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Advances In Automotive Technology Could Drive Repair Costs Up
By Nebraska Autobody Association
Dec 15, 2005, 11:55

(PRWEB) November 18, 2005 -- Today’s vehicles are engineered with the latest technology that makes driving safer, more comfortable, and more enjoyable. Virtually every component of a modern vehicle has been carefully reengineered and manufactured after extensive research and development. From smart tires, microsecond timing of the inflatable safety restraint system, to the dazzling showroom finish, each vehicle components was designed after extensive scientific research, innovation, and advancements. But what happens when those marvels of technology crash?

‘Remanufacture’ may be a better term than ‘repair’ to describe the process of putting a collision-damaged vehicle back on the road. Trained and qualified technicians who work in modern automobile remanufacturing facilities will repair the damage and restore the vehicle to pre-accident condition while maintaining the same pre-loss performance and safety characteristics. And that process could drive repair costs up.

According to a survey conducted by the Nebraska Autobody Association, remanufacturing modern collision-damaged vehicles requires highly skilled employees whose salaries are commensurate with other professional technicians. Investment in human resources will be reflected in employee retention, continuing certification, and compensation; costs that will ultimately be absorbed by the consumer in forms of higher premiums and repair costs.

In addition to increases in human resources costs, the survey indicated that body shops would face additional investment in equipment and technology. Remanufacturing modern collision-damaged vehicle and the accompanying technological accoutrements will require additional capital investments in computers, software, and specialized diagnostics equipment.

According to the study, body shops that do not adapt may find themselves out of business. “Shops have to keep an eye on the future,” said Al Pfeifer, President of the Nebraska Autobody Association. “We can’t make decisions based on today’s business models, because those models are quickly changing.”

Your neighborhood body shop may also be headed for a financial collision. As shop expenses skyrocket, insurers are aggressively squeezing shops to cut costs. “Insurers are becoming increasingly stingy at a time when the repair industry faces rapid increases in operating costs and investments,” said Norbert Zaenglein, Executive Director of the Nebraska Autobody Association.

Body shops operate in twilight zone economics, a situation where free market conditions are twisted sideways. Insurers influence labor rates, select replacement parts, cap reimbursements, and tell shops how to repair the vehicle. Insurers may even tell shops to omit required repair procedures. “The situation is seriously flawed,” said Zaenglein,“ and shops are caught in the middle. If you don’t play by the insurer’s rules, you risk losing referrals from the insurance company.”

Claimants have to be vigilant to be certain that the insurer recognizes and pays for all covered repairs. “Insurers sometimes try to shift a portion of their policy obligations onto the body shop or back to the claimant by denying a portion of the claim; and that is not only unfair, it violates state laws,” said Zaenglein.