A new report from San Diego-based Mitchell International Inc. delves into the complex relationship between the economy, the cost of replacement auto parts and claims severity.
The fourth quarter 2010 edition of Mitchell’s Industry Trends Report (ITR), finds that the recession continues to influence alternate part selection behavior, and, paradoxically, estimate severity is now trending flat even as OEM parts prices continue to rise.
The findings are based on the Mitchell Collision Parts Price Index (MCPPI), a metric similar to the Consumer Price Index (CPI) but created specifically for the collision repair industry, based on the industry's most comprehensive data for the top 20 most-replaced collision parts. Parts represent approximately 42% of the average repairable estimate dollars, and therefore have a significant influence on the overall cost of a collision repair estimate.
"Our MCPII data for the first half of 2010 indicates that OEM parts prices have risen while estimate totals have stayed flat, with overall parts spend decreasing as more alternative parts are used due to the substitution effect-an alternative where insurers and shops choose to repair a part rather than replace it," said Mitchell's VP of Industry Relations, Greg Horn. "This year's data reconfirmed 2009's year-end surprise finding that when OEM part prices increase, estimate severity decreases. Future estimate severity trends will arise from the interplay of parts prices, inflation and general economic conditions, which Mitchell will continue to monitor especially as we move out of the recession."
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