Insurers have seen their bodyshop approval rating dip over the past three years, but the 2001 Sewells Bodyshop Opinion survey, sponsored by computer-based estimating supplier Audatex, revealed the largest recorded drop. Last year, insurers were rated a lowly 63.7, down from 68.4 in 1999 and far below the 71.7 high achieved in 1997.
Sewells research consultant Chris Oakham, who co-ordinated the survey, said repairers were angry about approved repairer contracts, which were highly demanding, but could be cancelled by insurers at a whim.
“Repairers were also unhappy about periodic reviews of their approved status, a lack of flexibility on opinion times and hours allowed per job,” he said. “Previously, these had been much lower down the list, which is usually dominated by speed of payments and quality of service.”
Mr Oakham described the industry mood as “the worst I've seen”.
He said: “Previous surveys have found the industry to be more bullish than is generally reported. This year, ratings have dived – it's a much gloomier environment.”
The survey, based on 578 responses, found that regional differences in pay and labour rates were causing “massive problems” for repairers.
Bodyshops within the M25 were paying productives 46% more than repairers in Northern Ireland, for example, but their labour rates were only 12% higher.
“There is massive inequity between the different regions – many bodyshops within the M25 have been forced to close,” said Mr Oakham.
The breakeven labour gross profit level for repairers is thought to be around 58%, though for a satisfactory return, repairers should be achieving 64-66%.
Mr Oakham said: “If they can't make 58% returns they will be suffering huge losses. Bodyshops in the M25 are making around 56.5% on average.”
The body repair market has experienced minimal growth since last year – its value has nudged up 3.45%, from £4.93bn to £5.1bn.
Insurers continue to dominate, taking £3.47bn (68% market share) compared to £3.4bn last year (69%) – the first year-on-year increase for three years.
Bodyshop numbers remain in decline, although the market has defied some analysts' predictions.
Following the phased implementation of the Environmental Protection Act during the 1990s, which demanded costly investment, many experts predicted the demise of the medium sized repairer (typically between four and 12 productives).
They would be forced to downsize to slip the EPA's lower threshold for conformity or invest to become volume repairers.
Small outlets (less than four productives) would fall slightly, while the volume repairers (more than 12 productives) would grow.
However, the survey reveals a four-year trend where the smaller bodyshops are in greatest decline. In 1997, there were 8,497 small repairers; last year there were 5,040, a drop of 41%.
In contrast, medium sized outlets fell slightly by 11.4% – from 3,560 to 3,152 – while volume repairers increased, as expected, from 662 to 1,086. They account for the greatest share of the work by value, at 42%.
The overall market fell by 8.1% to 9,278 outlets.
Primary bodyshops – where body repairs account for 90% of business – are also in decline, falling from 5,780 in 1999 to 5,675 last year, of which 1,950 were franchised repairers. Mr Oakham predicts there will be 5,000 primary bodyshops by 2005.
Franchised dealer bodyshops were, he added, facing a troubled future. “They are at the mercy of the main dealership – if that closes, so will the bodyshop in most cases.
“It is surprising because you can generally make more from the bodyshop than other areas of the dealership – but only just.”
Perry Group recently underlined its commitment to body repair, selling its motor retail division. The company believes it can achieve better returns from its standalone Nationwide Crash Repair Centres.
Manufacturers have made a concerted effort to create a greater awareness in their branded bodyshop programmes. Previous opinion surveys have indicated widespread confusion by franchised repairers over whether their carmaker operates a branded scheme.
“Many dealers did not know that they had a manufacturer programme,” said Mr Oakham. “This ambivalence has changed – carmakers are working hard to get their programmes known and several have revised their schemes.
“As a result, more dealers have a better understanding about what their manufacturer is doing.”