Federation (RMI), bringing together the National Association of Bodyshops and the repairer members of the Vehicle Builders and Repairers Association. The NBRA operates a quality assurance scheme for members and the Service and Maintenance Consumer Code of Practice. Visit the website for further information.
Another valuable source of information is the Auto Body Professionals Club. The ABP Club website is an online community for the body repair industry with more than 2,000 members. ABP Club also produces a number of useful publications, including the trade journal 'Auto Body Professional', the 'AudaStats' body repair industry market analysis and the 'UK Body Repair Industry Guides'.
You'll be able to obtain a lot of useful information if you go to a trade show. You'll be able to meet parts manufacturers, suppliers and importers. Information about forthcoming trade shows can be found on the Exhibitions UK website.