Emerging from COVID-19 - The UK Vehicle Body Repair and Motor Insurance Market 2020-2023

Samples

Executive Summary

The UK Car Body Repair Market is a biennial report produced in 1993 and the result of market research via primary and secondary sources. The report is a ‘market sizing’ study, providing a current view of the market by considering preceding years and forecasting ahead, where appropriate.

• The effects of the Covid-19 worldwide pandemic have had a huge influence on the vehicle body repair market in 2020, compounded by the uncertainty surrounding the UK’s withdrawal from the European Union.
• We estimate the number of primary bodyshops to be 2,270 within the UK; a number that can be reduced further still if we segment by vehicle body repairers who hold leading insurance company or vehicle manufacturer approvals. We estimate this number to be approximately 1,740.
• There has been a 14% decline in UK vehicle bodyshops since 2010, from a high of 3,650 to 3,134 in 2019.
• UK motor accident claims fell by c.80% almost overnight as lockdown was announced in March 2020
• The ABI reported a second quarter fall in motor claims to be 48%; 324,000 new claims opposed to the 678,000 claims received in Q1 2020.
• The total market value for UK primary car body repairs is estimated to have fallen to £3.57 billion (excluding VAT) in 2020; a decline of 26.6%.
• Of the £3.57 billion total market value in 2020, 31.7% is attributed to labour, 43.3% to parts, 19.8% to paint and materials, with the remaining 5.2% being additional items.
• Parts expenditure for the total market had risen by 59.6% to £2.1 billion in 2019, up from £1.32 billion in 2012.
• Paint and materials expenditure for the total market have increased by 30.6% over the same period, from £738 million in 2012 to £964 million in 2019.
• The average insurer-funded body repair cost in 2020 H1 has risen by 10.2% from 2018, and by 37% from 2015 via transactions through the Audatex system.
• Insurer-funded vehicle repair costs have risen by 37.5% over the past five-year period (for transactions through the Audatex system).
• Nationwide Accident Repair Services, the UK’s largest wholly owned repair network and the largest independent accident repair company in Europe, entered into administration on 3 September. A ‘pre-pack’ agreement was entered into with Redde Northgate for them to acquire ‘certain businesses and certain assets’.
• The overall cost of an average repair transacted via the Audatex system has risen from a weighted average of £1496.79 in 2015 to £2050.58 for the first half of 2020 (a 37.5% increase).
• The overall labour cost per repair for jobs transacted via Audatex has increased by 27.3% since 2015 to 2020 H1, from an average of £509.97 in 2015 to £649.40.
• Labour hours per repair increased from 15.82hrs in 2015 to 17.29hrs in 2020 H1, for jobs transacted via the Audatex system.
• The cost of parts per repair for jobs transacted via Audatex, has risen from a weighted average of £609.81 in 2015, to £856.63 for the first half of 2020. This represents a 40.5% increase over a fiveand- a-half-year period.
• Only 41.1% of bodyshops were operating to the same capacity that was available pre-Covid-19, in September 2020, meaning the remaining 58.9% have implemented measures that have reduced their available workshop capacity.
• 85% of bodyshop businesses took advantage of Covid-19 government-led business support, with 94% taking advantage of the Coronavirus Job Retention Scheme (Furlough).
• 39.2% of bodyshops expect to make redundancies by the end of 2020, with a further 21% being uncertain but believing that redundancies are likely, equating to over 800 job losses from survey respondents. 33.9% of bodyshops stated they are ‘very confident’, whilst 50% remain ‘cautiously confident’ that that their business will be able to withstand the financial impact of the Covid-19 pandemic.
• The total Gross Written Premium (GWP) for the UK motor insurance market for 2019 is estimated to be £18.88 billion.
• Admiral is the largest motor insurer in the UK with GWP of £2.16 billion or 11.4% market share, followed by Aviva with £1.89 billion (10.1% market share) and Direct Line Group with £1.65 billion (8.8% market share).
• The total expenditure on motor claims has reduced year-on-year, from £10.4 billion in 2010 to £6.9 billion in 2019. However, total expenses have remained constant at c.£2.6 billion.
• If we assume an annual saving of 25% on the £6.9 billion spend in 2019, the 2020 motor claims pay out will fall to c£5.2 billion.
• Approximately 70% of motor insurance purchases is placed online and in 2020 approximately 40% of these were via Price Comparison Websites.
• The UK car parc between 2010 and 2019 for cars and light commercial vehicles has increased in size by approximately 14%, from 31,629 million to 36,011 million vehicles.
• New car sales for the full year in 2019 were 2,311,140 units, continuing a steadily downward trend in the last three years, from 2,692,786 in 2016, representing a 16.5% fall in annual registrations since 2010.
• New car sales fell to unprecedented levels during the second quarter (April to June) of 2020 due to the Covid-19 lockdown that saw the majority of dealerships forced to close. As a result, new cars sales were down from 1,269,245 units for H1 2019 to 653,502 units for the first half of 2020. They had fallen by 97.3% in April to just 4,321 units compared to 156,743 in April 2019. May also saw an 89% sales decline on the previous year.
• A total of 7.94 million used cars changed hands in 2019, almost the same number of transactions that took place in the previous year, although used car motor finance business fell by 32% in the first half of 2020 compared with the first half of 2019.
• Mileage driven by road fell rapidly following the PM’s lockdown announcement on 23 March to almost 80% of the baseline measure, and stayed much reduced (between 77% and 60%) to mid- May, when a steadily increasing trend back to pre-Covid-19 levels commenced.
• The average age of a licensed car on the roads of the UK at the end of 2019 was 8.3 years old, up from 7.8 years from 2017.
• The approximate length of car ownership was 3.4 years in 2019, which is expected to rise to 3.9 years in 2020, before slowly returning to 3.6 years in 2024.
• The total mileage travelled by cars in Great Britain trended upwards from 233.7 billion in 2000 reaching 257.4 billion miles in 2019.
• As vehicles have increasingly become more reliable, the age of the UK car parc has slowly increased from 7.3 years in 2010 to 8.3 years in 2019.
• The rise in popularity of the Dual-Purpose vehicles is palpable, increasing market share by 259% since 2010, selling 562,360 in 2019.
• The number of Electric Vehicles (EVs) and Alternatively Fuelled Vehicles (AFVs) as hybrid, plug-in hybrid, battery electric and hydrogen fuel cell car units sold have risen by nearly 750% in the past ten years, from 22,865 in 2010 to 171,071 in 2019.
• Since the year 2000, light commercial vehicle (2.6 to 3.5 tonne) registrations have grown by 59%. However, in the half-year to June 2020, LCV registrations had almost halved (-44.6%), down more than 87,500 units, with registrations in negative growth for five of the first six months of the year.
• The desire to ‘own the customer’ via Big Data is a primarily factor for motor insurers, driven by profit and the need to increase market share.
• The motor insurance sector faces huge challenges as the market moves toward fully autonomous vehicles.
• Vehicle electrification is probably the technology shift that brings with it the most significant risk to safety, especially for the repair technician, VDAs and first responders.

Companies Mentioned

• 3M
• A D Williams Accident Repair Centres
• A W Repair Group
• ABL Group inc. 1-Touch Repair
• Admiral
• Allianz
• Alton Cars Group
• Apollo Motor Group
• Arnold Clark
• Audi
• Autotech Group
• Aviva
• Baldwins Repair Group
• Balgores Motors
• Bennetts Scotland
• Blade Group
• BMW
• Direct Line Group
• Drive Vauxhall
• East Bilney Coachworks
• Fix Auto
• FMG Repair Services (Redde Northgate)
• Ford
• Gemini Accident Repair Centres
• Group 1 Automotive
• Hyundia
• Inchcape plc
• Industry Insights
• Innovative Repair Group (iRG)
• Jaguar
• John Clark Motor Group
• KC Autos Accident Repair Centres
• Kia
• L&I Eaton Accident Repair Centres
• Land Rover
• Lexus
• Lloyd Motor Group
• Lookers Motor Group
• LV
• Markerstudy
• Marshall Motor Group
• Mercedes-Benz
• Motofix Group
• National ARG
• NFU
• Page Automotive Group
• Parks Motor Group
• Pendragon
• Pentagon Motor Group
• Perrys
• Porsche
• PPG Industries
• Rainbow Bodyshop Group inc Xpress Centres
• Robins and Day
• Rybrook Holdings
• Rye Street Group
• Seat
• Selsia
• Skoda
• SMART
• Solera Audatex
• Stoneacre Motor Group
• Sytner Group
• T C Harrison Group
• Thatcham
• The Cooperative Insurance
• The Vella Group
• TrustFord
• Vauxhall
• Veetec Motor Group
• Vertu Motors
• Vizion Network
• Volkswagen
• Williams Group
• Wrights Accident Repair Centres
• Zurich

Methodology