CollisionWeek Exclusive | Q4 2011

Mitchell's Greg Horn: Industry Trends Report

Horn says Japanese tsunami had little material impact on Japanese vehicle parts prices.

The average Actual Cash Value (ACV) of vehicles appraised for Collision losses during the third quarter of 2011 exceeded $14,000 for the first time according to the latest edition of the Mitchell Industry Trends Report (ITR). The company also reported a slight increase in the estimated average gross collision appraisal value of $2,884, an increase of $17 from the same period last year.

Mitchell recently released the fourth quarter 2011 edition of its Industry Trends Report (ITR), the company's quarterly publication that highlights industry trends, news items and statistics. This edition features the article, "Did the Tsunami in Japan Devastate Asian Parts Prices?" written by Mitchell's Vice President of Industry Relations, Greg Horn, who analyzed estimate parts data to measure the impact of the tsunami this past spring on Japanese vehicle parts pricing, including whether costs increased as a result of shortages.

In the article, Horn uses the Mitchell Collision Parts Price Index (MCPPI) to identify trends in parts prices vs. inflation and assess the impact of the tsunami on parts selection behavior. The MCPPI index tracks parts price changes for the top 20 most replaced collision parts. Comparing the latest MCPPI data with a subset of Japanese only vehicle parts showed that the disaster had little impact on the U.S. parts market.

"Our in-depth analysis using the MCPPI indicates the tsunami had little net impact on parts pricing. Isolating the Japanese vehicle make parts index and breaking out the subset of Japanese make vehicles by part type shows that the Japanese vehicle index mirrors broader market trends. In the aggregate, parts prices increased, even in a year where inflation has slowed to the lowest rate since we began measuring the index. OEM indexed parts decreased in price while aftermarket and remanufactured parts increased slightly. Spot shortages and hoarding may have occurred immediately after the tragic events in the spring but had little material impact on Japanese vehicle parts prices."

Also in the fourth quarter report, Mitchell found that the average gross appraisal value for Comprehensive coverage estimates processed through Mitchell servers was $2,699, compared to $2,600 in Q3 2010. The initial Average Appraisal Value, calculated by combining data from all first and third-party repairable vehicle appraisals uploaded through Mitchell systems in Q3-2011 was an estimated $2,587, an increase of $48 over the previous year's Q3-2010 appraisal average.

The report also showed a continued increase in paint and materials costs on the average estimate. During Q3-2011, paint and materials made up nearly 10.9 percent of the average appraisal value, representing a 0.4 point relative increase from Q3-2010. The average paint and materials rate, achieved by dividing the average paint and materials charge by the average number of estimate refinish hours, yields a rate of $30.20 per refinish hour, up from $29.51 in Q3-2010.

Notably, the report showed the second consecutive quarterly decrease in the percentage of estimate dollars spent on aftermarket parts. In Q3-2011, 15.1 percent of all parts dollars recorded on Mitchell appraisals were attributed to aftermarket sources. This is down from the first quarter peak of 15.7 percent and 15.4 percent in the second quarter. While the average percentage of OEM parts fluctuated slightly during the past three quarters, remanufactured and salvage parts each experienced two consecutive quarters of increases.

Download the latest Industry Trends Report.

Reprinted with permission from CollisionWeek (www.collisionweek.com)