Ireland's Publication for the refinishing & associated Industries

Bodyshop shortage hits UK motorists – what about here?

You may be familiar with the Irish saying: “If the England sneezes, we get a cold”, well this coverage of the latest Trend Tracker report in the Financial Times by their insurance correspondent Alister Gray makes very interesting reading for Irish refinishing industry. 

Insurers and motorists in the UK are facing a shortage of repair shops after the closure of more than 1,500 businesses in the past decade.

With a third of British garages out of business, the scale of closures means there “will soon be insufficient repair capacity to meet demand”, a study by Trend Tracker, the automotive industry research group, found.

The typical wait for vehicle accident repairs (in the UK) has been predicted to lengthen from about 10 days to as much as six seeks, said Robert Macnab, lead analyst at Trend Tracker.

He expected supply to be especially tight in London and the southeast, where bodyshops’ operating costs are higher, and for repairs of high-tech vehicles such as hybrids.

Bodyshops blame, in large part, financial pressure from insurance companies – which finance an estimated 70 per cent of repairs – for squeezing profit margins.

They complain motor insurers have taken an increasingly tough approach to negotiating prices, including setting up networks of “approved” garages to which they direct policyholders.

However, Trend Tracker predicted there would be a shortfall in garages (in the UK) as the economy recovered and lower oil prices lead to more driving, as well as the possibility of more accidents.
Garages are expected to respond by increasing prices, but research revealed there would not be enough facilities to go around.

“It’s a considerable concern,” said David Cresswell, chairman of the Auto Body Professionals Club trade body. “You’re going to have a lot of unhappy customers if they can’t get their cars repaired.”
“They [insurers] have squeezed the pips out — there’s nothing left to squeeze.”
What about here in Ireland? Do you recognise the symptoms, feel the chill or… ?

A third of UK repair businesses have gone in past 10 years

A third of UK repair businesses have gone out of business, been acquired by rivals in a wave of consolidation, switched to another activity or sold their sites for redevelopment in the past 10 years. Most of those were small, family-run enterprises. 

As well as pressure from insurers, improved car safety and a weak economy have put a strain on the industry. Garages typically operate on profit margins of less than 2 per cent.

Trend Tracker forecasts that the number of car body repair workshops will fall by another 8 per cent, to 3,065, by 2019. However, it also forecasts the number of repairs to rise over the same period from 4.2m to 4.3m. Insurers will “start to experience problems placing repair jobs” within two years, it said.

Insurers tend to require that garages provide courtesy cars for accident victims. However, Mr Macnab said this could become the subject of legal disputes as garages would find it “impossible” to provide enough vehicles, given the lengthier waiting times.

The Association of British Insurers said: “Insurers are constantly striving to manage costs to ensure the best value for money for their customers. They will want to agree fair and reasonable repair rates with garages that they use for repairs.”