The first ever IBIS South Africa conference was all about change, raising standards and improving trade skills as the global evolution of the collision repair trade came under the spotlight.
For over two decades the IBIS Bodyshop Symposium has been a major point of interest as the whole world of repair descends on the global think tank of how the industry will develop and mutate when viewed against the evolution of the global car. So the car of the future,, driver of the future and crash of the future as well as the repair of the future are all separate but key issues on the modern car development are put under the spotlight.
Jason Mosely, CEO of IBIS, who was the keynote speaker at the conference revealed some interesting cost facts on a global scale with the average body crash repair costs increasing in all markets by some 8.5% with future crash analysis. Looking at a larger severity of the damage vehicle when viewed against a background of new materials and technology, their research also showed that some repair nations were still enjoying a full 60% mark-up on labour sales in work done in the sales order sales mix where little change was seen in many developed mature markets with insurers developing a new strategy on promoting against non-part replacement, where in many cases smaller repairs were handled in that way with some insurance concerns posting decent profits. The case of claims frequency showed a downward trend where Volvo showed a decline of over 33% when compared with a modest decrease of just 4% in accident rates in Europe. The United Kingdom posted a reduction of some 18% in that period as well with close to 40% less rear-end prangs being experienced.
Along with this the profile of body repair was also changing to smaller repairs using different tools and different skills as repairs are no longer becoming easier but more complex and ever more expensive. Insurers were showing on average costs increases per repair of around 23% on the latest generation of vehicles with major front-end repairs showing a significant cost increase because of expensive parts replacements needed. Some headlamps had increased by over 200% against previous models.
The question of who exactly owns the customer – is it the repairer or the insurer – came into view with declining sales in some markets. Lower service levels, the parts revenue focus for motor makers has moved to body shop activities with less labour needed and inevitably more repair parts needed. All combined with an adjacent set of skilled repair profiles being needed as talent will become the biggest challenge in creating. Your own bench mark of trained staff to support tomorrow’s car repair as speed will become everything through major industry consolidation periods as Germany is facing close to a 30% reduction in the period up to 2030.
Even all the important insurance for car repair market could decline by up to 40% of its current size by 2030 said JP Morgan Motor Insurance as ADAS devices come into the real world of driving where their share of the market in 2016 was US $11 billion, by 2026 those electronic gizmologies with turnover at a colossal US $132 billion in revenue. This will bring a raft of focus change to the insurers offer as product liability, recall insurance liability and cyber liability insurance develop going forwards, so all in all said Jason.
Trevor Ward, head of customer service at Mazda SA, explained the Mazda brand objective behind their collision repair programme where the four pillars of their main focus combine with franchise dealers, insurers, body shops and Mazda OEM. They want the dealers to take care of the vehicle, owner and all parties to do the same in repair to give each customer a good collision repair experience. To offer Mazda’s philosophy of granting full freedom of choice, avoid restrictive practices in a market that self regulates to give all the market players a fair share of the cake, for clearly OEM’s, insurers and collision repair associations and body shops cannot work against each other.
Their move has been to appoint collision repair programmes and associations to sign service level agreements where they then take care of dispute regulation on any repair issues, has been working extremely well for Mazda. They require no audits, no fees and no limits on who can repair a Mazda vehicle and their signage package is also an optional agreement.
Ward went on to explain to the delegates on the Save-A-Car programme which applies to both insured and uninsured drivers when they offer a service to assist on a once-off basis for genuine parts pricing. Proof however would be required in all cases that the Mazda owner had received the benefit of the reductions on offer to repair the damaged vehicle.
There is a great need to respect all the players involved in vehicle damage repairs, to respect each other’s way of doing business, retain good and consistent communication levels to keep ahead in the playing field of business was the Mazda way.
Filum Ho, MD of Autoboys, presented their new pathway into the insurance quotation and OEM parts supply to iron out some heavily held marketing suspicions in South African collision parts business. “Traditionally,” said Ho, “the cost of entry represented a barrier to supply concerns.” Autoboys have expanded their offer in their 66 franchise operations nationally to include refinish paint and polishing systems. They also distribute both OEM and OEE alternative parts to repairers. Using their new online shops PSA, all make use of the programme,. Autoboys also have a direct parts supply business with some nominated insurers. Filum Ho’s comment of, “If you’re not in a digital space now, you are not in the game”. Autoboys will continue to innovate and lead via technology in creating value partnerships for their customers with a view to offer the widest range of products.
Dr Frik Botha of IT-C, a dedicated lifetime educator, then gave a very interesting talk on the government education skills development programme. The paper discussed the ongoing divide and rule principle that many insurance companies continue to dominate profitability of small to medium car repair shops. This plus the syllabus in many apprentice training curriculums is woefully outdated with the recent technology advances made in motor vehicle design and construction.
“As an industry,” Botha says, “we should demand from all the role players involved much more respect for such a skilled job.” The Skills Development levy is poorly understood as to exactly what a shop is entitled to claim back. Their apprentice training efforts has resulted in a huge pile of cash being held in reserve and undistributed or used by the trade which all puts our effort to develop ‘human capital’ on the back burner for the future of technological demographics and socio-economic disruptions that lie ahead as we transform the employment landscape.
“All this adds to South Africa’s lack of commitment to reduce the nations colossal and ever-growing unemployment problem. Government have revisited their funding module but labour market regulation needs drastic change to make people more easily employable or dismissed from their work. It is doubtful that with our aging work force (average age of 54!) of outdated panelbeaters, of which are less than 1000 currently registered, as to whether we would be able to repair future technology now being employed in the world car. In a market where, changing skills needs to be understood, government moves to increase learning pathways and linking it to the work place were to be welcomed.
Workplace based learning still formed a vital part of journeymen training with around just 12 400 total industry employees. The major role players of general assistants held at 7 292 many of whom don’t get upgraded because body shops don’t want them to cost more as qualified artisans in a great many cases. But with fewer than 750 apprentices registered in South Africa clearly there is a crisis with skills availability.
When you look at the prospect of R40 000 tax rebate per learner available it is hard to understand why apprentice training remains in the doldrums for our body shops. “We need recognition that skills development remains a critical issue on the repair road ahead,” said Botha, “or we will not cope in this trade.”
Next, an industry interview explored refinish market dynamics with Don Serapelo, Axalta, key account manager, moderated by Jason. The two examined a multitude of topics including skills, technology, collaboration, digitisation, and changing mobility. Serapelo emphasised that “Axalta’s future is about creating products that will be sustainable and a right fit for the future culture. It’s about investing more in innovation and thinking differently. Furthermore, Serapelo explained, that to help body shops improve efficiency, product development is key for not only Axalta, but for all those in the refinish sector.
Dave Shepherd, regional manager director of Audatex UK and SA, gave a special talk on the three major forces that cause disruption in global collision repair with technology intelligence data and ever high customer expectations being recorded by Audatex. The future for any body shops that hopes to retain a future in the trade would need a much-improved customer centric outlook. A firm view on digital systems advances within their own operation as well as outside forces at work.
The need for a more streamlined production with work flow and delivery on time status will become a big area of improvement for most shops in the next generation, of what is called the Amazon effect, where clients choose with internet options increase exponentially, and their demand for inclusive information seems to know no bounds.
Further to this changing landscape of claims where 3000 personnel harnessed data for organisations developed a new trust point for Audatex operations and all parties need to be able to trust the claim for damage repair. Average repair costs in Europe were now running at approximately 2600 Euros right now.
TTI Global, who have a specialist skills upliftment programme working across the world showed through Cornelius Viviers, three skills development challenges, the ways to overcome rapid changes in technology and the need to develop the staff to handle it. Recruitment strategies need development. Is our training effort sufficient to cope with the changes where a whole new raft of duty and care for workers training was fast emerging? Repairing new aluminium bodies and ultra–high strength steel panels was a new process entirely with new technology techniques in use today, where fusion welding was taking over from traditional methods of repair, plus the latest ADAS circle of safety devices now being employed on new models in an ever-changing environment. Declining skills levels is becoming a real headache for the trade to contend with.
A panel discussion which included Steve Kessel, CRA operations diretor, Graeme Reid of Lightstone, and Ian Groat, Publisher of Automotive Refinisher magazine, was moderated by Jason and finalised the day’s proceedings. Woeful skills availability came under the spotlight as well as a need for more OEM involvement on new car repairs at body shop level. Reid said that over 4000 monthly CSI reports provided feedback to customers who were often neglected in the repair cycle in a void of communication.
Groat said it was unforgivable for insurance players to grant a rate of R900 or over for a mechanical repair at the motor agents but could only offer less than R300 average per hour for collision repair labour charge out rates. The current rate was causing huge distress on profitability and sustainability to the trade stakeholders.
Steve Kessel also went on to say that active work steering often supplied an over capacity to some shops which leads to poor quality work output finished work repaired.
In the discussion about the future, role players were asked to step up to the plate and improve some of the traditional adversarial confrontation that remains all too often unresolved in this industry.