UK-based Europe correspondent, Barry Edney provides this overview of a recent Covid-19 update webinar held by ARC360, an industry forum for the collision industry.
Looking at the Automobile Association (AA) data on vehicle movements, also used in government statistics, it’s clear that traffic reduced immediately after the lockdown to around 40 percent of normal. Claims have fallen below that. Since then claims have been fairly flat until a couple of weeks ago then almost doubling each week and now at 50 percent of normal level. It’s not clear at this stage if that is due to more customers looking for repairs, new demand, or if it is simply pent up demand.
Several repairers have re-opened in a limited way with either a skeleton or reduced staff level. The overall view is that the original estimate that around 20 percent of shops were at risk of permanent closure is still about right. A challenge for the shops re-opening is that they don’t have a pipeline of work. These shops don’t necessarily want the techs back yet as they need to be sure they have the cars, the approval and the parts before taking the techs back onto their payroll.
The initial results for last month show a slight dip in April with a lot of WIP and non-driveables. Shops are expecting 40 percent of usual turnover, but this is driven by WIP and VORs commencing, although some believe this could be a false positive with more likely only 20 percent actually commencing. Shops need some clarity within 4 weeks or so. If the 40 percent doesn’t materialise then furlough will need to be continued and may have to be extended across the industry.
Most expected any recovery to be affected by a permanent increase in working from home which will likely reduce miles driven and lead to reduced claims activity. One view from China is the opposite, with many people preferring to drive rather than risk exposure and on public transport. This will have to be closely monitored.
All agreed that without the various government support programs, many shops would go under already. All were complimentary at the ease and speed that the various schemes delivered cash to the business but the CFO of a major repair chain advised caution of a cash flow crunch when deferred payments such as GST and other fees are due in 12 months.
There was frustration expressed that insurers and work providers are leaving all the support to the government and not doing enough themselves. The limited contributions by insurers don’t really help. For example, the cost of PPE sky-rocketed and is hard to get, The cost of assessments and cleaning has increased due to care needed and extra PPE used and additional parts contribution more than eroded by costs to collect and / or ship.
Some insurers issuing a premium refund to drivers as cars not being driven as well as additional claims on holiday and travel products and the significant claims for business interruption cover. The AA has taken steps to help body shops cashflow with invoice payment within 24 hours, stage payments for parts, and directly supporting drivers with courtesy cars on behalf of the repairer.