This is Jeff White--I've been asked to write about my recent trip across the pond to meet with potential SceneExchange partners in the UK. Here is a summary of my observations about the UK market.
While in the UK I had the opportunity to visit the headquarters of a multi-shop company as well as a single location shop. Each provided a unique and distinct view of the insurance marketplace. UK body shops are under much more governmental scrutiny than shops in the US. They are also held to higher service expectations in some areas.
For example, in the UK shops provides a free ‘courtesy car’ with any repair. This means there is no rental cost to the carrier for the entire duration of the repair. The purchase of the cars as well as maintenance and repair are paid in full by the shop. This practice was started several years ago when the UK auto manufacturers realized they had a surplus of vehicles and needed an outlet to sell more cars. They began approaching shops with a competitive advantage and extremely cheap car prices. (In no time, every shop had to have the cars and the purchase prices went back to normal.)
Current repair conditions are much like the US--with fewer vehicles being repaired and smaller shops folding due to increased competition. Perhaps, at some point the remaining shops may revolt and shift the rental cost back to the carrier or at least have them help share in the expense.
Governmental oversight and adherence to several nationally recognized standards, such as the introduction of Kitemark into the repair industry, make it increasingly more expensive to be a shop in the UK. The imposed standards are based on the following four cornerstones: Man, Machine, Method and Materials.
- Man--This means that every person working at the shop who touches a specific vehicle, such as a BMW or Merc, needs to be certified by the manufacturer on each of their vehicles and that these certifications must be constantly kept up to date.
- Machine--Each machine or tool that is used on a vehicle must be acquired from the manufacturer and only used on their vehicles; this includes everything from lifts to wrenches.
- Method--The method to repair the vehicle comes straight from the manufacturer and can not short-circuit any part of the processes; meaning it takes longer and is more costly to repair each car.
- Materials--Lastly are the materials, which must be OEM or LKQ and often cause new parts to be ordered rather than repair the existing.
A current example of how all these pieces intersect is the increasing concern over the number of UK vehicles that use Boron Steel for increased strength and lighter weight. For UK shops, they are required to purchase the special welding tools and the training needed to work with this material. They also need to have separate and enclosed bay space for any required welding--and it must be fully sanitized after use. Take these costs, along with the current need to have separate welding tools for aluminum and regular steel and you can see where a shop will need to invest in three sets of welding gear per mechanic in order to perform to the Man, Machine, Method and Materials Kitemark standard.
The US and UK markets have most of the same difficulties and concerns; yet the size of the UK(same area as Michigan) and the number of shops(about 8,000) create a very different environment for the shop/ carrier relationship. Here are some ideas being tossed around overseas:
1. One pro-shop program would give certain shops have the ability to repair a vehicle with no need to provide the carrier an estimate.
2.On the opposite side is a proposal to allow the carriers ability to force a $1,000.00 fixed price per vehicle trial program on shops if they wish to keep the business.
In the end, I believe when the plus and minus columns are totaled in the US and UK the shop issues balance out but it’s the UK consumer who is making out the best. They get the all the benefits of the governmental controls on the shops, no rental fees and lower insurance rates on comparable US vehicles.