Ryan Mandell
Director of Claims Performance, Auto Physical Damage, Mitchell, An Enlyte Company
None of us could have predicted the events of 2020 and their impact on the automotive industry. A disruption in the export of Chinese parts, manufacturing delays in Europe, the short-term closure of U.S. assembly plants and a significant drop in sales volume can all be blamed on COVID-19. Despite these challenges, however, the industry continues to demonstrate its resilience. From OEMs producing personal protective equipment to dealerships launching online purchasing options, the automotive sector is finding new ways to move forward. So what can we expect in 2021? Here are five trends that we’re watching and that you should be aware of as you prepare for the New Year.
Trend #1: Personal Vehicle Ownership Over Shared Mobility
For the last five years, experts have anticipated the demise of personal vehicle ownership and usage. However, COVID-19 has flipped the shared mobility trend on its head. While the pandemic has reduced the commuting needs of countless workers, many still rely on their vehicles for vacation travel and shorter, more frequent trips throughout the day. Jonathan Smoke, chief economist of Cox Automotive went so far as to say, “The vehicle, in many ways, has become our own private bubble”. This trend is also illustrated by ride-sharing companies, which are evolving their business models to put greater emphasis on the movement of goods. Case in point: the Uber Eats platform. Uber viewed this as such a critical aspect of their business that they purchased another digital food delivery service, Postmates, for $2.65 billion in July.
Trend #2: Electric Vehicle Expansion
Auto manufacturers remain committed to both the hybridization and electrification of their fleets. As proof, the 2021 U.S. lineup includes 75 different fully electric (EV) or plug-in hybrid (PHEV) models compared to 59 in 2020. Tesla continues to command the largest share of the EV market. However, growing parity between legacy and startup manufacturers is predicted to drive a more balanced environment, reducing Tesla’s market share from a forecasted 66% of new electric vehicles sold in 2020 to 55% in 2021. Increasing levels of choice have spurred EV adoption for the past several years and the expansion into the pickup truck segment may serve as a catalyst for further growth and disruption. GM recently announced the EV Hummer, Ford is bringing to market a fully electric F-150 in 2021 and the startup Rivian is enjoying increased attention thanks, in part, to its planned use in the Amazon delivery fleet.
The 2021 U.S. lineup includes 75 different fully electric (EV) or plug-in hybrid (PHEV) models compared to 59 in 2020.
Consumer anxiety over EV range limitations will likely diminish as the mean range of fully electric vehicles is expected to increase by almost 9% in 2021. These factors, combined with lower EV/PHEV purchase prices, will continue to push consumers down the EV path. Since 2018, the frequency of EV/PHEV vehicles as a percentage of repairable claims has doubled and the signs point to this trend accelerating in the year ahead, according to Mitchell data.
Trend #3: Prevalence of Collision Repair Diagnostics
The use of diagnostics continues to increase at a steady rate and, for a growing number of collision repair facilities, it’s a standard part of the repair process regardless of the severity of the damage. An analysis of data from more than 2.2 million scans with Mitchell Diagnostics reveals that the average scan produces more than seven diagnostic trouble codes (DTCs), making pre- and post-scanning critical to properly restoring a vehicle’s safety systems. The increased pervasiveness of diagnostics is a positive trend for all industry stakeholders. Repairers rely on diagnostic scanning and recalibrations to help verify that safety systems are operating appropriately. And for insurers, scanning and recalibration help validate that a vehicle has been properly restored. It’s not out of the realm of possibility to expect a near universal application of diagnostics in collision repair by this time next year.
Trend #4: Increased Focus on Glass
Once considered a niche segment of the collision repair industry, glass is rapidly becoming a core component of proper, safe vehicle repair. The average number of labor hours categorized as “glass” has increased by just over 27% since 2018 based on Mitchell’s data from glass estimates. Additionally, calibration of the front-facing cameras mounted behind windshields has become more common, with many manufacturers releasing position statements that require such calibrations even when the windshield itself is not removed.
The average number of labor hours categorized as “glass” has increased by just over 27% since 2018 based on Mitchell’s data from glass estimates.
Adding to the growing importance of glass in collision repair is the evolution of Heads-Up-Display (HUD) technology. HUD provides a form of augmented reality projected on the windshield, giving the driver greater real-time connectedness to the vehicle’s safety systems. Analysts expect the use of HUD technology to increase, with an anticipated 31.3% compound annual growth rate (CAGR) between now and 2025. They also predict HUD to be offered across the entire automotive spectrum instead of just through high-end luxury brands.
Trend #5: Rise in Accident Severity
Accident severity, in this context, is not specifically focused on part costs, although that may be a significant by-product. Instead, the increase in severity is related to factors including lightweight construction and the interconnectedness of vehicle systems—such as Advanced Driver Assistance Systems (ADAS), air bag components, suspension, steering parts and various other electronic mechanisms. Between 2018 and 2020, the frequency of estimates classified as “non-drivable” has grown by 5.63% and the frequency of airbag deployments has increased by 22% per Mitchell data. These numbers demonstrate the critical role properly functioning electrical systems play in vehicle safety. When such systems are activated during an accident, the vehicle has a much higher likelihood of being non-operational, adding extra costs to the repair.
Between 2018 and 2020, the frequency of estimates classified as “non-drivable” has grown by 5.63% and the frequency of airbag deployments has increased by 22% per Mitchell data.
The pandemic’s impact on the global automotive industry will be felt for years to come. Changing consumer needs coupled with advancements in technology are sure to drive innovation and a new way of operating—helping the sector emerge from the COVID-19 crisis even stronger.