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®
Volume Seven Number Four
Q4 2007
Published by Mitchell International, Inc.
Industry Trends
Report
In this issue:
Quarterly Feature:
“Measuring Alternate
Parts Usage”
The Economy &
Short-Term Energy Outlook
Plus a Special Editor’s
Feature Article: “Will the
Soon-to-Come Chinese Cars
Affect Salvage Prices?”
Motor Vehicle Markets
New Vehicle Sales
Used Vehicle Sales
Price Movements by Market Class
Current Events in the Collision
Industry
U.S. Auto Facts At-A-Glance
Mitchell Collision Repair
Industry Data
Average Appraisal Values
Parts Analysis
Paint & Materials
Labor Analysis
Adjustments
Total Losses
J.D. Power & Associates:
Facts, Figures, Trends
Total Loss
Canadian Collision Summary
Casualty Statistics
About Mitchell
Mitchell News Releases
Mitchell Brand Advertising at Work
Industry Trends
The Industry Trends Report is a quarterly
snapshot of the auto physical damage
collision and casualty industries. Just
inside—the economy, industry highlights,
plus illuminating statistics and measures,
and more. Stay informed on ongoing and
emerging trends impacting the industry,
and you, with the Industry Trends Report!
Report
Questions or comments about the Industry
Trends Report may be directed to:
Q4 2007
Mitchell International is a leading provider
of information, workflow, and performance
management solutions to the automotive insurance
and collision repair industries—serving carriers,
collision shops, and other commercial participants
in the physical damage and auto-related medical
claims markets. Mitchell facilitates millions of
electronic transactions between more than 16,000
business partners each month to enhance their
productivity, profitability, and customer satisfaction
levels. For more information on Mitchell International,
please visit our website at www.mitchell.com.
Table of Contents
3 Quarterly Features : “Measuring Alternate Parts Usage”
6 Special Editor’s Feature Article : “ Will the Soon-to-Come Chinese Cars
Affect Salvage Prices?”
8 The Economy & Short-Term Energy Outlook
10 Current Events in the Collision Industry
15 Motor Vehicle Markets
New Vehicle Sales
Used Vehicle Sales
Price Movements by Market Class
17 Mitchell Collision Repair Industry Data
Collision Losses
Comprehensive Losses
Third-Party Auto Property Damage
Supplements
Parts Analysis
Paint & Materials
Labor Analysis
Adjustments
Total Losses
21
23
25
26
U.S. Auto Facts At-A-Glance
J.D. Power & Associates: Facts, Figures, Trends
Total Loss
Greg Horn
Editor in Chief,
Vice President of Industry Relations
[email protected]
For distribution and circulation questions,
or requests for back issues, please contact:
Regina Merkey
Managing Editor,
Marketing Communications Specialist
Distribution and Circulation
(858) 578-6550, ext. 8146
e-mail: [email protected]
Additional Contributors:
Manheim analytics provided by Thomas
C. Webb, Chief Economist at Manheim
Auctions. Webb has been associated with
the used vehicle market for more than 26
years, including serving as Senior Manager
at a professional services firm’s global
automotive practice, and Chief Economist
for one of the industry’s largest national
trade organizations.
PIN Insights published by Power
Information Network®, a division of J.D.
Power and Associates. © 2006 by J.D.
Power and Associates®, The McGraw-Hill
Companies, Inc. All Rights Reserved.
The Industry Trends Report is published
by Mitchell International, Inc.
®
The information contained in this publication
was obtained from sources deemed reliable.
However, Mitchell International, Inc. cannot
guarantee the accuracy or completeness of
the information provided.
Canada Appraisal Severity
Canada Parts Utilization
Vehicle Age and ACV’s
30 Collision Casualty Statistics
31 About Mitchell International, Inc.
News Releases Q3-2007
Mitchell Industry Trends Report
2
Quarterly Feature
Measuring Alternate Parts Usage
By jamison day
Senior Director, Information Solutions—Mitchell International
Alternate Parts Usage (APU) has been a popular area of focus for the collision repair
industry over the past few years, not surprising given that parts can typically make up over
40% of the dollars of a repair. APU is the choosing of less expensive parts of equal quality
over parts from the Original Equipment Manufacturer (OEM) and includes parts categories
of Aftermarket, Recycled or Like Kind Quality (LKQ) and Remanufactured. This article
examines the different methodologies for measuring APU and the pros and cons of each.
Many of Mitchell’s clients have adopted APU as a key metric that they measure, track and
attempt to affect over time. A recent analysis conducted by Mitchell International shows
there has been a marked increase in APU over the past few years. (See Figure 1.)
25%
23%
20%
10%
0%
2003
2004
APU as a % of part dollars
2005
2006
Jamison Day
Senior Director,
Information Solutions,
Mitchell International
Jamison has over 15 years of
experience in Information Technology,
Management Consulting, Business
Operations and Data Analytics. He
joined Mitchell in 2004, serving
in sales and customer service
management roles before becoming
Sr. Director of Information Solutions.
He now oversees Mitchell’s Data
Management,
Reporting
and
Analysis products as well as leading
the Business Analytics group which
provides
customized
analytical
services to Mitchell’s customers.
Figure 1: Alternate Parts Usage 2003-2007
30%
About the author…
2007
APU as a % of part counts
As a percent of dollars, APU has increased over 8% since 2003 (from 23% to 25%)
and appears to be reaching a plateau and even slightly declining this year. As a percent
of actual part counts, however, the change has been much more dramatic: APU has
increased nearly 28% since 2003 (from 18% to 23%). APU has clearly increased over time,
but here we see the differing results using the two APU metrics.
APU – Percent of Dollars
The most common method of calculating APU is to divide the total amount of dollars spent
on alternate parts (the sum of aftermarket, recycled and remanufactured) by the total
amount of dollars spent on ALL parts. This methodology is attractive since it gives a higher
mathematical weight to the more expensive parts and ultimately is an indication of where
parts dollars are actually being spent. The inherent flaw in this methodology is best shown
through an ironic example.
Prior to Mitchell, Jamison worked
for Boston Idealab, a technology
incubator, AT Kearney Management
Consulting in Atlanta and several
Internet
companies
in
San
Francisco. He received a Mechanical
Engineering degree from Cornell and
an MBA from the Stanford Graduate
School of Business.
Example: A repair requires replacing two parts. It is determined that the first part
must be replaced using an OEM part costing $500, and, with the second part,
there is a choice between a $300 part from a nearby aftermarket parts vendor or
the same part for $500 from a remote vendor.
Part 1 Cost
Part 2 Cost
Total Parts Cost
APU (% of $)
Choice A
$500
$300
$800
37.5%
Choice B
$500
$500
$1,000
50.0%
3
Quarterly Feature : Measuring Alternate Parts Usage (con’t.)
The better alternative for this repair is clearly Choice A, but the APU% would actually be
higher using Choice B. In this case, a simple, blind focus on increasing APU would lead
one to make the wrong decision.
APU – Percent of Part Count
Another method of calculating APU is to divide the total number of alternate parts
(aftermarket, recycled and remanufactured) by the total number of ALL parts. This
methodology avoids the problem illustrated in the example above and is quite simple
to understand since it involves just counting the number of times an alternate part was
used. This methodology, however, has two flaws. First, of course, not all parts have the
same price. Thus, a repairer could frequently choose to utilize alternate parts for relatively
inexpensive parts, like tail-lights, but always choose OEM for highly expensive parts, like
steering gears or alloy wheels. Although the APU metric might be high, it would not be
indicative of the amount of dollars actually spent on APU.
The second problem with this methodology involves the choosing of assemblies versus
individual parts. In many cases, a repairer will select alternate parts in the form of recycled
assemblies instead of individual OEM parts. Imagine an example where a door shell, a
handle and a mirror needed to be replaced. Choosing all OEM parts would result in a part
count of three versus choosing one recycled door assembly. In the latter case, the repairer
would only “get APU credit” for a part count of one.
APU – Versus “What You Would have Spent”
So how accurate are these metrics and which one is better? In an attempt to answer this
question, we next explored how the two APU metrics relate to what we would consider
a “perfect-world” metric. Although difficult to measure and track with today’s information
systems, one could envision measuring what a repairer spent on parts versus what they
would have spent if they had chosen to replace ALL the required parts with OEM parts.
By choosing a random data set of estimators and estimates and cross referencing that
against Mitchell’s extensive database of parts prices, we were able to calculate that metric
and determine the total part dollars that would have been spent if the entirety of parts in
these sample estimates had been replaced with OEM parts. Next, by comparing what was
actually spent on parts against this all-OEM amount, the net parts cost differential was
computed. Finally, this cost differential for each estimator was plotted against the currentlyused two APU metrics to see whether there was a strong correlation between higher APU
and net part cost differential. (See Figures 2 & 3.)
Figure 2: APU (as % of Dollars) versus Part Cost Differential*
Percent Parts Cost Differential
30%
25%
2
R = 0.71
20%
15%
10%
5%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
APU Percent of Dollars
*NOTE: A random sampling of 150 estimators from the Northeast region and their repairable estimates was taken
from June of 2007. Approximately ten thousand selected estimates where analyzed for these figures.
4
Quarterly Feature : Measuring Alternate Parts Usage (con’t.)
Figure 3: APU (as % of Part Count) versus Part Cost Differential*
Percent Parts Cost Differential
30%
2
R = 0.77
25%
20%
15%
10%
5%
0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
APU Percent of Part Count
Here we see a clear relationship between the two APU metrics and the “perfect-world”
metric—part cost differential. Both metrics have a high correlation factor (R Squared) with
APU—Percent of Part Count slightly higher at 77% versus APU—Percent of Part Dollars
of 71%. The results here show exactly what was expected—the higher the APU, the higher
the parts cost differential. What is less obvious and perhaps more interesting is that the
two APU metrics appear to have an almost equivalent accuracy in predicting this cost
differential.
Conclusion
In this article, we have shown that the use of alternate parts has increased significantly
over the past few years with the rate of change slowing and leveling since 2005. We
defined the two popular APU metrics—APU as a percent of dollars and as a percent of
part counts—and have illustrated via invented scenarios that these metrics have inherent
flaws. However, by comparing APU metrics against a more relevant measurement, we have
shown unequivocally that higher APU predicts higher levels of part cost differential. Thus,
we conclude that the two common APU metrics are relevant and valid.
“What is less
obvious is that the
two APU metrics
appear to have an
almost equivalent
accuracy in
predicting this
cost differential.
We conclude the
two common
APU metrics
are relevant and
valid.”
As is often the case with any measurement and tracking methodology, there is no one
right answer. Rather, repair process managers must use a collection of metrics to properly
evaluate performance and understand the inherent flaws and possible inaccuracies in each
of these metrics. They must strive to not only look at the numbers, but also understand
the methodologies employed to compute those numbers and, in the end, make sure that
they and their teams are making the right repair decisions using common sense and good
business practices.
Editor’s Note: With an increasing focus on parts in the collision repair industry, Mitchell
has conducted a number of analyses around parts usage, APU and other parts-relevant
topics. Look for more articles around the topic of parts in upcoming editions of the Mitchell
Industry Trends Report.
*NOTE: A random sampling of 150 estimators from the Northeast region and their repairable estimates was taken
from June of 2007. Approximately ten thousand selected estimates where analyzed for these figures.
5
Special : Editor’s Feature Article
Will the Soon-to-Come Chinese
Cars Affect Salvage Prices?
By greg horn
Vice President of Industry Relations—Mitchell International
Delays coming to the U.S.
A few years ago, Malcolm Bricklin boldly stated that he would import Chinese cars to the
U.S. by 2007. Bricklin is responsible for bringing Subarus to the U.S. in the 1960’s, his own
Bricklin SV-1 (“SV” stood for safety vehicle) in the mid 1970’s, and Yugos in the 1980’s. With
Bricklin’s track record and reputation for unrealistic predictions, it’s no surprise that he has
now extended that date by a few years.
With the recent well-publicized release of poor crash test results from both Russia and
Germany, some Chinese auto executives have now said that it could be as late as 2020
before Chinese-designed and manufactured vehicles can readily enter the U.S. market.
Most likely, these Chinese-made cars will eventually arrive in the U.S. through a joint
venture between a Chinese manufacturer and Chrysler or Volkswagen via the assembly
of ‘knockdowns’—vehicle component kits that are assembled in a factory, primarily to take
advantage of inexpensive labor.
Although the insurance and collision repair industries will not have to face the problem
created by the influx of low-value vehicles—oftentimes totaled even in moderate
collisions—for a few more years, the impact may be felt earlier than expected. (Remember
how easily brand new Yugos totaled out in parking lot accidents?)
Will rapid expansion in the Third World affect U.S. salvage values?
By simply looking at the number of Chinese vehicles exported to African and Latin American
countries, it is clear that the market is feeling the impact of what could be the first of many
ripples. The Chinese have begun exporting cars to these developing countries, which have
fewer safety regulations and do not mandate airbags. These vehicles have taken each
market by storm and in the process have taken a huge share away from used and rebuilt
European salvage vehicles, particularly from port countries like Belgium and Holland. As
sales of Chinese vehicles continue to rise, will this have a chilling effect on our own robust
international salvage market?
International salvage impact by the numbers, according to Copart Auto Auctions:
• 61.2% of vehicle sales are influenced by international bidders
• 26% of salvage vehicles are sold to international buyers
About the author…
Greg Horn
Vice President of Industry Relations,
Mitchell International
Greg Horn joined Mitchell International
in September of 2006 as Vice President
of Industry Relations. In this role, Greg
assists the Mitchell sales force in
providing custom tailored business
solutions to the auto collision industry.
He provides guidance to Mitchell’s
Product Management and Business
Analytics teams, playing an important
role in shaping Mitchell’s solution
portfolio to ensure that it meets
the evolving needs of current and
future clients. Greg also presents
Mitchell’s Industry Trends Updates at
conferences across the country.
Prior to joining Mitchell, Greg served
as Vice President of Material Damage
Claims at GMAC Insurance, where
he was responsible for all aspects of
the physical damage claims process
and the implementation of a unique
vehicle replacement program along
with serving on the GM Safety
Committee. Prior to GMAC, Greg
served as Director of Material Damage
Processes for National Grange Mutual
in Keene, NH.
• 35% of salvage vehicles sold list international buyers as the 2nd highest bidders
Do these statistics illustrate that the influx of Chinese vehicles could potentially reduce
international demands for rebuildable salvage vehicles and significantly impact the record
returns seen in recent years? Not necessarily, according to Rob Vannuccini, Senior Vice
President of Marketing at Copart, Inc. “We have not seen an impact on returns from the
influx of these cars from China, and it is important to note that China is a very large buyer
of salvage.”
6
Special : Editor’s Feature Article : Will the Soon-to-Come Chinese Cars Affect Salvage Prices? (con’t.)
Is it possible that the full impact has not been seen yet because this recent influx is just
the beginning? Consider the reality that the current volume of Chinese cars and trucks
exported to Africa is minimal but is growing quickly. Sixty-one thousand vehicles were
shipped in the first five months of 2007, more than double the number shipped abroad in
the same period in 2006 according to the Wall Street Journal.
The fact that Chinese vehicle exports to the West African nation of Senegal have risen
18-fold to $7.9 million from $434,000 since 2003 is a staggering example of how quickly
Chinese imports can grow and impact exports from other countries. In contrast, the number
of used cars shipped from the port of Antwerp in Belgium to Senegal has fallen over twothirds from 9,446 to 2,727. This trend is a sign of the significant change that is taking place
in the market. You may be among those who think that because Africa is another continent
that is so far away, the impact will be small. Perhaps, but if we consider what has happened
in Africa within such a short time, and we turn our attention to our neighbors in Mexico, the
scenario sounds very similar.
Zhongxing Automobiles plans to export 20,000 vehicles, primarily SUV’s and pickups, to
Mexico next year. The Zhongxing Landmark SUV will sell in Mexico for the equivalent of a
mere $12,000 USD, and the Admiral pickup will sell for considerably less. (If you’ve watched
auctions on the West Coast, you know that many of the pickup and SUV salvage buyers
are not from the U.S.)
Zhongxing Admiral Pickup
Zhongxing Landmark SUV
Don Hermanek, Senior Vice President of Sales and Marketing at Insurance Auto Auctions,
Inc. doesn’t believe these exports will have much effect. “Because we have globalized the
salvage market, we have over 125 international buyers from many countries. I don’t think
the entry of low cost Chinese cars will have much effect on salvage sales. Furthermore,
I think it will be a long time before low cost Chinese vehicles take hold in markets like
Mexico.”
“If we consider
what has
happened in
Africa, and we
turn our attention
to our neighbors
in Mexico, the
scenario sounds
very familiar.”
The export of Chinese-made cars into the U.S. appears to be years off, and the two largest
U.S. salvage vendors do not see the influx of low cost Chinese vehicles in Third World
countries having an impact on their global salvage business. They predict that the market
demand will continue for rebuildable salvage because the buyer base is global and not
limited to a few countries that currently import Chinese vehicles. It remains to be seen if
this will affect the smaller regional salvage seller who relies on Mexican buyers to purchase
rebuildable salvage. Will they feel the impact of these low cost Chinese vehicles being
exported to neighboring countries?
7
The Economy & Short-Term Energy Outlook
According to a statement released on October 9, 2007, the Federal Open Market Committee
decided to approve a 50 basis point reduction to the target for the federal funds rate, bringing
the rate to 4-3/4 percent (4.75%). While inflation has improved slightly, the economic outlook
appears to be uncertain. Evolving market developments and other factors will play a role in the
advancement of future economic prospects.
After expanding at a robust pace in July, retail sales rose at a somewhat slower rate in August.
Orders and shipments of capital goods posted solid gains in July. However, residential investment
weakened further, even before the recent disruptions in mortgage markets. In addition, private
payrolls posted only a small gain in August, and manufacturing production decreased after gains
in the previous two months. Meanwhile, core inflation rose a bit from the low rates observed in
the spring but remained moderate through July.
Private nonfarm payroll employment rose only modestly in August, and the levels of employment
in June and July were revised down. The weakness in employment was spread fairly widely
across industries. Residential construction and manufacturing posted noticeable declines in jobs,
employment in wholesale trade and transportation was little changed, and hiring at business
services was well below recent trends.
After posting solid gains in June and July, total industrial production edged up only a bit in
August. This increase was attributable to a surge in electricity generation, as temperatures
swung from mild in July to very warm in August. After large gains in the preceding two months,
manufacturing output declined in August, held down by a decrease in the production of motor
vehicles and parts. High-tech output rose only modestly in August, but production gains in June
and July were revised up considerably.
Consumer spending appeared to have strengthened early in the summer from its subdued
second-quarter pace. Although auto sales were weak in July, real outlays for other goods rose
briskly. At the same time, spending on services was up moderately despite a drop in outlays for
energy associated with relatively cool weather in the eastern part of the United States. In August,
consumption appeared to have posted another solid gain. Although nominal retail sales outside
the motor vehicle sector were about flat (abstracting from a drop in nominal sales at gasoline
stations associated with falling gas prices), vehicle sales stepped up and warmer weather likely
caused an increase in energy usage.
The housing sector remained exceptionally weak. Home sales had dropped considerably this
year: Sales of new and existing single-family homes in July were down substantially from their
averages over the second half of last year. Demand was restrained by deteriorating conditions in
the subprime mortgage market and by an increase in rates for thirty-year fixed-rate conforming
mortgages. In the nonconforming mortgage market, the availability of financing to borrowers
recently appeared to have been crimped even further. Most forward-looking indicators of housing
demand, including an index of pending home sales, pointed to a further deterioration in sales in
the near term. Single-family starts slid in July to their lowest reading since 1996, and adjusted
permit issuance continued on a downward trajectory. Although single-family housing starts had
come down substantially from their peak, the drop had lagged the decline in demand, and as a
result, inventories of new homes had risen considerably. In the multifamily sector, starts in July
were in line with readings thus far this year and at the low end of the fairly narrow range seen
since 1997. Meanwhile, house prices generally continued to decelerate.
Orders and shipments of capital goods posted a strong gain early in the third quarter. In particular,
orders and shipments of equipment outside the high-tech and transportation sector registered
a robust increase in July, and data on computer production and shipments of high-tech goods
pointed to solid increases in business demand for high-tech. In contrast, indicators of spending
for transportation equipment were mixed. While fleet sales of light vehicles appeared to have
moved up in July and August, sales of medium and heavy trucks remained below the secondquarter average. More generally, surveys of business conditions suggested that increases in
business activity were somewhat slower in August than in the second quarter.
Information on the economy and short-term energy outlook was obtained from the US Federal Reserve Board,
Federal Open Market Committee (FOMC) and the US Department of Energy, Energy Information Administration
(EIA). For more information, or to view original source materials, visit: www.federalreserve.gov/FOMC or
www.eia.doe.gov
8
The Economy & Short-Term Energy Outlook (con't.)
Book-value data for the manufacturing and trade sectors excluding motor vehicles and parts
suggested that inventory accumulation stepped down noticeably in July from the second-quarter
pace. Inventories of light motor vehicles rose again in July and August.
The U.S. international trade deficit narrowed slightly in July, as exports increased more than
imports. Sharp increases in exports of both aircraft and automobiles contributed importantly
to the overall gain. Exports of agricultural products and consumer goods were also strong. In
contrast, exports of industrial supplies and semiconductors exhibited declines. The value of
imported goods and services was boosted by a large increase in imports of automotive products.
Higher imports of capital goods excluding aircraft, computers, and semiconductors and of oil
also contributed to the overall gain in imports.
After rapid price increases earlier this year, U.S. headline consumer price inflation was moderate
in both June and July. Although food prices continued their string of sizable increases, energy
prices fell in June and July and gasoline prices appear to have dropped further in August. Core
PCE prices rose 0.2 percent in June and 0.1 percent in July. On a twelve-month-change basis,
core PCE inflation in July was below the comparable rate twelve months earlier. Step-downs
in price inflation for prescription drugs, motor vehicles, and nonmarket services accounted for
nearly all of the deceleration in core PCE prices.
It is estimated that real GDP increased at a moderate rate in the third quarter. However, the
increase is not estimated to continue in the fourth-quarter, possibly due to the recent financial
turbulence imposing restraint on economic activity in coming months—particularly in the housing
sector. A modest increase in unemployment is also expected, and softer demand for homes
amid a reduction in the availability of mortgage credit will likely curtail construction activity
through the middle of next year. Moreover, lower housing wealth, slower gains in employment
and income, and reduced confidence seem likely to restrain consumer spending in 2008. With
credit markets expected to largely recover over coming quarters, growth of real GDP is projected
to firm in 2009 to a pace a bit above the rate of growth of its potential. Headline PCE inflation,
which was boosted by sizable increases in energy and food prices earlier in the year, is expected
to slow in 2008 and 2009.
During this average winter-season (October 1 to March 31), U.S. prices and expenditures for
all space-heating fuels are projected to be higher than winter 2006-2007. And, According to
the National Oceanic Atmospheric Administration’s (NOAA) most recent projection of heating
degree-days, winter in the lower-48 States is forecast to be 4 percent colder compared with last
winter but 2 percent warmer than the 30-year average (1971 to 2000).
Reflecting movements in projected crude oil prices, regular grade gasoline prices are projected
to continue to average $2.75 per gallon in 2007 and $2.83 per gallon in 2008. While the difference
between the price of gasoline and the cost of crude is expected to be lower next summer than
this past summer, this spread is expected to remain relatively high on an historical basis, and,
along with high crude prices, result in gasoline prices projected to again average more than $3
per gallon by next May.
Continued low surplus production capacity, weak petroleum inventories, and strong demand
worldwide have all contributed to recent high crude oil prices. Crude oil prices are projected to
decline from their recent peak above $80 per barrel, but monthly average prices are expected to
remain above $70 per barrel throughout the forecast period.
China, Brazil, the United States, and Middle East countries are expected to remain the main
engines of oil consumption growth. World oil consumption in the fourth quarter of 2007 is
projected to be 1.8 million barrels per day (bbl/d) above fourth-quarter 2006 levels. World oil
consumption is projected to increase by 1.4 million bbl/d in 2008.
Information on the economy and short-term energy outlook was obtained from the US Federal Reserve Board,
Federal Open Market Committee (FOMC) and the US Department of Energy, Energy Information Administration
(EIA). For more information, or to view original source materials, visit: www.federalreserve.gov/FOMC or
www.eia.doe.gov
9
Current Events in the Collision Industry
PPG Sells Auto Glass Businesses to Private Investment Firm
Excerpted from: CollisionWeek—September 2007
PPG Industries has signed an agreement to sell its OEM and replacement auto glass
businesses to Platinum Equity of Beverly Hills, Calif., a privately owned investment group.
The deal also includes PPG’s insurance glass claim processing company, LYNX Services.
PPG said the total sales price for the businesses is approximately $500 million before
minority interest.
Some in the auto glass industry had expected PPG to sell the business to an existing
industry participant such as Belron, who acquired Safelite in March, or more likely, the
Michigan based glass manufacturer, Guardian Industries, according to the glass industry
trade publication GlassBytes.
Completion of the transaction is expected in the fourth quarter and is subject to customary
closing conditions, including receipt of required regulatory approvals.
“This transaction is a significant milestone in PPG’s continued transformation to focus on
coatings and specialty products, and it will significantly reduce PPG’s exposure to the U.S.
automotive market,” said Charles E. Bunch, PPG chairman and chief executive officer.
“This sale will also provide us with more resources to pursue profitable growth in coatings,
aerospace, optical products and opportunities in Asia.”
Platinum Equity has purchased dozens of companies since its founding in 1995 and owns
well known names such as USRobotics and American Racing Equipment.
NHTSA Signs Cooperative Agreement with China on Auto Safety
The National Highway Traffic Safety Administration signed a Memorandum of Cooperation
(MOC) with the People’s Republic of China (PRC) to strengthen the relationship between the
two countries in the area of motor vehicle safety and to improve enforcement standards.
“We are strengthening the lines of communication and cooperation to improve the safety
of vehicles and automotive equipment in both our countries,” said NHTSA Administrator
Nicole R. Nason. “This agreement will also help us to better enforce our standards.”
The bilateral arrangement, formally signed between NHTSA and China’s National
Development and Reform Commission (NDRC), sets out a range of cooperative
goals, including developing safety standards for automotive equipment and enforcing
those standards. The MOC also encourages developing and disseminating consumer
information, developing and sharing automotive safety research and sharing efforts on
improving vehicle fuel economy.
After a signing ceremony at the Department of Transportation headquarters in Washington,
DC, the Chinese delegation and NHTSA officials exchanged information on requirements
and procedures used in both countries to ensure compliance with automotive safety
standards, as well as the processes involved in conducting safety investigations and
recalling vehicles and motor vehicle equipment.
AN EDITOR’S NOTE…
The arrival of Chinese vehicles in
the U.S. seems inevitable, and this
agreement is an important step in
assuring that Chinese cars not only
protect their owners in case of an
accident, but it also helps identify
safety defects and establishes
a recall mechanism to prevent
potential equipment safety issues.
10
Current Events in the Collision Industry (con't.)
EPA Completes Draft of Proposed Paint Regulation
Long awaited rule adds new requirements for spray booths, spray guns, ongoing training
and annual reporting for every repair facility in the country.
The U.S. Environmental Protection Agency (EPA) has posted the draft of its soon to be
published regulation establishing new requirements for automotive refinish designed to
reduce the emission of Hazardous Air Pollutants (HAPs) by the industry.
The EPA is concerned with the release of toxic metal compounds that contain cadmium,
chromium, lead, manganese and nickel.
The rule establishes specific requirements designed to reduce the release of these HAPs
that includes spray booth specifications, spray gun efficiency standards, gun cleaning
procedures, reporting requirements and ongoing painter training for anyone who sprays
coatings.
Not yet published in the Federal Register, the rule will first be subject to a 30 day public
comment period before being finalized and made effective.
Rules Summary
I support this proposed regulation
because it is balanced. It
addresses training, equipment and
enforcement, which I believe will
ultimately increase refinish efficiency,
protect the painter and reduce
pollutants in the environment.
According to the draft, all shops will be responsible for meeting the following
requirements:
1. Certify that all painters have completed hands-on training in the proper application of
surface coatings. The training must cover specific items such as spray gun setup, surface
prep, spray booth and filter maintenance, transfer efficiency, environmental compliance
and more. Spraying coatings is prohibited by persons who are not certified, with an
exception made for students learning to spray in an accredited program and supervised
by an instructor who is certified according to these rules. Painters must be certified within
60 days of hire and recertified every five years. Training certification goes with the painter,
not the shop.
2. Spray booths for the painting of entire vehicles are required to be fully enclosed with
“four complete walls” and a “full roof” and a filter system fitted with polyester fiber or
fiberglass filters (or equivalent) that is demonstrated to achieve at least 98 percent
capture of paint overspray. The booth must also be ventilated at negative pressure. Prep
stations for painting parts or vehicle subassemblies must have a full roof, at least three
complete walls or complete side curtains, and must be ventilated so that air is drawn
into the booth.
3. All spray-applied coatings must be applied with a high-volume, low-pressure (HVLP)
spray gun, electrostatic application, or a technology with a transfer efficiency equivalent
to an HVLP spray gun.
4. All paint spray gun cleaning must be done with either non-HAP gun cleaning solvents,
or with a fully enclosed spray gun cleaner. Hand cleaning of parts with HAP-containing
solvent is permitted but spraying solvent through the gun is prohibited.
The EPA is proposing to allow two years from the date the rule is published for all shops to
come into compliance with these rules.
The Cost to Shops
In conducting its field research for this rule, the EPA found that training of the painter is
essential in achieving a high rate of transfer efficiency. The regulator specifically noted the
effectiveness of the Spray Technique Analysis and Research (STAR) program study which
originated at the University of Northern Iowa Waste Reduction Center. It also noted similarly
effective training by I-CAR and paint system manufacturers.
11
The good news is that the EPA estimates that the proposed standards, though perhaps
requiring some initial investment in equipment and training, will have no net annual cost
to the shops. The EPA believes the initial cost of complying with the proposed standards
would be off-set and recovered over time by cost savings as a result of more efficient use of
labor and materials. For example, the initial costs for training and more efficient spray guns
would be more than offset by the savings realized through reduced paint consumption.
The estimated cost for training, the EPA estimates, is $1,000 per painter, which covers
tuition cost and labor cost for 16 hours of training time. Using census data, the EPA
estimates that about 18,000 painters would need to be trained every year on an ongoing
basis. Data from the STAR training programs indicate that painters who complete this
training can decrease the amount of coating sprayed by about 20 percent per job. Doing
the math, the EPA estimates that the cost of training over five years would be covered if the
facility only reduced its coatings use by one percent.
EPA estimates that about 5,000 facilities would need to purchase and install an enclosed
spray gun washer at a cost of about $1,800 for each facility. However, the EPA notes that
this cost would be offset over time by reduced labor to clean spray guns and reduced costs
for solvent purchase and disposal. Spray gun washers are automated and are also capable
of reusing solvent to minimize solvent consumption and waste disposal.
The proposed standards specify that certain types of filters have to be used on the spray
booth exhaust, and these filters are not addressed by current OSHA standards. Some
shops may need to replace their current filters for ones with higher paint overspray capture
efficiency, but the higher efficiency filters are readily available and will not result in an
additional cost.
The EPA estimates the annual cost for recordkeeping and reporting would only average
about $220 per facility per year, however the EPA estimates that about 5,000 surface
coating operations would need to install new spray booths to comply with the proposed
standards.
The Automotive Service Association (ASA) has been very involved, along with many other
industry participants, with the EPA on the development of this rule. Bob Redding, ASA’s
Washington, D.C., representative said, “ASA leaders are reviewing the regulation and will
submit comments within the formal comment period.”
Efficiency = Savings
Conventional high-pressure air atomized spray guns have a typical transfer efficiency of
about 30 percent. That means that for every gallon of coating sprayed, only 0.30 gallon
reaches the part being coated. The remaining 0.70 gallon misses the part and either lands
on the booth walls and floor or is pulled into the spray booth filters. To get one gallon on the
car, a conventional spray gun needs to use 3 1/3 gallons of coating.
HVLP and other types of high-efficiency spray guns use lower air pressures and achieve
transfer efficiencies of about 50 percent, or greater, with appropriate operator training. To
get one gallon on the car, a high efficiency spray gun needs to use only 2 gallons of coating.
The increased transfer efficiency leads to a 40 percent decrease in coating consumption
(and cost) compared to conventional spray guns.
12
Honda, Acura Dealers to Join on OEConnection Crash Parts System
OEConnection announced that American Honda will begin providing OEConnection’s
Internet-based parts ordering and fulfillment system to Honda and Acura dealerships and
their collision shop customers nationwide.
American Honda joins 11 other automakers already using OEConnection’s CollisionLink
system.
Chuck Rotuno, OEConnection President & CEO, said , “We’re confident our products will
support Honda and Acura dealerships in enhancing parts department productivity, and
facilitating increased original equipment sales opportunities leading to more profitable and
successful businesses.”
The CollisionLink system will link Honda and Acura dealerships online to their wholesale
parts customers, allowing collision shops to submit parts orders to their supplying auto
dealerships online. The system can integrate with shop estimating and management
systems and also supports messaging and sending photos of hard-to- specify parts and
schematics between dealers and shops.
OEConnection LLC is a joint venture created by DaimlerChrysler, Ford Motor Company,
General Motors, and Snap-on Business Solutions.
The fact that the manufacturer of the
3rd and 5th best selling cars in the U.S.
has joined the 11 other OEMs that are
a part of the OEConnection is truly a
milestone. The efficiency gained linking
Mitchell’s shop management system to
the OEMs through the OEConnection
will benefit vehicle owners, insurers
and collision repairers.
Two years post-Katrina: Water-damaged cars continue to flood marketplace
By James Guyette
Excerpted from: ABRN October—2007
When Hurricane Katrina surged ashore it immersed the Gulf Coast’s vehicle fleet in a
poisonous saltwater soup that comprised key components. Two years later, government
officials now believe that some 500,000 so-called “Katrina cars” have since flooded the
marketplace—driven by “title washing” that hides their waterlogged origin.
Repairers who offer thorough, educated service can assist their car-buying customers by
providing advice on avoiding a washed-up vehicle.
This summer’s widespread flooding has heightened concerns over a new wave of used
cars that may look good when superficially cleaned and dried yet contain serious hidden
hazards.
Shop owners need to be aware that technicians can be at risk if proper precautions
aren’t taken when working on a suspect vehicle, according to Coordinating Committee
for Automotive Repair (CCAR). They could experience serious illness if exposed to parts
contaminated by disease-causing pathogens and harmful chemicals.
Notwithstanding the biohazard issues, a car’s occupants can face danger in that critical
safety systems may suddenly fail and vehicles can inexplicably stall in traffic.
Immersion is saltwater can be particularly troublesome to a vehicle’s performance. You’ve
probably seen what winter roadsalt can do a rocker panel—imagine what this corrosiveness
can do to sensitive electrical connections under the dash.
Freshwater from a river can be equally filthy and detrimental to a vehicle’s future
roadworthiness.
“Consumers should be aware that some businesses and individuals may try to sell
salvaged and flood-damaged cars without revealing the vehicle history,” says David Claeys,
13
purchasing manager for CarMax in Richmond, Va. “Flood-damaged cars that are not
structurally or mechanically sound could be repaired, re-titled, and sold to unsuspecting
buyers.”
Consumer advocates and government officials representing each side of the political
spectrum are calling for an effective national database to reliably identify a flood car and
keep it off the road forever. Pending passage of such a mandate, however, advisories
continue to be issued.
Recent media accounts by USA Today and ABC News have drawn renewed attention to
the situation, focusing on the risks to people who buy cars that have survived a flood only
to become a rolling “time bomb” to those riding in them.
“Even without the influx of Katrina-damaged cars, thousands of wrecked, flooded or stolen
automobiles are sold every year with clean titles to unsuspecting consumers,” says U.S.
Sen. Trent Lott (R-Miss). Lott, who lost his home and a car to Katrina, has become an
outspoken proponent of putting a plug in title washing.
“This situation persists because many states’ motor vehicle title laws are confusing or
incomplete. Right now there is no single nationwide database which tags all problem
vehicles. In some states, including Mississippi, unscrupulous folks are able to practice ‘title
washing,’ in which a car with a salvage title is reissued a clear title,” Lott points out.
“This legislation is particularly needed in Katrina’s wake, but it’s hardly a new problem,”
he asserts. “An estimated half million vehicles were damaged by Katrina, and there is
evidence that these cars are being cleaned up and sold to unsuspecting consumers. A
number of these cars are unsafe and shouldn’t be on the roads. And folks are overpaying
for vehicles they believe are mechanically sound. To the untrained eye, they appear to be
in good shape,” Lott adds.
“On the surface, these cars may look just fine, but underneath the hood and dashboard
there could be all kinds of problems,” he says. “Today’s automobiles are laden with complex
electronics and computer systems very susceptible to moisture. They don’t just ‘dry out.’
The damage may not manifest itself until after you’ve bought the car.”
“Once a vehicle has been flood-damaged, many critical auto safety features are
compromised,” concurs Glenn D. Turner, chief of staff at the Florida Division of Motor
Vehicles. “If a consumer unwittingly purchases one of these potential road hazards, they
are jeopardizing their safety, and the safety of others.”
14
Motor Vehicle Markets
New Vehicle Sales
According to Ward’s Auto, total new light-vehicle sales through September 2007 declined
by -2.9% compared to the same period last year, with a total of 12,301,941 vehicles sold.
Year-to-date domestic cars declined by -6% and import cars increased by only 1.9%,
resulting in a decrease in overall car sales of -3.7%.
Total light trucks declined in sales through September. The increase in import truck sales
(4.7%) was not enough to offset the domestic truck decline (-3.4%), resulting in a net
decline in year-over-year sales to date of -2.2%.
Ward’s U.S. Light Vehicle Sales Summary
January-September 2007
Source is country of manufacture. Domestics are from U.S., Canada, and Mexico. Imports
are from overseas. Light vehicles are cars and light trucks (GVW Classes 1-3, under 14,001 lbs.). DSR is
daily sales rate. Source: Ward’s AutoInfoBank
© 2007, Ward’s Automotive Group, a division of Prism Business Media Inc. Redistribution
by permission.
Number of Vehicles
0
2m
4m
6m
8m
10m
12m
4,010,613
-6.0
Import Cars
1,817,657
1.9
Total Cars
5,828,270
-3.7
Domestic Light Trucks
5,431,890
-3.4
Import Light Trucks
1,041,781
4.7
Total Light Trucks
6,473,671
-2.2
Domestic Light Vehicles
9,442,503
-4.5
Import Light Vehicles
2,859,438
2.9
Total Light Vehicles
12,301,941
-2.9
Vol % Change from 2006 Sales
Domestic Cars
15
Motor Vehicle Markets (con't.)
Ward’s 10 Best Selling
Cars and Trucks
January-September 2007
Cars
Trucks/Vans/SUVs
1. Toyota Camry
2. Honda Accord
3. Toyota Corolla/Matrix
4. Honda Civic
5. Chevrolet Impala
6. Nissan Altima
7. Chevrolet Cobalt
8. Toyota Prius Hybrid
9. Ford Focus
10. Ford Fusion
Note: Table combines imports and domestics.
Source: W
ard’s AutoInfoBank.
©Copyright 2007, Ward’s Automotive Group,
a division of Prism Business Media Inc.
Redistribution with permission.
324,261
301,879
291,981
254,955
249,713
212,704
152,895
137,114
133,043
112,519
1. Ford F-Series
2. Chevrolet Silverado
3. Dodge Ram Pickup
4. Honda CRV
5. GMC Sierra
6. Toyota Tundra
7. Toyota Tacoma
8. Toyota RAV4
9. Ford Econoline
10. Dodge Caravan
537,211
477,859
276,978
167,223
157,204
144,480
135,515
131,946
130,763
130,472
Used Vehicle Sales
By tom webb
Chief Economist – Manheim
Wholesale Prices Continue Strong in September
Wholesale used vehicle prices showed their normal, large seasonal decline in September, but on a mix,
mileage, and seasonally-adjusted basis prices were up 0.6%. The Manheim Used Vehicle Value Index
reading was 115.8 for the month, representing an increase of 3.5% from a year ago. Wholesale used
vehicle prices have risen 13.1% from the cyclical trough, which occurred in April of 2003.
With the wholesale market showing an increase in average sale price (as well as an increase in the
number sold), the retail used vehicle market may be performing better than some of the nationally
reported numbers suggest. There is no doubt, however, that dealer margins are under pressure and that
incremental sales gains are becoming increasingly difficult to obtain. But, if retail auto financing remains
readily available (likely), then used sales should continue to offer numerous profit opportunities.
Manheim Used Vehicle Value Index
September 2006 – September 2007
118
117
116
115
114
113
112
111
110
109
108
107
106
105
Sep
06
Oct
06
Nov
06
Dec
06
Jan
07
Feb
07
Mar
07
Apr
07
May
07
Jun
07
Jul
07
Manheim Used Vehicle Value Index categories based on 2001 J.D. Power and
Associates Vehicle Segmentation. Source: Manheim Used Vehicle Value Index
Aug
07
Sep
07
16
Mitchell Collision Repair Industry Data
The following information was assembled from industry-wide appraisal data uploaded from
participating insurance carriers, body shops, and independent appraisers, processed by
Mitchell International and compiled through Mitchell’s AIM™ (Advanced Information
Management) system.
With the obvious exception of the Total Loss section, all data in this section, including ACV
benchmarks, relate to repairable vehicle appraisals only.
Sections included in the Mitchell Collision Repair Industry Data:
• Average Appraisal Values
• Comprehensive Losses
• Supplements
• Paint & Materials
• Adjustments
• Collision Losses
• Third-Party Auto Property Damage
• Parts Analysis
• Labor Analysis
• Total Losses
Mitchell Product Solution:
AIM
AIM™ features immediate online data access,
custom report construction, ad-hoc query
capabilities, weekly updates, and the ability to
accept and consolidate detailed appraisal data
from all major estimating platforms. For more
information on AIM, visit Mitchell’s website at
www.mitchell.com.
Development Explained
The following data points are dynamic and subject to change from on-going supplement
and total loss designation activities amending original appraisal values. Average appraisal
values submitted in June, for example, will likely increase by several dollars over the next
few months, then stabilize as all supplements are factored into the final value for the period.
Raw values are provided, and then adjusted based on the observed six-month change
behavior from prior data to produce a projected final or “developed” value. Adjusted values
may therefore be considered reliable approximations of the eventual, industry value for
any given datum. As supplement frequency and severity, as well as total loss designation
activities vary by carrier, we suggest that each company isolate their own development
factors to apply to their own unique data sets.
The average appraisal value, calculated by combining data from all first- and third-party
repairable vehicle appraisals uploaded through Mitchell systems in Q3-2007, was $2,387,
2% less than the previous year’s Q3-2006 appraisal average of $2,440.
Applying the prescribed development factor of 6% to these data, produces an anticipated
average appraisal value of $2,527.*
Average Appraisal Values, ACVs and Age
All APD Line Coverages
$14,000
$12,000
$12,954
$12,820
$12,653
$12,166
$12,121
$11,182
$10,000
$8,000
UltraMate
UltraMate is Mitchell’s advanced estimating
system, combining database accuracy,
automated
calculations,
and
repair
procedure pages to produce estimates that
are comprehensive, verifiable, and accepted
throughout the collision industry. UltraMate
is a central component of Mitchell’s all-inone estimating, imaging, and claims workflow
management solution, UltraMate Premier
Suite. For more information on UltraMate
and UltraMate Premier Suite, visit Mitchell’s
website at www.mitchell.com.
®
$6,000
$4,000
$2,000
Avg. Unit Age
$2,324
$2,399
$2,506
$2,440
$2,525
$2,387/
2,527
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
5.95
5.93
5.87
5.91
5.89
5.98
Appraisals
ACV’s
*NOTE: Values provided from Guidebook benchmark averages, furnished through Mitchell UltraMate®.
17
Mitchell Collision Repair Industry Data (con't.)
Collision Losses
Mitchell’s Q3-2007 data reflect an average gross Collision appraisal value of $2,705, 4%
less than this same period last year. Applying the indicated development factor of 9.0%
suggests a final Q3-2007 average gross collision appraisal value of $2,943, $111 higher
than last year’s figure for this same period.
At $14,070, the average Actual Cash Value (ACV) of vehicles appraised for Collision
losses during Q3-2007 was $673 more than in Q3-2006 and also reflected slightly older
vehicles.*
Collision Coverage*
$14,000
$14,070
$13,556
$13,397
$12,918
$12,889
$12,000
$11,932
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$2,916
$2,830
$2,792
$2,919
$2,832
$2,705/
2,943
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
5.59
5.54
5.53
5.58
5.60
5.64
Appraisals
ACV’s
In Q3-2007, the average gross appraisal value for Comprehensive coverage estimates
processed through our servers was $2,135, compared to $2,101 in Q3-2006. Applying
the prescribed development factor of 3% for this data set produces an adjusted value of
$2,198, a 4.6% increase from this same period last year. Q3-2007’s average appraised
vehicle value (ACV) for comprehensive losses was $12,919, $288 more than those
appraised during this same period in 2006.*
$14,000
$12,000
$11,943
$11,366
$13,398
$12,631
$12,262
$12,919
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$1,993
$1,913
$2,180
$2,101
Q1 2005
Q3 2005
Q1 2006
Q3 2006
6.09
6.31
6.02
6.22
$2,096
$2,135/
2,198
Q1 2007
Q3 2007
6.10
6.27
Appraisals
ACV’s
18
Third Party Property Damage
In Q3-2007, our industry average gross Third-party Property Damage appraisal was $2,155,
compared to $2,145 in Q3-2006, reflecting a 4% initial increase between these respective
periods. Adding the prescribed development factor of 3% for this coverage type yields a
Q3-2007 adjusted appraisal value of $2,212, an overall 3% increase over Q3-2006.
In Q3-2007, the average PD appraised vehicle ACV was $11,957 compared to Q3-2006’s
average of $11,957—reflecting no change from this time last year.*
Auto Physical Damage APD
$12,000
$10,000
$10,419
$12,078
$11,957
$11,517
$11,524
$11,957
$8,000
$6,000
$4,000
$2,000
$1,931
$2,149
$2,231
$2,246
$2,145
$2,155/
2,212
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
6.20
6.06
6.07
6.03
6.04
6.13
Avg. Unit Age
Appraisals
ACV’s
Supplements
Editors Note: As it generally takes at least three months following the original date of
appraisal to accumulate most supplements against an original estimate of repair, we report
(and recommend viewing supplement information) three months’ after-the-fact, to obtain
the most accurate view of these data.
In Q3-2007, 28.06% of all original estimates prepared by Mitchell-equipped estimators
during that period were supplemented one or more times. In this same period, the pure
supplement frequency (supplements to estimates), was 48.66%, reflecting a .92 pt, or
2% relative increase from that same period in 2006. The average combined supplement
variance for this quarter was $540.47, -$92.48 lower than in Q3-2006.
Average Supplement Frequency and Severity
Date
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Pt/$ Change
% Change
% Est. Supplement
27.12
33.04
34.97
34.43
35.36
28.06
-6.37
-19%
% Supplement
54.13
43
49.2
47.74
50.87
48.66
Avg. Combined Supp. Variance
532.39
622.71
637.21
632.95
641.76
540.47
% Supplement $
22.9
25.95
25.43
25.94
25.41
22.64
0.92
2%
-92.48
-15%
-3.3
-13%
19
Average Appraisal Make-up
This chart compares the average appraisal make-up as a percentage of dollars, constructed
by Mitchell-equipped estimators. These data points reflect a slight decrease in the use of
parts, while the percentage of paint material and labor dollars used in the average appraisal
have increased between these respective periods.
.
% Average Appraisal Dollars by Type
Date
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Pt/$ Change
% Average Part $
44.95
44.38
44.77
44.38
45.87
44.08
% Average Labor $
44.28
44.68
44.63
44.69
43.39
44.97
0.28
1%
% Paint Material $
9.49
9.48
9.21
9.48
9.32
9.81
0.33
3%
Parts Analysis
As a general observation, recent data show that parts make up 44.9% of the average value
per repairable vehicle appraisal, about (.63) points more than the average allocation of
labor dollars. In addition, the overall trend now reflects a stabilized level of OEM parts use,
an increasing volume of Aftermarket and Remanufactured parts dollars used by Mitchellequipped estimators, and declining LKQ (recycled) parts use.
Editor’s Note: While there isn’t a perfect correlation between the types of parts specified
by estimators and those actually used during the course of repairs, we feel that the
following observations to be directionally accurate for both the insurance and auto body
repair industries. This segment illuminates the percentage of dollars allocated to each
unique part-type.
Parts Type Definitions
• Original Equipment Manufacturer (OEM): Parts produced directly by the vehicle
manufacturer or their authorized supplier, and delivered through the manufacturer's
designated and approved supply channels. This category covers all automotive parts,
including sheet metal and mechanical parts.
• Aftermarket: Parts produced and/or supplied by firms other than the Original Equipment
Manufacturer’s designated supply channel. This may also include those parts originally
manufactured by endorsed OEM suppliers, which have later followed alternative
distribution and sales processes. While this part category is often only associated with
crash replacement parts, the automotive aftermarket also includes a large variety of
mechanical and custom parts as well.
• Non-New/Remanufactured: Parts removed from an existing vehicle that are cleaned,
inspected, repaired and/or rebuilt, usually back to the original equipment manufacturer’s
specifications, and re-marketed through either the OEM or alternative supply chains.
While commonly associated with mechanical hard parts such as alternators, starters and
engines, remanufactured parts may also include select crash parts such as urethane and
TPO bumpers, radiators and wheels as well.
• Like Kind and Quality (LKQ): Parts removed from a salvaged vehicle and re-marketed
through private or consolidated auto parts recyclers. This category commonly includes all
types of parts and assemblies, especially body, interior and mechanical parts.
Editor’s Note: It is commonly understood within the collision repair and insurance industries that a
very large number of LKQ “parts” are actually “parts-assemblies” (such as doors, which in fact include
numerous attached parts and pieces). Thus, attempting to make discrete comparisons between the
average number of LKQ and any other parts types used per estimate may be difficult and inaccurate.
-0.3
% Change
-1%
Mitchell
Alternate
Parts Program
Mitchell Alternate Parts Program (MAPP™)
offers automated access to nearly 30,000,000
Remanufactured, Aftermarket, and OEM
Discount parts from over 1,500 suppliers,
ensuring shops get the parts they need
from their preferred vendors. MAPP is fully
integrated with UltraMate for total ease-of-use.
Designated company administrators are also
provided the MAPP Matrix Manager application
free of charge—allowing clients the ability
to manage their MAPP matrices, run four
different matrix reports, add new suppliers/
parts, all from their local platform without the
need for Mitchell support/intervention.
Quality
Recycled
Parts (QRP)
Mitchell Quality Recycled Parts (QRP™) is
the most comprehensive source for finding
recycled parts. It gives online access to a parts
database compiled from a growing network of
more than 2,500 of the highest quality recyclers
in North America and Canada, covering more
than 400 part categories representing access
to nearly 44,000,000 parts from recyclers’
parts inventories—updated daily. QRP is fully
integrated with UltraMate for total ease-of-use.
In addition, for selected QRP parts, UltraMate
automatically applies Mitchell’s Assembly Time
Guide labor allowances and P-pages specific to
LK parts replacement.
20
Original Equipment Manufacturer (OEM) Parts Use in Dollars
In Q3-2007, OEM parts represented 74.1% of all parts dollars specified by Mitchell-equipped
estimators. These data reflect a .33 point relative increase from Q3-2006. Likely influences may
include an actual increase in alternative parts use, as well as OEM price reductions to enhance
competitiveness within the channel. In the larger picture, however, OEM use appears to have stabilized
near 74% for most of 2007.
OEM Parts, as a % of Total Parts Dollars per Appraisal
U.S. Auto Facts
At-A-Glance…
• Six-year car loans are now the most
common loans booked for new
cars, accounting for over 40% of new
car loans and nearly 35% of used car
loans.
72.7%
73.6%
72.8%
73.8%
74.2%
74.1%
• In 1960, the average new car cost
$2,500 and traveled about 75,000
miles over a seven-year life span.
Today, the median price of a new car
is $25,500 dollars.
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
• According to the US Department of
Transportation, today’s vehicles will
average 145,000 miles in 13 years.
Aftermarket Parts Use in Dollars
In Q3-2007, 10.03% of all parts dollars recorded on Mitchell appraisals were attributed to Aftermarket
sources, down slightly from Q3-2006. As stated in previous reports, Aftermarket use has stabilized in
the 10 percent range since 2006.
Aftermarket Parts, as a % of Total Parts Dollars per Appraisal
9.9%
Q1/05
9.9%
Q3/05
10.7%
Q1/06
10.2%
Q3/06
10.5%
Q1/07
10.0%
Q3/07
Remanufactured Parts Use in Dollars
• The first auto insurance policy was
purchased in Westfield, Mass., in
1897.
• The average new car loses over 50
percent of its value in the first four
years according to the NADA used car
guide.
• The cost of owning and operating a
new vehicle in 2007 is 52.2 cents per
mile, or $7,823 per year, when driving
15,000 miles annually according to
AAA
Currently listed as “Non-New” parts in our estimating platform and reporting products, Remanufactured
parts currently represent 4.97% of the average gross parts dollars used in Mitchell appraisals during
Q3-2007. This reflects a 0.06 point relative increase over this same period in 2006.
Non-New/Remanufactured Parts, as a % of Total Parts Dollars per Appraisal
4.8%
4.8%
4.9%
4.9%
4.7%
5.0%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Like Kind and Quality Parts Use in Dollars
LKQ parts constituted 11% of the average parts dollars used per appraisal during Q3-2007, reflecting
a 0.25 point relative decrease from this same period last year. In mapping out the data by quarter, we
are seeing a slight decrease in the use of LKQ used parts since 2005
LKQ Parts, as a % of Total Parts Dollars per Appraisal
12.7%
11.7%
11.6%
11.2%
10.6%
11.0%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
21
Paint and Materials
During Q3-2007, Paint and Materials made up nearly 9.81% of our average appraisal
value, representing a .24-point relative increase from Q3-2006. Represented differently,
the average paint and materials rate—achieved by dividing the average paint and materials
allowance per estimate by the average estimate refinish hours—yielded a rate of $25.30
per refinish hour in this period, compared to $24.90 in Q3-2006.
Refinishing
Materials
Calculator
(RMC)
Paint and Materials, by Quarter
Mitchell’s Refinishing Materials Calculator™
(RMC) provides accurate calculations for
refinishing materials costs by incorporating a
database of over 7000 paint codes from eight
paint manufacturers. It provides job-specific
materials costing according to color and type
of paint, plus access to the only automated,
accurate, field-tested, and industry-accepted
breakdown of actual costs of primers, colors,
clear coats, additives, and other materials
needed to restore vehicles to preaccident
condition. RMC is now also fully integrated
with UltraMate v6.0 and UltraMate v6.0
Premier Suite for total ease of use. For more
information on RMC, visit Mitchell’s website at
www.mitchell.com.
$25.73
$25.67
$24.90
$24.80
9.6%
$25.20
9.8%
$25.30
9.6%
9.5%
9.5%
9.2%
Q1 2005
Q3 2005
Q1 2006
% of Appraisal $
Q3 2006
Q1 2007
Q3 2007
Rate = Average P&M $/Average Refinish Hours/Estimate
Labor Analysis
Average body labor rates have risen in all of our sample states except California, which
may reflect on an increase in the number of estimates written in other California areas other
outside of the San Francisco Bay area, where labor rates are the highest in California.
% Average Labor Dollars by Type
Average Body Labor Rates and Change by State
Refinish (33.0%)
Parts Replacement (27.0%)
Parts Repair (40.0%)
Q3 2006
Q3 2007
Pt Change
% Change
Arizona
44.35
45.33
0.98
2.2
California
47.20
47.12
-0.08
-0.2
Florida
39.98
40.45
0.97
2.4
Hawaii
42.28
42.47
0.19
0.4
Illinois
45.39
45.92
0.53
1.2
Michigan
40.69
40.76
0.07
0.2
New Jersey
42.54
43.81
1.27
3.0
New York
43.24
44.36
1.12
2.6
Ohio
40.41
41.25
0.84
2.1
Texas
39.70
40.52
0.82
2.1
Adjustments
In Q3-2007, overall adjustments decreased, with betterment frequency decreasing by 12%,
though the dollar amount increased by 3%.
Adjustment $ and %’s
Date
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Pt/$ Change
% Change
% Adjustments Est
3.8
4.12
4.26
4.61
4.29
3.94
-0.67
-15%
% Betterment Est
3.08
3.28
3.25
3.55
3.36
3.11
-0.44
-12%
% Appear Allow Est
0.48
0.58
0.58
0.6
0.55
0.57
-0.03
-5%
% Prior Damage Est
5.34
5.32
5.25
4.82
4.58
4.69
-0.13
-3%
Avg. Betterment $
108.01
126.96
110.25
111.81
104.13
115.66
3.85
3%
Avg. Appear Allow $
140.93
161.03
155.97
181.15
164.41
167.29
-13.86
-8%
22
J.D. Power and Associates: Facts, Figures, Trends
Editor’s Note: The following information is reprinted from PIN Insights published by
Power Information Network®, a division of J.D. Power and Associates. © 2007 by J.D. Power
and Associates®, The McGraw-Hill Companies, Inc. All Rights Reserved.
Scion tC Has Highest Proportion of Young Buyers
The 10 models with the highest proportion of young buyers (age 16–24), based on sales
that occurred in June, July and August of this year, included six Asian, two domestic, and
two European models. More than one-third of Scion tC buyers are in this age category, a far
higher proportion than for any other model. All 10 models are in either the Compact Basic,
Compact Conventional or Compact Sporty car segments.
10 Models with Highest Percentage of Young Buyers*
Vehicles
Percent of Young Buyers
Scion tC
48.9%
Pontiac G5
60.4%
Mitsubishi Lancer
50.7%
Mazda 3
54.4%
Toyota Yaris
60.9%
Subaru Impreza
56.4%
Volkwagen Rabbit
56.0%
Volkswagen GTI
51.4%
Chevrolet Cobalt
55.5%
Suzuki Aerio
48.6%**
Source: Power Information Network (PIN)
June – August 2007
*Young buyers are defined as those age 16 – 24.
**Caution: Small sample.
Robust—But Declining—Domestic Conquest Rates for Three Asian
Pickups
Among the three largest Asian pickups, the Titan conquested the highest proportion of
owners of domestic products, 49%, in the July–August time period. The conquest rates of
domestic owners for all three Asian pickups exceeded 40% and was substantially above
the domestic conquest rates for the trucks’ corresponding overall brands. Though the
conquest rates for all three trucks and their respective brands have been robust, they are,
without exception, down from the same time period a year ago. The Tundra’s domestic
conquest rate has declined the least, which is not surprising given that the larger, all-new
2007 Tundra was launched this past February and has captured a far bigger share of the
large pickup segment than its predecessor.
23
J.D. Power & Associates: Facts, Figures, Trends (con't.)
Domestic Trade-Ins as a Percent of All Trade-Ins
on Purchases of Selected Models.
July – August 2007
July – August 2006
Toyota Tundra
46.3%
Toyota less Tundra
38.7%
Toyota Tundra
48.3%
Toyota less Tundra
42.0%
Nissan Titan
49.0%
Nissan less Titan
38.5%
Nissan Titan
53.1%
Nissan less Titan
40.1%
Honda Ridgeline
43.2%
Honda less Ridgeline
35.3%
Honda Ridgeline
47.3%
Honda less Ridgeline
38.7%
Total Logic
Valuation
Ease of settlement, one of the main goals
when settling total loss claims, is easier
than ever with Mitchell’s revolutionary Total
Logic™ Valuation solution. Backed by a
leading-edge analytic model developed by
Power Information Network (PIN), a division
of J.D. Power and Associates , Total Logic
Valuation calculates vehicle values that reflect
real market conditions at the time of loss by
incorporating key variables that may affect
vehicle values. The Total Logic valuation
tool incorporates true sold and available
vehicle data from sources consumers
trust, such as cars.com , AutoTrader.com
and PIN. In addition, the system is fully
customizable allowing carriers to automate
internal policies and regulatory requirements.
Total Logic Valuation delivers a granular
view of the valuation details ensuring quick
claim resolution and promoting consumer
confidence in their carriers.
®
®
®
Trading Patterns Show Consistent—But Slowing—Movement to Asians
Consistent with the trends of automobile manufacturers’ U.S. new-vehicle market shares,
owners of all types of vehicles—domestic, Asian and European—are trading to Asian
vehicles at an increasing rate and to domestic vehicles at a declining pace. During the first
six months of this year, almost 3 of every 10 owners of a domestic vehicle traded to an
Asian vehicle; almost 4 of every 5 owners of an Asian vehicle traded to an Asian vehicle;
and more than 4 of every 10 owners of European vehicles traded to an Asian vehicle. Each
of these results is up more than 5 percentage points from the prior year. Simultaneously,
the percent of owners of all three categories of vehicles moved to a domestic vehicle at a
decreasing rate. One silver lining for the domestic companies: the increase from 2006 to
2007 in movement to Asians was less than the increase from 2005 to 2006.
1Q and 2Q
2005
1Q and 2Q
2006
®
1Q and 2Q
2007
What Owners of Domestic Cars and Light Trucks Traded To
Total Domestic
75.2%
71.1%
69.2%
Total Asian
23.0%
26.9%
28.7%
Total European
1.8%
2.0%
1.9%
What Owners of Asian Cars and Light Trucks Traded To
Total Domestic
23.6%
20.2%
18.2%
Total Asian
72.4%
75.8%
78.0%
Total European
3.9%
3.8%
3.8%
What Owners of European Cars and Light Trucks Traded To
Total Domestic
22.4%
19.7%
18.6%
Total Asian
34.8%
36.8%
40.2%
Total European
43.0%
43.4%
41.2%
Note: U
niverse is owners who traded their vehicles for new vehicles
in the designated time period.
24
Total Loss
Average Vehicle Age in Years
The chart below illustrates the shift we’ve been seeing in vehicle buyer’s tastes. Overall,
the vehicles on U.S. roads are getting older (the average passenger car on the road today
is the oldest in U.S. history at over 9 years of age), yet SUV’s and Crossovers (shown as
‘Wagons’) are the newest vehicles in the mix.
Vehicles
Q1
2004
Q3
2004
Q1
2005
Q3
2005
Q1
2006
Q3
2006
Q1
2007
Q3
2007
Convertible 9.11 9.32
9.11
9.33
9.53
9.74
9.47
9.87
Coupe 9.23 9.4
9.51
9.73
9.82 9.99
9.91 10.1
Hatchback 10.76 10.85
10.75
10.89
10.93 10.71 10.75 10.59
Sedan 8.77 8.83
8.96
9
9.11 9.18 9.22 9.19
Wagon 10.21 10.09
10.2
9.87 9.81 9.44 9.3 8.98
Pickup 9.17 9.56
9.47
9.62 9.58
9.83 9.68 9.65
Van 9.08 9.28
9.33
9.48 9.48 9.58 9.53 9.51
SUV 7.61 7.71
7.74
7.78 7.83 8.02 8.07 8.09
Average Vehicle Actual Cash Value
The average actual cash value has not risen in many vehicle classes, but the hot
‘Crossover’ segment (shown here as ‘Wagons’) continues to rise as more higher-dollar
luxury Crossovers hit the market (and in this case other objects, resulting in a total loss).
Vehicles
Q1
2004
Q3
2004
Q1
2005
Q3
2005
Q1
2006
Q3
2006
Q1
2007
Q3
2007
Convertible
$9,037.24
$8,468.47
$9,303.93
$9,937.76 $9,335.76 $10,085.94
$9,845.97
$9,951.18
Coupe $5,106.21
$5,157.10
$5,097.24
$5,519.71 $5,454.43 $5,836.52
$5,974.59
$6,054.33
Hatchback $3,062.36
$3,258.98
$3,499.73
$3,741.74 $3,958.03 $4,626.70
$4,794.7
$5,112.68
Sedan $5,014.54
$5,075.73
$5,078.32
$5,624.92 $5,555.69 $5,949.48
$5,917.19
$6,066.73
Wagon $4,508.43
$5,067.46
$5,094.96
$5,925.48 $6,256.64 $6,770.52
$6,869.25
$7,271.31
Pickup $7,207.61
$7,289.59
$7,952.84
$8,507.37 $8,812.45 $8,892.15
$8,946.83
$8,912.98
Van $4,965.26
$5,066.35
$5,112.48
$5,518.26 $5,394.50 $5,866.58
$5,634.84
$5,707.44
SUV $9,076.36
$9,489.01
$9,384.51
$10,022.42
$9,640.33 $9,804.38
$9,232.17
$9,330.91
25
At the request of our customers and friends in Canada, we are pleased to provide the following
Canada-specific statistics, observations, and trends. All dollar-figures appearing in this
section are in CDN$. As a point of clarification, these data are the product of upload activities
from Body Shop, Independent Appraisers and Insurance personnel, more accurately
depicting insurance-paid loss activity, rather than consumer direct or retail market pricing.
The average gross appraisal value, calculated by combining data from all first- and
third-party repairable vehicle appraisals uploaded through Mitchell Canadian systems in
Q3-2007, was $2,992, a -$24 decrease from Q3-2006. However, applying the prescribed
development factor of 3% yields an anticipated average appraisal value of $3,094, a 2.5%
increase from Q3-2006.*
W
Editors Note: All dollar-figures
appearing in this section are in CDN$.
As a point of clarification, these data
are the product of upload activities from
Body Shop, Independent Appraisers and
Insurance personnel, more accurately
depicting insurance-paid loss activity,
rather than consumer direct or retail
market pricing.
Canada—Severity Overall
$13,312
$12,000
$12,832
$12,134
$13,291
$12,872
$12,218
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$3,022
$3,007
$2,946
$3,092
$3,016
$2,992/
3,094
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
5.76
5.92
5.72
5.77
5.58
5.57
Appraisals
ACV’s
Collision Losses
Mitchell’s Q3-2007 data reflects a Canadian average gross collision severity of $2,997, a
$136 decrease over Q3-2006. But when we apply the prescribed development factor, we
obtain an estimated final value of $3,096, reflecting a smaller decrease of $37.*
Canada—Severity Collision
$12,000
$13,224
$12,897
$12,232
$13,156
$12,918
$12,243
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$3,156
$3,004
$3,089
$3,133
$3,224
$2,997/
3,096
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
5.62
5.67
5.61
5.60
5.44
5.44
Appraisals
ACV’s
26
Canadian Collision Summary (con't.)
In Q3-2007, the average gross Canadian appraisal value for comprehensive coverage
estimates processed through our servers was $3,128, or $410 higher than in Q3-2006.
Applying the prescribed development factor of 3%, the anticipated average appraisal value
will be $3,240.*
Canada—Severity Comprehensive
$13,894
$13,548
$12,424
$12,000
$13,357
$12,091
$12,019
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$2,754
$2,387
$2,718
$2,438
$3,128/
3,240
$2,563
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
6.24
6.58
6.18
6.30
5.99
5.77
Appraisals
ACV’s
Third Party Property Damage
In Q3-2007, our Canadian industry average gross third-party property damage appraisal
was $2,444, a decrease of $576 from Q3-2006 despite an increase in ACV of the average
vehicle estimated.*
W
About Mitchell in Canada…
For more than 17 years, Mitchell’s
dedicated Canadian operations have
focused specifically and entirely on
the unique needs of collision repairers
and insurers operating in the Canadian
marketplace. Our Canadian team
is known for making itself readily
available, for being flexible in its
approach to improving claims and
repair processes, and for its ‘second
to no one’ commitment to customer
support. Headquartered in Toronto,
with offices across Canada, Mitchell
Canada delivers state-of-the-art, multilingual collision estimating and claims
workflow solutions (including hardware,
networks, training, and more), worldclass service, and localized support.
To learn more about Mitchell Canada
and its solutions and services, contact:
Mike Jerry
Vice President and General Manager–
Mitchell Canada
t: 888.209.4338
f: 416.733.1633
®
Canada—Severity APD
$12,783
$12,000
$12,594
$11,903
$12,322
$11,552
$11,147
$10,000
$8,000
$6,000
$4,000
$2,000
Avg. Unit Age
$2,460
$2,761
$2,740
$3,020
$2,365
$2,444/
2,516
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
7.16
6.78
7.16
6.60
6.58
6.15
Appraisals
ACV’s
27
W
Average Appraisal Make-up
This chart compares the average appraisal make-up as a percentage of dollars, constructed
by Mitchell-equipped estimators. These data points reflect an increase in Paint Materials
and labor dollars, while the percentage of parts has declined between these respective
periods.
% Average Appraisal Dollars by Type
Date
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Pt/$ Change
% Change
% Average Part $
46.7
42.13
46.08
43.19
45.81
41.55
-1.64
-4%
% Average Labor $
42.94
46.63
43.2
44.36
43.24
47.13
2.77
6%
% Paint Material $
7.46
8.03
7.71
8.42
8.13
8.71
0.29
3%
Labor Analysis
All data reflect the percentage of labor-type dollars utilized in the construction of Mitchell
appraisals by Canadian estimators.
Average Body Labor Rates and Changes by Province
% Average Labor Dollars by Type
Refinish (34.8%)
Q2 2006
Remove/Replace (24.0%)
Repair (41.2%)
Q2 2007
Pt Change
% Change
CANADA
47.83
51.66
3.83
8.0
ALBERTA, CAN
49.87
57.77
7.90
15.8
BRITISH COLUMBIA, CAN
60.81
56.96
-3.85
-6.3
Newfoundland & Labrador, CAN
52.71
53.11
0.40
0.8
NOVA SCOTIA, CAN
51.23
52.17
0.94
1.8
NORTHWEST TERRITORIES, CAN
63.22
68.33
5.11
8.1
ONTARIO, CAN
48.61
50.13
1.52
3.1
QUEBEC, CAN
40.82
42.59
1.77
4.3
SASKATCHEWAN, CAN
53.92
55.54
1.62
3.0
YUKON TERRITORY, CAN
70.67
74.00
3.33 4.7
Adjustments
In Q3-2007, overall adjustments decreased by 9%, with betterment frequency down by
12%, though the dollar amount increased by a surprising 20%.
Adjustment $ and %’s
Date
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Pt/$ Change
% Adjustments Est
4.69
6.16
4.66
4.39
3.4
3.98
-0.41
-9%
% Betterment Est
4.23
5.64
4.21
4
3
3.52
-0.48
-12%
% Appear Allow Est
0.47
0.54
0.47
0.41
0.41
0.49
% Prior Damage Est
0.26
0.28
0.19
0.18
0.16
0.08
-0.1
-56%
Avg. Betterment $
120.68
148.91
132.29
151.71
159.22
182.18
30.47
20%
Avg. Appear Allow $
161.81
173.62
179.56
148.52
174.13
143.9
-4.62
-3%
0.08
% Change
20%
28
W
Parts Analysis
As a general observation, recent data show that parts make up 44.9% of the average
value per repairable vehicle appraisal, about .63 points more than the average allocation
of labor dollars. In addition, the overall trend now reflects a stabilized level of OEM parts
use, an increasing volume of Aftermarket and Remanufactured parts dollars used by
Mitchell-equipped estimators, and declining LKQ (recycled) parts use.
Editor’s Note: While there isn’t a perfect correlation between the types of parts specified
by estimators and those actually used during the course of repairs, we feel the following
observations to be directionally accurate for both the insurance and auto body repair
industries. This segment illuminates the percentage of dollars allocated to each unique
part-type.
For Parts Types Definitions, see page 18.
Original Equipment Manufacturer (OEM) Parts Use in Dollars
In Q3-2007, Canadian OEM parts use rose slightly compared to Q3-2006 and reflects a
trend of a continued rise in OEM use in Canada.
Aftermarket Parts Use in Dollars
Aftermarket parts use in Canada dipped slightly compared to Q3-2006 but has remained
in the mid 10% range for over a year.
Remanufactured Parts Use in Dollars
Remanufactured parts use in Canada was 3.27% for Q3-2007, compared to 3.61% in
Q3-2006.
Like Kind and Quality Parts Use in Dollars
LKQ parts use in Canada has steadily declined since Q1-2004, reflecting the rise in OEM
use in the same periods.
Canada—OEM
71.2%
72.0%
71.8%
73.8%
74.1%
75.4%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Canada—Aftermarket
11.2%
11.7%
11.3%
10.9%
10.7%
10.5%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Canada—Non-New/Remanufactured
3.7%
3.7%
3.6%
3.6%
3.5%
3.3%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Canada—LKQ
13.9%
12.6%
13.3%
11.8%
11.6%
10.8%
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
29
Casualty Statistics
Personal Injury Protection (PIP)
During the second quarter of 2006, The 12-month rolling average for countrywide Personal
Injury Protection claims (as calculated from the percentage of such claims reported per 100
insured exposures) was 1.45 and the average claim severity was $7,535.
Countrywide PIP Frequency
About Mitchell Medical…
2.0%
1.59
1.5%
1.55
1.52
1.49
1.45
1.0%
0.5%
0%
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Countrywide PIP Severity
$8,000
$7,500
$7,000
$6,500
$6,000
$5,500
$5,000
$4,500
$4,000
$7,535
$6,375
$6,483
$6,640
$6,744
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Bodily Injury
As of the second quarter of 2007, the 12-month rolling average for countrywide bodily injury
paid claim frequency was .99, down from the previous 12-month rolling total of 1.00 and
lower than the other reported quarters.
Countrywide BI Frequency
1.08%
1.07%
1.06%
1.05%
1.04%
1.03%
1.02%
1.01%
1.00%
0%
1.02
1.01
Q2 2006
Q3 2006
1.01
Q4 2006
1.00
0.99
Q1 2007
Q2 2007
Countrywide BI Severity
$11,000
$10,500
$10,000
$9,500
$9,000
$8,500
$8,000
$7,500
$7,000
$6,500
$6,000
$10,318
$10,429
Q2 2006
Q3 2006
Editors Note: All information depicted
here is based on the most recent and
available ISS (formerly PCIAA) Fast
Track data, reported one quarter in
arrears.
$10,594
$10,722
Q4 2006
Q1 2007
$10,884
Mitchell’s Medical division has
20+ years experience delivering
successful technology, database, and
service solutions for collision-injury
claim handling that are accurate and
efficient. Mitchell Medical is proud to
serve many of the top P&C Insurers
using both enterprise-wide and
standalone implementations.
Mitchell Medical Decision Point®
facilitates 1st and 3rd party claimhandling by automating vital tasks,
thus streamlining claim processing.
Applying carrier-specific business
procedures,
claimant-specific
treatment protocols, and Mitchell’s
industry acumen, the majority of
claims are handled without human
intervention from first notice of loss
through payment. Exceptions are
handled via automated assignment to
the appropriate subject matter expert
(nurse reviewer, special investigator,
experienced adjuster). Decision Point
monitors compliance with federal
and state regulations, and includes
powerful analytic capabilities for
predictive modeling and performance
management.
Mitchell Medical’s extensive customer
service infrastructure provides clients
with training, plus systems, content,
regulatory, and litigation support,
process consulting, and outsource
service options.
To learn more about Mitchell Medical
and its casualty solutions, visit
www.mitchell.com, or contact:
Jeff Pirino
Sr. Director of Casualty Sales
Mitchell Medical
[email protected]
t: 858.536.8346
f: 858.536.5379
Q2 2007
30
About Mitchell
®
Mitchell International, Inc.
9889 Willow Creek Rd. – San Diego, CA 92131 – 858.578.6550
Mitchell International, Inc., founded in 1946 and headquartered in San Diego, California, is
a leading provider of information and workflow solutions to the automotive insurance and
collision repair industries, serving carriers, shops, and other commercial participants in the
physical damage and auto-related medical claims processes. Mitchell facilitates millions
of electronic transactions between more than 16,000 business partners each month to
enhance their productivity, profitability, and customer satisfaction.
From the moment policyholders notify their insurance companies of a vehicle claim,
Mitchell’s state-of-the-art solutions go into action throughout the entire claims and repair
cycle. Mitchell provides the information and workflow management expertise insurers and
collision repair shops rely upon to serve their customers. From initial damage appraisal to
helping collision repairers return vehicles to pre-accident condition, from shop management
to salvage, claims review to subrogation, Mitchell is there to ensure every aspect of the
industry has the tools it needs to get the job done.
All Mitchell collision solutions are backed by Mitchell’s industry-leading Parts & Labor
Database—the most accurate and comprehensive source for vehicle information available
anywhere—and which recently expanded its coverage to include specialty lines such as
motorcycles, recreational vehicles, and watercraft. The Mitchell Database stands as a critical
point of connectivity between shops and insurers, an unbiased resource referenced by all
industry participants as a basis for resolving collision claims consistently and accurately.
Mitchell International is a privately-held company, owned primarily by the Aurora Capital
Group. Aurora Capital is a Los Angeles-based investment firm formed in 1991 that acquires
and builds companies in partnership with operating management. The firm currently
manages approximately $2 billion in capital and is committed to investing in companies
with unique, defensible market positions. Aurora is dedicated to generating long-term value
principally through investing the time and resources necessary to enhance the fundamentals
of each of its businesses.
For more information on Mitchell International, visit www.mitchell.com.
For more information on Aurora Capital, please visit its website: www.auroracap.com.
31
Mitchell News Releases Q3-2007
®
GMAC Insurance Selects Mitchell for Expanded Claims Performance Solutions
Top insurer renews contract and expands relationship to include total loss, claims review
and customer satisfaction solutions
San Diego, CA – September 24, 2007 – Mitchell International announced that GMAC
Insurance (GMACI), one of the largest property and casualty insurance groups in the
nation, has selected Mitchell as its exclusive provider of claims performance solutions.
Under terms of the deal, GMACI extends its use of Mitchell APD (auto physical damage)
claims processing solutions and expands the relationship to include new Mitchell products
and services. Included among the claims performance solutions Mitchell will provide are:
Total Loss, Claims Review, CSI, Workflow and new communication tools. With Mitchell as its
exclusive partner, GMACI gains a comprehensive and powerful claims performance engine
fully in tune with the changing dynamics of the APD marketplace.
“For many consumers, the insurance claims process has the potential to be both stressful
and complicated; we at GMAC Insurance are committed to making it as customer-focused
and efficient as possible,” said George Hall, VP of Claims, GMAC Insurance. “Mitchell’s
solutions will help us better serve our customers, reduce claims settlement time and offer
fair and accurate compensation to our policy holders.”
ICBC Renews Customer Satisfaction Agreement with Mitchell International
San Diego, CA – September 19, 2007 – Mitchell International announced a renewal
agreement with Insurance Corporation of British Columbia (ICBC) for customer satisfaction
indexing (CSI) services to be provided by AutocheX, Mitchell’s voice-of-the-customer
performance management group.
AutocheX has managed the customer satisfaction program for ICBC’s accredited c.a.r. shop
Valet program since 2004. The new agreement extends through 2011 and includes voiceto-voice customer contact, problem recognition and notification, and detailed management
reporting. As part of the agreement, Mitchell also worked with ICBC to migrate the
AutocheX customer satisfaction data to Mitchell’s Canadian-based data processing and
reporting center. Collision repair shops that participate in the ICBC c.a.r. shop Valet program
started accessing their customer satisfaction data on the new Canadian-based Web site on
September 1, 2007.
Frank Fekete, Director of Material Damage Services for ICBC, said, “AutocheX is a part
of ICBC’s overall commitment to customer service. Through its ongoing measurement
of customer satisfaction at ICBC c.a.r. shop Valet facilities, we can work to ensure our
customers receive safe, quality repairs that are guaranteed for as long as the customer
owns the vehicle.”
Under the new agreement, ICBC has enhanced the customer satisfaction service for the
c.a.r. shop Valet program participants to include real-time “Customer Alerts” that AutocheX
will e-mail to ICBC when the customer survey is completed. “This will help ICBC to be more
proactive in identifying and assisting the collision repair facility resolve customer issues,”
said Kevin Ballance, Manager of Accreditation Programs for ICBC. “We are committed to
helping our shop partners respond to the needs of our customers and provide the best
repair experience possible.”
General Casualty Insurance Extends Agreement with Mitchell for Comprehensive
Estimation Solutions
San Diego, Calif. – September 17, 2007 – Mitchell International announced that General
Casualty Insurance Companies, a super-regional property & casualty (P&C) insurance
Continued…
32
Mitchell News Releases Q3-2007 (con’t.)
provider, has signed a multi-year contract with Mitchell for its estimating and specialty
database solutions. Under the terms of the agreement, General Casualty will continue
using Mitchell’s UltraMate® estimating solution for automobiles, motorcycles, marine craft
and medium and heavy trucks. Terms of the deal were not disclosed.
Gale Harder, Assistant Vice President of Claims at General Casualty, said, “General
Casualty looks forward to continuing our successful relationship with Mitchell International.
We continue to be impressed with Mitchell’s quality and range of estimating databases and
their continued efforts to build a trustworthy vendor partner relationship.”
Mitchell’s estimating solution uses its own comprehensive database to gather essential
claim data, such as vehicle parts and labor times, and organizes and routes the information
while simplifying the collection and flow of critical documents and tasks within and between
business partners. The solution, which includes increasingly popular specialty vehicles
such as motorcycles, marine craft, RVs, and medium and heavy trucks, helps to create
complete and accurate estimates that reduce cycle times for repairs and improve customer
satisfaction.
Nationwide Insurance Renews Shop and Staff Customer Satisfaction Indexing
Programs with AutocheX
San Diego, CA – August 22, 2007 – Mitchell International announced a renewal agreement
with Nationwide Mutual Insurance Company for customer satisfaction indexing (CSI)
services to be provided by AutocheX, Mitchell’s voice-of-the-customer performance
management group.
Nationwide will continue to use AutocheX to measure and report satisfaction with its Blue
Ribbon collision repair facilities and staff associates across the United States through 2009.
Specifically, AutocheX evaluates customer satisfaction with the individual Blue Ribbon
shops following the collision repair transaction, and the front line claims adjusters during
the claim settlement process.
Terry Fortner, Associate Vice President Claims, asserted Nationwide’s commitment to
measuring customer satisfaction: “Exceeding our customers’ expectations is a critical
element of our ‘on your side’ approach to customer service. Being able to accurately capture
the voice of our customers and understand what drives their satisfaction enables us to
provide the highest level of service possible,” said Fortner.
“Having customer satisfaction information at our fingertips helps us make better decisions
on how to best serve our customers and is critical to maintaining policyholder loyalty,” added
Jim Gadberry, Director of Blue Ribbon Services.
Mitchell International Wins a Multi-year Contract Extension from Progressive
Insurance
San Diego, CA – August 20, 2007 – Mitchell International announced that Progressive
Insurance, the nation’s third largest auto insurer, has agreed to a multi-year contract
extension with Mitchell for auto physical damage (APD) claims estimating solutions.
Steve Gellen, Claims Process Leader, of Progressive said, “We have partnered with
Mitchell for many years, and they have become an integral part of our claims processing
strategy and solution-set. Mitchell has routinely demonstrated a willingness and ability to
work closely with us to meet the unique needs of Progressive and our customers. We look
forward to our continued partnership.”
Press Releases Continue…
33
Plymouth Rock Assurance Selects Mitchell’s Total Logic™ Valuation
Mitchell’s Total Loss Valuation Solution Reduces Claims Settlement Cycle Time with
Accurate, Trusted and Transparent Vehicle Valuation Data
San Diego, CA – July 16, 2007 – Mitchell International announced that Plymouth Rock
Assurance Corporation, a leading insurer with over 125,000 individual policyholders and
personal auto insurance premiums which, in 2006, exceeded $302 million, has selected
Mitchell’s Total Logic™ Valuation as the company’s total loss valuation solution. Plymouth
Rock Assurance chose Mitchell’s Total Logic Valuation because it delivers a customercentric loss claims process. Total Logic Valuation, developed in partnership with J.D. Power
and Associates®, produces objective, transparent and trusted vehicle valuations resulting in
a fair and easy to understand claims settlement process.
“Mitchell’s Total Logic Valuation is perfect in keeping with Plymouth Rock Assurance’s
mission of providing unparalleled customer service, responsiveness and professionalism,”
said Bill Kelleher, Claim Director at Plymouth Rock Assurance Corporation. “In Total Logic
Valuation, Mitchell has developed a product that thoroughly, and uniquely, considers our
customers’ perspective in the claims settlement process. With Total Logic Valuation, our
customers get loss valuations based on trusted third-party data sources and transparent,
efficient and easy to understand valuation reports.”
Mitchell International Revs Up Partnership With Harley-Davidson® Motorcycles
Integration of Harley-Davidson’s parts, pricing and factory accessories with Mitchell’s
UltraMate® Motorcycle creates standardized estimating platform
San Diego, CA – August 1, 2007 – Mitchell International announced a marketing and
sales partnership with Harley-Davidson, Inc. Through this partnership, Harley-Davidson,
Inc. will market and sell Mitchell’s UltraMate® Motorcycle estimating solution directly to its
dealers. The solution includes extensive Harley-Davidson model coverage as well as a
comprehensive list of Harley-Davidson upgrade accessories.
UltraMate Motorcycle eliminates the time spent manually entering repair estimate data
and makes importing estimates into shop management systems easier. Having access to
accurate parts and labor information allows users to create work orders faster and easier
than ever before. Users of UltraMate Motorcycle for Harley-Davidson reported a reduction
in per estimate time from an average 2-3 hours to less than 30 minutes, with a typical user
reporting an average estimate time of 15 minutes. This equates to an average of 15-25
hours saved per month.
”In the bike business, there are significant seasonal and repeat customer factors at work, so
shorter repair cycle times translate into happier customers and a more profitable shop,” said
Robert Carey, Parts and Service Manager, Harley-Davidson of Danbury, an early adopter of
the new Harley-Davidson/UltraMate Motorcycle estimating solution. “UltraMate Motorcycle
has enabled our shop to reduce cycle times by quickly creating fair and accurate motorcycle
repair estimates that our insurance partners can understand and readily accept.”
Carey added, “I have grown dependent on UltraMate Motorcycle. It is a great tool for
creating parts and accessories estimates in conjunction with the sales process of new
bikes. The product is a real time saver and has helped us gain credibility with most of the
major insurance companies.”
Press Releases Continue…
34
Mitchell International Announces Creation of Data Centers in Canada for Regulatory
Compliance
Canadian Data Centers Protect Canadians’ Personal Information from Unauthorized ThirdParty Access
San Diego, Calif. – September 21, 2007 – Mitchell International furthered its commitment
to protect the personal data of its Canadian insurance carrier customers, and their policy
holders, through the successful establishment of Canadian-based primary and secondary
data centers. With this announcement, Mitchell remains a leader in creating local data
centers to store and run applications used by Canadian insurance carrier customers. These
domestically run data centers process Canadian customer information independent from
US-based data centers and replace facilities that previously provided services from within
the United States.
“Data protection and maintaining the privacy of personal data have always been a top priority
of Mitchell International. Our Canadian customers can now rest assured that personal
information is protected with the establishment of our all-Canadian state-of-the-art data
center facilities,” said Mike Jerry, General Manager, Mitchell International (Canada).
Mitchell International’s Canadian data centers also feature Canadian-based local support
and systems staff who ensure private data is not accessed remotely from outside Canada
to meet new Canadian privacy requirements. By locating Canadian data in centers
domestically, Mitchell offers a unique service advantage to its Canadian customers while
complying with local government regulations.
Mitchell International Announces Leadership Succession
President, Alex Sun, to become President and Chief Executive Officer and a Member of the
Board of Directors; Chief Executive Officer, James Lindner, to become Executive Chairman
of the Board
San Diego, CA – September 14, 2007 – Mitchell International announced that its Board of
Directors has unanimously approved a succession plan that will ensure strong leadership
at Mitchell in the years to come. Effective January 01, 2008, Alex Sun, President of Mitchell,
will become President and Chief Executive Officer and a member of Mitchell’s Board of
Directors. Alex Sun joined Mitchell in 2001 as Executive Vice President and Chief Financial
Officer and assumed the title of President in early 2005. James Lindner, who has been
Mitchell’s Chief Executive Officer since 1997, will become Executive Chairman of the
Board.
“I want to thank the Board of Directors for their support and confidence in our leadership
team, strategy and vision for Mitchell’s successful future,” stated Alex Sun. “Under Jim’s
firm guidance over these past ten years, Mitchell has consistently grown its revenue,
earned a stellar reputation for world-class customer service and developed many of the
key innovations our customers rely on every day to drive their business. I look forward to
working with our extended management team, customers and stakeholders in continuing
Mitchell’s rich legacy of achievement. Moreover, I am excited that Jim will be working with
us as Executive Chairman as we continue to pursue opportunities to expand the breadth of
our products and services.”
“As Chief Executive Officer of Mitchell for the past ten years, one of my key responsibilities
was to build an organization that would ensure Mitchell’s long-term industry leadership,”
stated Jim Lindner. “I am pleased to turn the Chief Executive Officer position over to
someone of Alex Sun’s caliber. Having worked closely with Alex over the past several years
I have experienced his strong leadership skills and business acumen first hand. His indepth understanding of our operations, combined with his strategic vision for our industry
Continued…
35
and Mitchell’s future, will benefit all of our customers and business partners. As Executive
Chairman of the Board, I will continue to work closely with Alex and his team on a number
of key areas, including acquisition and partnering opportunities, corporate strategy and
customer relations.”
John Mapes, Managing Partner at Aurora Capital, added, “As we stated at the time we
consummated our investment in Mitchell, Aurora Capital has great confidence in Mitchell’s
leadership. With this succession plan, customers can continue to expect new, innovative
products and strategic acquisitions which will allow Mitchell to deliver greater value to its
customers.”
Mitchell International and eAutoclaims Announce Joint Distribution Agreement
San Diego, CA – July 30, 2007 – Mitchell International announced that it has entered in
to a distribution relationship with eAutoclaims, a leading provider of claims management
solutions and services for the property casualty market.
This reciprocal marketing and distribution agreement enables eAutoclaims to distribute
Mitchell’s products and services to its national network of contracted Repair Facilities,
Independent Appraisers and Insurance Clients, and provides Mitchell with the opportunity
to offer eAutoclaims products and services to targeted customers. eAutoclaims’ focus will
be marketing and selling Mitchell’s estimating, shop management platforms and targeting
specific insurance opportunities that are interested in their mutual products and services.
“The addition of eAutoclaims as a national distributor allows Mitchell to partner with a strong
industry leader to expand our reach in the Collision Repair Industry,” said Paul Van Deventer,
Mitchell’s Senior Vice President of Sales. “Mitchell’s shop management and estimating
solutions have seen record levels of adoption over the last several years, and we look
forward to the added support of the eAutoclaims’ distribution channel.”
“With Mitchell’s strong brand along with industry-leading product offerings plus eAutoclaims’
most recent release of web applications called eJusterSuite, eAutoclaims can expand
its presence and provide more products and services to our contracted Collision Repair
Network, Independent Appraiser Network and Insurance Market,” said Tim Ellis, eAutoclaims
Vice President of Sales & Marketing.
Mitchell Presents to Society of Insurance Research on “Driving Claims Performance
Through Data Analytics”
San Diego, CA – July 11, 2007 – Presenting to the Society of Insurance Research (SIR) at its
Spring Conference on May 22nd in Dallas, TX, Alex Sun, President of Mitchell International,
highlighted the main findings of his whitepaper “The Tip of the Information Iceberg” (available
at www.mitchell.com) to reveal how the strategic use of data analytics can improve the
claims performance of insurers. Claims organizations are only now beginning to embrace
data analytics as a critical factor in driving business improvements and transforming the
claims process.
Collecting and assessing performance data allows insurers to apply the resulting insights and
drive improvements throughout the claims process. By analyzing key processes, physical
damage and casualty severity data points, the opportunity now exists to leverage analytical
insights to improve operational performance across all critical claims performance drivers.
“Analyzing the massive amounts of data collected during the claims process can produce
insights that lead to substantial operational improvements,” said Sun. “With the adoption of
many claims automation technologies today, from estimating systems to workflow solutions,
there is now the ability to systematically capture data on critical activities in the claims
Continued…
36
process. This data can now be leveraged to better understand how an individual carrier
performs against both internal and industry-wide best practice benchmarks and drive
significant performance improvements.”
According to Ed Budd, Executive Director of SIR, “We were very pleased with Mr. Sun’s
presentation since the SIR Conference is about brining new trends and technology to the
forefront and the free exchange of ideas to address industry issues.” Budd continued, “Most
organizations are in the early stages of implementing data analytics, such as capturing data
and basic reporting. As Mr. Sun demonstrated, in order to achieve enhanced performance,
carriers will need a structured process for applying the insights derived from rigorous data
analytics. His presentation topic was well received by conference attendees and sparked
interesting discussions about the future of data analytics.”
Sun added, “Some examples of future claims analytics include Common Data Presentment,
so that claims adjusters can receive both relevant medical and APD reports. This capability
is expected to drive better decision making about the relatedness of injuries and present
a more holistic picture of claim circumstances. As well, fraud identification and straightthrough processing will benefit from data analytics in the future, allowing for better decisions
to be made earlier in the claims process, saving time and money.”
As a provider of information solutions and technology for both auto property and casualty
claims, Mitchell has the ability to observe and evaluate the various and ongoing processes
aimed at improving claims settlement practices—and has collaborated with a diversity of
experienced claims professionals.
Mitchell Glass Releases GlassMate® 5.5
New Glass Website Launch Dedicated to the Auto Glass Repair and Replacement User
Community
San Diego, CA – September 6, 2007 – Mitchell Glass, a division of Mitchell International,
today announced the release of GlassMate® Version 5.5 to the Auto Glass Repair and
Replacement (AGRR) industry. GlassMate, a leading point-of-sale system for the AGRR
industry, increases user efficiency by allowing direct order placements of auto glass parts
from Pilkington, a leading automotive glass manufacturer. Along with the new release of
GlassMate, Mitchell Glass today launched its new website tailored to the needs of the
AGRR user community. The new website, available at http://Glass.Mitchell.com, provides a
destination offering comprehensive information about Mitchell Glass products, support and
answers to commonly asked questions.
“This release of GlassMate v5.5 offers our customers another leap forward in streamlining
glass repairs and enhanced productivity. With integrated parts ordering through GLAXIS™,
and through Pilkington, retailers can quote, invoice, order parts, and schedule without ever
leaving the GlassMate software environment,” said James Patterson, Director of Glass
Product Management at Mitchell International. “We are excited about this new GlassMate
release and will continue to add robust functionality and integration with other glass vendors
in upcoming releases.”
Patterson added, “Over the past few years more of our customers have been relying on
information from the Internet to make educated decisions. In response, we have created
our new dedicated Mitchell Glass website to serve as a trusted source of industry and
product information that the AGRR community can use on a daily basis.”
More information about GlassMate software is available at http://Glass.Mitchell.com or by
calling (800) 551-4012.
37
At this year’s NACE in Las Vegas, Mitchell introduced its new WorkCenter™ claims
processing workspace—where simplification is the innovation. With a highly developed mix
of modules facilitating efficiency and seamless workflow, insurance companies can realize
significant improvements across their claims processing environment.
Assignment | Dispatch | Estimating | Total Loss | Parts Management | Salvage | Compliance | Audit | Review | Reinspection | Payment | CSI | Analytics
mitchell
solutions
with muscle
meet our
new chief
simplification
officer…
The Mitchell WorkCenter
™
Claims Performance Solution:
t
en
ch
nm
at
sig
sp
As
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nt
me
ge
s
na
ing
os
Ma
at
ge
lL
a
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ym
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®
38
Mitchell Brand Advertising at Work (con’t.)
Also at this year’s NACE, Mitchell stood front and center showcasing powerful business
solutions for collision repair facilities—most notably its industry-leading ABS™ management
systems, which help body shops step up their performance in shop-critical areas and also
gives them insight into improvable areas of their businesses—resulting in better customer
satisfaction and business partnering.
Management Systems | Estimating | Repair | Glass | CSI |
mitchell
solutions
with muscle
ABS Enterprise Management System:
Feel the performance!
™
Designed for high-volume and multi-location facilities
who want the ultimate web-based tool and who also
crave muscle-powered business performance.
ABS Enterprise
™
®
39
Industry Trends
Report
Q4 2007
The Industry Trends Report is a quarterly
snapshot of the auto physical damage
collision and casualty industries. Just
inside—the economy, industry highlights,
plus illuminating statistics and measures,
and more. Stay informed on ongoing and
emerging trends impacting the industry,
and you, with the Industry Trends Report!
Questions or comments about the Industry
Trends Report may be directed to:
Greg Horn
Editor in Chief,
Vice President of Industry Relations
[email protected]
For distribution and circulation questions,
or requests for back issues, please contact:
Regina Merkey,
Managing Editor,
Marketing Communications Specialist
Distribution and Circulation
(858) 578-6550, ext. 8146
e-mail: [email protected]
Original Cover Photography
Jennifer Therieau,
Graphic Designer, Mitchell International
Layout and Design
Larry Barnett,
Creative Director, Mitchell International
®
©2007 Mitchell International, Inc. All rights reserved.

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