PALO ALTO, CA — Collision repair components are growing at a rate double that of most automotive wear replacement components, according to new research from Frost & Sullivan. In the past, the dealer channel was the avenue of choice for replacement components in North America, but with the establishment of aftermarket certification organizations such as CAPA and MQVP Inc., that have boosted the fit, quality and durability of aftermarket components, as well as the recent rulings in the Avery versus State Farm case, lower cost aftermarket component sales have flourished, the research firm said.

In key collision replacement product categories, aftermarket channel sales that include both aftermarket and aftermarket certified products are growing as a percentage of both units and revenues. Installation shops have traditionally pushed for the OE components because of their ease of installation and higher margins. Today’s certification programs have improved aftermarket quality and reduced component costs by 20 to 30 percent on equivalent parts. This is driving the shift toward aftermarket, according to Frost research.

New analysis from Frost & Sullivan U.S. Automotive Collision Repair Shop Analysis reveals that the U.S. automotive collision repair industry in 2005 is showing strong avenues for growth. Aftermarket component manufacturers have successfully penetrated the collision repair distribution channels through their ability to provide high quality parts at significantly lower costs with impeccable service. This has created a competitive situation which the original equipment manufacturers are challenged to meet.

“The quality and rigor of the testing and specifications laid out by aftermarket certification companies CAPA and MQVP, Inc. resonate well with collision repair shop personnel,” said Consulting Analyst Mary-Beth Kellenberger.

“Installers may have been forced into trying aftermarket components by the insurance companies but now our research indicates that installers are choosing aftermarket parts with increasing frequency without influence from the insurance companies,” said Research Analyst Rick Brown.

Insurance companies still have a great deal of say in what types of parts (OE or aftermarket) are used on a vehicle. Insurance companies’ validation of the aftermarket components has opened the floodgates as indicated by installation shops strong choice for aftermarket products and aftermarket distributors. Price is important, the dealer excels at availability but its service is not always in line with the service needed at the shop level.

Collision repair jobs are on the decline yet research at this time also indicates that component costs and average cost of repairs are rising further emphasizing the need for shops to quote wisely and win as many jobs as possible. On hand information has become essential to the quotation process and with increasing frequency; shops are turning to supply sources that improve their bottom line through information, service, delivery and costs.

The aftermarket channel has succeeded in many of these areas and poses an ominous threat. Vehicle manufacturers are testing a variety of pricing strategies designed to lower prices, but with aftermarket distributors focused on the high unit volume parts, price is simply not going to be enough to bring customers back to the OE channel.

“Insurance companies have a hand in more than 90 percent of reported collision repairs. The insurance companies have fine-tuned the repair process and consumers continue to defer decisions to the insurance companies,” said Kellenberger. “The complacency of consumers challenges the repair shop’s ability to use more OE parts and seek higher rates for their work.”

As insurance costs rise, vehicle owners are choosing to avoid the repair or are looking to alternative types of repair facilities to provide lower cost work. With the average cost of collision repair work increasing, it is ever more imperative to win that job. Despite the industry’s attempt to push back insurance company pressure, Direct Repair Programs (DRPs) are ingrained in the U.S. collision repair industry and indications show that those who participate in DRPs get more jobs and have higher revenues than non DRP shops. DRPs are here, becoming more sophisticated, and are growing.

U.S. Automotive Collision Repair Shop Analysis polled 205 respondents from four geographical regions.

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