Winter 2011

Audatex
Directions
News from Audatex North America, Inc. Vol 09
Bumper Covers: Training,
Quality Control and Data
Analytics Aid in Repair
Versus Replace Decisions
Article contains valuable
information from 3M and
ABRA Auto Body & Glass
Audatex Directions is a newsletter that
provides in-depth trends and industry
analysis on the auto physical damage
market. It is published by Audatex North
America, Inc., a Solera Company.
Contributing Writers
Mark Algie
Business Development Manager, 3M
Michael T. Anderson
Sr. Director of Data Analytics, Audatex
Posit Science/www.positscience.com
Posit Science is the leading provider of
clinically validated brain fitness programs.
Rick Tuuri
VP Industry Relations, Audatex
Tim Adelmann
Executive Vice President,
ABRA Auto Body & Glass
Audatex Directions
Contents
3
4
8
Design
Joe Sullivan
Graphic Designer, Audatex
Request Copies
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please email: [email protected]
To download the pdf, please visit our
Web site: http://audatex.us/thinktank.aspx
Local focus. Global knowledge.
Audatex is the leading global claims
solutions provider. As part of the Solera
group of companies, we draw on our broad
global claims market experience to identify
and implement the best-practice processes
that drive continuous improvement for our
local customers and their trading partners.
Solera companies serve the automotive
industry in more than 50 countries across
six continents.
15030 Avenue of Science, Suite 100, San Diego, CA 92128
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© 2011 Audatex North America, Inc. All rights reserved.
Audatex, Audatex Insight, Autosource, Audatex Estimating,
Audatex Win-EMR, PenPro and Shoplink are trademarks or
registered trademarks of Audatex. All other company
and/or product names may be trademarks or registered
trademarks of their respective owners in the United States
and other countries.
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16
18
Executive Message
Feature Article
– Bumper Covers: Training, Quality
Control and Data Analytics Aid in
Repair Versus Replace Decisions
Trends Data
– Repairable Loss Trends Continue to
Benefit from Aging Vehicle Population,
Other Factors
– Total Loss Trends: Experts Indicate
2011 Total Loss Percentages May
Trend Closer to Pre-Recession Levels
Industry Leadership
– Substrate Identification Improves the
Collision Repair and Estimating
Process
New Technology
– Keep Boomers Safe on the Road with
Brain Training
Audatex News and Events
– Audatex Launches New
Educational Institutions Program
– Upcoming Events
Executive Message
Principles That Drive Leadership and Innovation
The beginning of the year is always an appropriate time to reflect on the past and plan
ahead for a better future. At Audatex, that future remains focused on a desire to lead and
innovate – to build claims processing solutions that drive higher levels of efficiency for our
customers year after year. We attribute our many accomplishments in this area to the Think
80/20, Act 30/30 and Live 90/10 principles, which are deeply ingrained in every aspect of
our business.
Think 80/20: Encourages managers and associates to focus their efforts on the 20 percent
of the work that drives 80 percent of the value to our clients and employees.
Act 30/30: Emphasizes reducing waste and wasteful processes by 30 percent while
improving productivity by the same amount. At Audatex, we ask our associates to use the
30/30 lens when evaluating and creating high-performance solutions for our customers.
Live 90/10: Encourages managers and associates to personally assume a leadership role
and take 90 percent accountability for team-based projects, with the remaining 10 percent
given to team members. This principle gives every associate a “voice” and teaches
accountability and leadership. A 90/10 focus means that Audatex will always look to take
a leadership role in driving positive industry change.
These principles guide all of our decisions at Audatex – strategically and tactically as well
as organizationally and individually. It should come as no surprise that this issue of
Directions is packed with articles that showcase Think 80/20, Act 30/30 and Live 90/10 in
action. Our bumper cover feature story is about leveraging data and following the 30/30
principle to make an informed repair vs. replace decision.
In addition, it was our 80/20 focus and 90/10 leadership stance that resulted in the
development of color-coded substrate identification, which is now available as a key
enhancement to our industry-leading 3D vehicle graphics within Audatex Estimating™.
We’re pleased to use this issue of Audatex Directions to explain the new capability in
more detail. By making use of this feature, shops can further optimize the collision repair
and estimating process through the ability to more accurately and easily identify substrate
materials.
Think 80/20
Act 30/30
Live 90/10
This entire issue is devoted to helping your business achieve its goals in 2011, and on
that note, we’d like to extend our best wishes to all of you for a successful and prosperous
New Year. We assure you that we’ll continue to follow the guiding principles that have been
crucial to our success, and in turn, the success of our customers.
We look forward to continuing to work with you, and we remain focused on doing our very
best to earn your business.
Sincerely,
Elias Olmeta
Chief Finance Operational Officer
Audatex North America
www.audatex.us
3
Feature Article
Bumper Covers: Training,Quality
Control and Data Analytics Aid in
Repair Versus Replace Decisions
Written By: Michael T. Anderson, Audatex; Tim Adelmann, ABRA Auto Body & Glass;
and Mark Algie, 3M Automotive
Figure 1: Top 15 vehicle
makes based on 2010
claim counts. Bumper
cover repair percentage
(front and rear) by make.
Note: Jeep vehicles have
a high percentage of
unfinished rough covers,
which are less likely to be
repaired.
(Source: Audatex
Insight™ Parts
Analytics Module)
Bumper covers - front and rear - represent
some of the most commonly replaced parts in
automotive collision repair. Consisting largely of
either thermoplastic or thermoset plastic, they
are mostly cosmetic in nature and contribute
towards increased fuel economy via
aerodynamic designs. In recent years, bumper
covers have accounted for a larger portion of the
vehicle surface area, thereby further increasing
the likelihood of being damaged. In addition, for
each replaced part dollar, 13 cents is spent on a
bumper cover. In fact, the annual dollars spent
on replacing bumper covers is nearly equal to
that spent on front fenders, hoods, grilles and
radiators combined. This begs the question:
Does the industry have a good grasp on the key
drivers of costs related to bumper covers?
Part Frequency: Bumper Covers
Present in Nearly 50% of Estimates
With greater surface area comes the higher
probability that a bumper cover will be involved
in a collision. Data suggests that for every 100
repairable estimates, there will be approximately
Bumper Cover Repair Percentages by
Vehicle Make (Top 15) 2010
50%
45%
40%
35%
30%
25%
4
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20%
30 bumper covers replaced and an additional 18
repaired. Estimates written on newer model year
vehicles (2007-2010) are more likely to contain a
bumper cover than those of older models (2002
to 2006) -- likely the result of bumpers
accounting for a larger surface area in the more
recent models.
Bumper Cover Total Costs: Part Price
Accounts for Only 57% of Total Cost
Bumper cover costs can vary greatly by make
and model, and an understanding of the total
costs is critical to the repair versus replace
decision. For example, a 2010 Ford Focus front
bumper cover may cost in excess of $533, while
a Ford Mustang may only cost $230. Across all
vehicle years, makes and models, the average
replacement cost for a bumper cover stands at
$534 when you account for the cover and the
other operations necessary to complete the
repair. The part price itself represents only 57
percent of the replacement cost. Other
operations, such as sheet-metal labor, refinish
labor, and paint and materials, constitute the
majority of the remaining 43 percent, which do
not include the additional costs that may be
incurred to blend into adjacent panels on
replacements.
Original Equipment (OEM), aftermarket and
remanufactured/reconditioned parts collectively
account for 99 percent of all replaced bumper
covers. In 2010, data suggests that OEM and
remanufactured/reconditioned part prices each
increased by 2.3 percent while aftermarket parts
increased by 0.8 percent. Despite part price
increases, the overall average part price remains
Continued next page
Audatex Directions
Vol 9
Feature Article
C o n t i n u e d f ro m p re v i o u s p a g e
unchanged from 2009 ($307), as the use of nonOEM parts has increased by 4.5 percentage
points, offsetting the overall increases.
Front Bumper Cover Part Cost
& Part Type Percentage 2010
50%
40%
30%
20%
10%
0%
$400
$300
$200
$100
$0
OEM
Aftermarket
Reman/Recon
Front Bumper Covers Average Part Price
Part Count Percentage
Figure 2: Bumper cover part costs and
percentage by part type.
(Source: Audatex Insight Parts Analytics)
With bumper covers being present on nearly half
of all estimates, and total replacement costs in
excess of $530, it’s no surprise that the industry
has sought to improve repair percentages over
the past several years. Despite recognizing the
benefits of repair, from 2007 to 2010 bumper
cover repair has improved by a mere 2.1
percentage points. Why have there not been
improvements in repair rates? To help answer
this question, we sought the perspective of both
3M and ABRA Auto Body & Glass.
plus any impact on cycle time and rental costs.
Another cost benefit of repair is that the damage
is often localized, allowing for blending away
from adjacent panels, which results in lower
refinish costs.
3M and ABRA Auto Body & Glass each
represent leaders in their respective fields. 3M,
a cornerstone in the collision repair industry,
believes that half of the bumper covers that are
replaced could be repaired instead, saving
customers money and generating extra profit for
the shop. As a result, 3M has spent the better
half of a decade working to reverse the
replacement trend. By offering a complete
system – as well as innovative products such as
the 3M™ EZ Fix Flexible Patch – 3M believes a
repair rate of 66 percent is safely and
economically attainable.
Analyzing the costs of an economically-repaired
bumper requires a comparison of the total cost
of replacement relative to the total cost of repair,
dollars spent on
replacing bumper
When it comes to repairing versus replacing
bumper covers, education on proper repair
techniques is paramount. Research suggests
that lack of technician and/or estimator training
is one of the main reasons for inconsistency in
bumper cover repair. While some insurers have
taken steps towards education, many still do not
require training or certifications for all of their
appraisal resources.
fenders, hoods,
Training: Critical to Quality Repair
grilles and
3M’s Plastic Repair System is straightforward
and uncomplicated, delivering the confidence
that technicians gain through hands-on training,
which is key to consistently delivering both
improved repair percentages and higher quality
repairs. 3M was also the first to offer an entire ICAR Training Alliance course dedicated to
adhesive plastic repair. However, technician
training is only a start. Estimators must also be
informed about the process – so they can know
when to write an estimate for a repair. 3M also
offers a series of short online courses titled:
covers is nearly
equal to that
spent on front
radiators
combined.
...Does the
industry have a
good grasp on the
key drivers of
• Bumper Structural-Tab Repair
• One-Sided Cosmetic Bumper Repair
The Decision: Repair Versus Replace
...the annual
• Traditional Non-Structural Bumper Repair
costs related to
bumper covers?
• Non-Structural Bumper Repair with the
Flexible Patch
These courses are delivered via the Standard
Operating Procedures Learning Center section
on their website (www.3M.com/Automotive).
Featuring interactive modules, they offer a
comprehensive introduction to the topic of
plastic repair, and are designed for shop owners,
estimators, adjusters and others associated with
the collision repair industry.
Three Facts to Know About
Repair Versus Replace
Organizations that consistently practice repair
versus replace realize three things:
Please visit
www.3M.com/automotive
for more product information.
Continued next page
www.audatex.us
5
Feature Article
C o n t i n u e d f ro m p re v i o u s p a g e
1. Surface preparation is the key to repair
success. Follow the provided directions for
use. Cleaning of the surface, followed by
some amount of abrasion, as well as
“dishing” the repair area, and using an
adhesion promoter will result in a repair that
will stand the test of time.
2. While just about everything can probably be
repaired, not everything should be repaired.
Just like any situation, for the economics to
make sense, the amount of labor that needs
to go into a repair should be evaluated
against the benefits. Spending 10 hours to
re-assemble the eight broken pieces of a
$150 cover is not likely to be a sound
financial decision.
3. Repairing bumper covers is a win-win-win
proposition for all involved.
The vehicle owner typically gets their car back
sooner, with the original part. The insurance
company sees a lower claims cost. The shop
sees an improvement to key performance
indicators, and higher profit.
Repair Versus Replace: Decision
Varies by Appraisal Resource
Audatex data suggests there are considerable
differences among insurers and their appraisal
resources. Currently, repair
percentages can range
Front & Rear Bumper Cover Repair %
from nearly 50 percent all
and Cost by Appraisal Type
the way down to the low
thirties, which clearly
45%
$240
40%
points towards variation
42.8%
$220
34.9%
35%
32.9%
in the appraisal process.
30%
25%
20%
$200
$180
Staff
DRP
Repair Costs
Figure 3: Bumper cover
repair costs and percentage
by appraisal type.
(Source: Audatex Insight
Parts Analytics)
A detailed examination of
repair percentages on
Independent
bumper covers for staff
Repair Percentage
and DRP resources (see
Figures 3 and 4) illustrates
the variation. Stackranking all resources suggests that the repair
percentage of the top quartile, which represents
the 25 percent of shops with the highest repair
percentages, is nearly identical for both
appraisal channels. However, the drop in the
lower quartiles is more pronounced for DRP
than staff.
While conducting this segmentation, it was
observed that ABRA Auto Body & Glass
6
Front Bumper Cover Repair
Staff
DRP
First Quartile
41%
40%
Second Quartile
34%
31%
Third Quartile
29%
24%
Fourth Quartile
23%
17%
Figure 4: Front bumper cover repair
percentage by quartile.
(Source: Audatex Insight Parts Analytics)
maintained an average repair percentage of
18 percentage points higher than its peers. To
understand how ABRA consistently attains these
results, we spoke to Tim Adelmann, executive
vice president of the company.
Repair Versus Replace Facts
from ABRA Auto Body & Glass
According to Adelmann, “Our success begins
with operating principles. ABRA has made a
commitment to repair damaged parts, including
bumpers, whenever it represents the best
solution. This includes making an investment to
ensure all technicians receive training on current
repair techniques.”
He identified four distinct advantages of repair
for the customer, the insurer and repairer.
• It is always better to leave an OEM part on the
vehicle whenever possible. Not only does this
help maintain the integrity of the vehicle, but it
reduces the need to blend into the adjacent
panels.
• The next issue is cost. Not only is it less
expensive to repair than replace, but cycle
time and rental car costs are also reduced
because there’s no waiting for parts. Whether
the repair is paid by the customer or by
insurance, it’s a win for either party. Overall, it
lowers both the cost of repair and cycle time.
• What does the repairer gain if the severity is
lower? The repairer will actually make more
money because the gross profit in repairing is
higher than in replacing.
• And finally, in a world increasingly dedicated
to “green” processes, it is much better for our
environment to repair a bumper. Repairing
Continued next page
Audatex Directions
Vol 9
Feature Article
C o n t i n u e d f ro m p re v i o u s p a g e
uses significantly fewer resources than
manufacturing and transporting a new bumper
to a repair center, and the landfills will be
spared the excess waste.
How does ABRA know it is doing the best it
can? Adelmann provided the following insight:
“Every time one of our operations managers is in
a repair center, he or she inspects our recycle
bins to see if there are bumpers in them that
could have been repaired. If they find one, they
immediately address the matter with the
technician and general manager to educate
them on how the bumper could have been
repaired. We also know of our success by
reviewing the part-level repair versus replace
statistics provided to us by companies such as
Audatex.”
Managing part-level detail requires a desire to
understand specific areas for improvement and
the relative economic opportunity. In the past,
access to detailed part-level data at the
appraisal resources level did not exist. The
inability to identify which resources fell within
the third and fourth quartiles, and the related
financial impact, could not be quantified. This is
likely one of the main contributors to the anemic
improvement in bumper cover repair over the
past several years.
Analytics Provide Information Key
to Repair Versus Replace Decisions
With parts representing over 40 percent of the
estimate total, along with the increasing pressure
to manage results, knowing where specific
inefficiencies exist and their financial impact on
the organization is necessary to instill change.
Audatex Insight Parts Analytics delivers the
ability to analyze part-level results by appraisal
resources, vehicle and geography to instantly
identify staff that requires training on repair
versus replace, and the financial impact of their
decisions.
In addition to providing key operating metrics,
Audatex Parts Analytics can systematically
identify illogical part-related scenarios. For
example, through the data, reports can be
produced to identify replaced bumper covers
that have repair attributes.
www.audatex.us
The data from Audatex Insight supports the
assertions of both 3M and ABRA regarding
bumper cover repair: our findings indicate that
48 percent of those bumpers on exception
reports could have been economically repaired.
For most companies, this would represent an
increase in repair percentages by 15 to 20
percentage points. Clearly, delivering the ability
to look at parts data significantly improves
claims costs and provides focus for quality
assurance, re-inspection and training teams.
Conclusion
Research suggests that significant opportunities
remain in the repair of one of the most
commonly replaced parts. In tough economic
times, it is important to identify favorable
conditions for reducing costs without
shortcutting quality or safety. It is rare to find a
way to accomplish this while also increasing the
bottom line. Repairing bumper covers instead of
simply replacing them is one such opportunity,
and products, processes and training are all
available from a number of reputable sources to
help repairers and insurers with this effort.
Figure 5: A front bumper
cover that was replaced,
but is repairable, was
identified through
Audatex Insight Parts
Analytics reporting.
(Source: Audatex Insight
Parts Analytics)
Repairers that place an emphasis on training,
quality control and data will differentiate
themselves from their peers. In addition to
education, estimators and claim managers
require analytics specifically targeted towards
the largest cost driver in the auto claim
operation: parts. Until now, the ability to
measure part-level repair data hasn’t existed,
and that is likely the reason for only slight
improvement in bumper cover repair in recent
years.
Identifying and improving upon these results can
translate into millions of dollars in annual loss
costs, and can also lead to a win-win for both
the insurer and repairer, particularly when the
repair work is done properly the first time. 
Please visit
www.abraauto.com for
information and
locations.
7
Trends Data
Repairable
Loss Trends
Continue to
Benefit from
Aging Vehicle
Population,
Other Factors
By Michael T. Anderson
Repairable Trends
Gross Appraisal Values (GAV)
Audatex Gross Appraisal Values (GAV) for
repairable vehicles continued to reflect a
downward trend through much of 2010
compared to 2009. As a percent of change,
third quarter GAV data suggests a one percent
decline compared to the same period last year,
and a 1.7 percent decline compared to 2008
figures. Several factors contributed towards
the decline.
Gross Appraisal Values
$2,450
$2,400
$2,350
$2,300
compared to the same quarter in 2009.
Approximately 92 percent of all estimates fall
into three classifications: car, SUV and pick-up
(van, sport and specialty vehicles comprise the
remaining eight percent). The third quarter of
2010 reflected a slight shift away from pick-up
trucks (which declined by 4.2 percent), while
SUVs increased by 2.9 percent and averaged
$61 less to repair than pick-up trucks. Similar
shifts were also seen in the second quarter of
2010 relative to the same quarter in 2009, with
pick-up trucks declining by 4.9 percent. The
percentage of vehicle mix classified as cars
(accounting for 54 percent of the estimates)
didn’t change between quarters. However, the
average GAV of cars declined by $43 compared
to the third quarter of 2009. This decline is
largely associated with a $17 reduction in part
costs, a $7 reduction in labor costs and a $19
reduction in sublet.
In addition, Asian brand vehicles continue to
represent a larger portion of the vehicle claim
mix. Compared to the same period last year,
Asian brands have increased by two percentage
points.
Vehicle Mix Distribution
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
38%
38%
39%
40%
40%
39%
39%
40%
41%
41%
41%
53%
52%
51%
51%
51%
51%
51%
51%
50%
50%
49%
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
$2,250
$2,200
Domestic Brands
European Brands
$2,150
Asian Brands
Not Specified
2008 2008 2008 2008 2009 2009
2
2009 2009 2010 2010 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Figure 2: Vehicle Mix Distribution
(Source: Audatex Insight, Estimatics Premium)
Figure 1: Gross Appraisal Values (GAV)
(Source: Audatex Insight, Estimatics Premium)
Vehicle Mix
In addition to increased alternative parts use
(discussed later in this article), vehicle mix
changed slightly during the third quarter of 2010
While Asian brand vehicles continue to cost
more to repair than domestic brands, the gap is
narrowing. Asian brand vehicles currently edge
domestic brands by $51. In part, this is
attributable to flat OEM part prices and a three
percentage point increase in alternative part use
Continued next page
8
Audatex Directions
Vol 9
Trends Data
C o n t i n u e d f ro m p re v i o u s p a g e
(67.6% third quarter 2010 vs. 70.6% third
quarter 2009).
Part Costs
Average part costs per estimate continued to
decline in 2010, reaching a low point in the third
quarter when the average part cost per estimate
was $831, which represented a .32% decrease
compared to the third quarter of 2009.
Average Part Dollar by Type
$1,000
$900
$800
$57
$56
$51
$46
$700
$98
$92
$102
$50
$51
$104
$103
$106
$110
$115
$126
$106
$681
$599
$118
$118
$56
$57
$110
$112
$116
$116
$549
$543
2010
Q2
2010
Q3
$120
$600
$682
$62
$111
$110
$112
$500
$61
$58
$106
$631
$636
$618
$560
$566
2009
Q2
2009
Q3
$126
$608
$400
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
OEM
Aftermarket
2009
Q4
2010
Q1
Recycled
Reman/Recon
Figure 3: Note - Chart excludes OE surplus due to
the small dollar amount it currently represents.
(Source: Audatex Insight, Estimatics Premium)
The decrease in part dollars per estimate is
threefold: alternative parts continue to represent
a larger portion of part dollars, there are fewer
replaced parts on estimates (.2 fewer parts than
the third quarter 2009, and .6 fewer parts versus
the same period in 2008), and only slight
increases in average prices are occurring across
the various part types.
OEM parts comprise 65.3 percent of part dollars
– a figure that is the lowest percentage of total
part dollars in the three years of data that were
analyzed. Conversely, alternative part use
reached its highest point at 34.7 percent of total
part dollars. This reflects a 2.6 percentage point
increase over the third quarter 2009, or an 8.1
percent of change.
continue to
represent a larger
than historical
average portion of
part dollars.
100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
5.8%
5.5%
5.8%
11.1% 11.0% 11.3%
5.9%
6.2%
6.1%
6.2%
6.5%
11.4% 11.9% 12.6% 12.4% 12.6%
6.8%
6.7%
6.9%
12.8% 13.2% 13.5%
While current data
11.7% 12.1% 12.1%
12.4% 12.5% 12.9%
13.2% 13.4% 13.7% 13.9% 13.9%
remains positive,
significant increases
in raw material
71.2% 71.2% 70.6% 70.1% 69.0% 68.0% 67.9% 67.2% 66.3% 65.8% 65.3%
costs through much
of 2010 warrant
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010
watching. In 2010,
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
vehicle sales in
OEM
Aftermarket
Recycled
China are projected
Reman/Recon
OE Surplus
to increase by 25
percent over 2009,
Figure 4: Part Dollar
or 17 million units. Annual sales of 17 million
Distribution
would equal the highest yearly figure ever
(Source: Audatex Insight,
Estimatics Premium)
reached in the U.S. India growth rates are not
too far behind as demand has increased by 30
percent in 2010. Now, enter the simple
economic laws of supply and demand. For
example, rubber—used for tires, hoses and
belts—climbed 74 percent in 2010 after
increasing 92 percent in 2009. Palladium, used
in the production of car exhaust systems,
increased 39 percent this year. If raw material
prices continue to increase as global demand
rises, part manufacturers may not have a choice
but to pass these costs along to consumers.
Labor
In the third quarter of 2010, labor dollars per
estimate averaged $934, which includes the
replacement and repair of sheet metal, refinish,
Figure 5: Average
Labor Dollar by Type
Average Labor Dollars by Type
100%
90%
$56
$48
$54
$58
$53
$51
$49
$56
$55
$48
$51
$343
$327
$334
$355
$343
$324
$327
$348
$437
$327
$326
$548
$546
$542
$562
$544
$531
$540
$549
$540
$535
$538
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
2010
Q2
2010
Q3
80%
70%
(Source: Audatex
Insight, Estimatics
Premium)
60%
50%
40%
According to R.L. Polk’s latest data, the average
vehicle age of all light vehicles stands at 10.2
years, continuing the upward trend seen in
recent years. As more vehicles become eligible
for and use alternative parts in the repair
process, the alternative parts channel will
Part Dollar Distribution
30%
20%
Sheet Metal
Refinish
Mech/Elec
Frame
Continued next page
www.audatex.us
9
Trends Data
C o n t i n u e d f ro m p re v i o u s p a g e
mechanical/electrical
and frame.
Compared to the
same period in 2009
($935), the average
labor dollars per
estimate remained
flat.
Repaired Parts Percentage
27%
26%
25%
24%
23%
22%
21%
Two opposing
factors accounted
for flat average labor
dollars in 2010: a
reduction in replaced parts per estimate lowered
the average labor cost by $21. This reduction
was offset by the dollars associated with an
average labor rate increase of $.90 per hour.
With an average of 20.1 labor hours multiplied
by the $.90 per hour increase, the total average
labor amount per estimate remained flat.
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Figure 6: Repaired
Parts Percentage
(Source: Audatex
Insight, Estimatics
Premium)
Repair Versus Replace
The percentage of parts that were repaired
versus replaced reflects slight increases
throughout the year compared to 2009. Repair
percentages vary with seasonality, typically
falling by 1.8 percentage points in the winter
months.
Most pronounced is the seasonal decline in front
bumper cover repair percentages. During the
winter months, front bumper cover repair
percentages typically decline by 5.5 percentage
points, or 18 percent. That 5.5 percentage point
decline results in an additional $880,000 for
every 50,000 front bumper covers that are
replaced.
Conclusion
Repairable trends continue to benefit from aging
vehicle populations, a reduction in high cost-torepair vehicles (i.e., pick-up trucks), flat part
prices and higher than historical averages in
total loss. As winter sets in, GAV will increase as
it typically does but it may be less pronounced
than in years past if SUVs continue to displace
pick-up trucks in the mix.
OEM part costs in aggregate have remained flat
and may only increase modestly as many OEMs
are looking at ways to gain additional parts
market share. In fact, some (but not all) average
OEM part costs among the top makes declined
by as much as 4.5 percent in the past 12
months. Regardless of vehicle origin or brand,
the cost of raw materials warrants watching in
2011.
As new materials continue to comprise a larger
portion of the vehicle, understanding the
relationship between part prices and substrates
will assist in forecasting loss costs. Audatex
Insight Parts Analytics can help organizations
understand these cost differentials. 
WA
-2.5%
MT
-11.4%
OR
-1.6%
ID
-4.8%
Front Bumper
Cover Repair
Winter Change
-5.5%
WY
-4.2%
UT
-2.3%
CA
-1.8%
CO
-6.5%
KS
-5.4%
MA
-6.4%
WI
-9.9%
MI
-11.4%
IA
-12.5%
IL
-9.2%
AZ
+2.8%
OK
-3.6%
NM
-13.5%
AK
-7.8%
HI
+4.6%
PA
-7.9%
CT
-5.2%
NJ
-6.3%
DE
-10.9%
MO
-7.3%
WV
-6.9%
MS
-6.6%
AL
-2.1%
VA
-7.2%
MD
-6.8%
D
DC
-13.
-13.9%
NC
-5.7%
TN
-5.6%
AR
-3.5%
LA
-1.6%
RI
+.4%
NY
-6.8%
OH
IN
-8.1% -8.4%
KY
-8.5%
TX
-1.6%
10
MN
-16.7%
SD
-12.4%
NE
-12.4%
NV
+2.1%
(Source: Audatex
Insight Parts Analytics)
ND
-18.5%
NH
ME
-8.1% -6.1%
VT
-2.1%
SC
-5.5%
GA
-2.0%
FL
0.0%
Audatex Directions
Vol 9
Trends Data
C o n t i n u e d f ro m p re v i o u s p a g e
Total Loss Trends:
Experts Indicate 2011 Total Loss Percentages
May Trend Closer to Pre-Recession Levels
By Michael T. Anderson
Total Losses
The used car market enjoyed a strong year in
2010 as demand exceeded supply to drive up
used vehicle values through most of the year.
All used vehicle sales channels (franchised,
independent and private party) reported
improved sales throughout the year. Equally
important is that consumers have shown a
willingness to spend more on used cars.
Actual Cash Values (ACV) rebounded strongly
from the effects of late 2008 and 2009 as
increases were seen in each month when
compared to the same period last year.
What can explain the increase? Used car sales
did not decline proportionately to new car sales
during the recession. With the continued
economic uncertainty along with lack of
consumer confidence, increased saving rates
and fewer trade-in vehicles, the used car market
(and thus used vehicle prices) is subject to
limited supply and increased demand. In
November, Edmunds.com reported record high
used car prices for the month of October, 2010
($18,570 versus $17,968 in 2009).
New car sales are trending at two-thirds of
prerecession levels and continue to move in a
positive direction. However, U.S. car buyers
remain apprehensive about laying out money for
ACV - Percent of Change
to Prior Year Values
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
7.0%
4.9%
4.8%
4.1% 4.0%
2.1%
2.6% 2.4%
3.0%
0.8%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
Figure 1: ACV - Percent of Change to Prior
Year Value
(Source: Audatex Insight, Estimatics Premium)
a new car. The Consumer Confidence Index,
while slightly improved from September (48.6),
2010, remains near historically low levels as
consumers’ assessment of the current state of
the economy is relatively unchanged, driven
largely by perceived labor market conditions.
With used car sales and values strong, we will
likely see the percentage of vehicles identified
as a potential total loss (Figure 2) average 17
percent in 2010, which accounts for the
seasonal uptick in November and December.
This represents a .5 percentage point decline
from the 2009 average of 17.5 percent, which is
Continued next page
www.audatex.us
11
Trends Data
C o n t i n u e d f ro m p re v i o u s p a g e
As it does, vehicle owners will
begin trading in their older
cars
for new or slightly used
20%
$7,800
models.
Depending on the
$7,600
19%
rate
in
which
this occurs, and
$7,400
18%
the rate in which older
$7,200
17%
vehicles retire from the road,
$7,000
total loss percentages in 2011
16%
$6,800
may drift slightly back towards
15%
$6,600
pre-recession levels. In fact,
14%
$6,400
third quarter total loss data
suggests an increasing
presence of newer vehicles in
ACV’s
Total Loss Percentage
the total loss mix. Vehicles
that range in age from 1-3
Figure 2: ACV & Percent of Estimates Flagged
model years comprised nine percent of the total
as a Potential Total Loss
loss population in 2009. In 2010, that segment
(Source: Audatex Insight, Estimatics Premium)
increased to 10.2 percent, or a 12.6 percent
increase. The next segment, 4-6 model year
occurring despite the fact that the average age
vehicles, increase by .5 percentage points, or a
and miles on total loss vehicles continues to rise
three percent increase.
(Figure 3). Actual total losses will trend near
What will 2011 bring? Supply and demand will
dictate what will happen to ACV and total loss
percentages in the next 12 months. Much
depends on the state of the overall economy,
which is forecasted to grow at a slow pace.
However, consumers appear to be taking small
steps back towards their pre-recession spending
habits, indicating that the recovery is gaining
momentum.
Aug 10
Sept 10
July 10
Based on ACV trends, new and used sales data,
scrappage rates and wholesale trends, 2011
total loss estimates may decline by an additional
.2 - .5 percentage points. This, however, still
remains one percentage point above prerecession levels.
It is also important to note that the U.S. Energy
Information Administration (EIA) expects world
oil prices to rise gradually as global economic
growth leads to higher global oil demand, and as
growth in non-OPEC oil supply slows in 2011.
The EIA projects regular-grade
gasoline to average $2.97 per
gallon in 2011, representing
Total Loss Estimates - Average Age & Miles
$.20 per gallon more than
10.5
2010. If these forecasts hold
10
true, we likely won’t see the
9.5
9
significant change in vehicle
8.5
mix that we did in 2008 as
8
consumers aggressively
7.5
sought smaller, more fuelefficient vehicles, which
increased the values of that
vehicle
segment considerably
Average Miles - Total Loss Estimates
while decreasing the values of
Average Age - Total Loss Estimates
sport utility vehicles (SUV). 
2008 / 11
2008 / 12
2009 / 01
2009 / 02
2009 / 03
2009 / 04
2009 / 05
2009 / 06
2009 / 07
2009 / 08
2009 / 09
2009 / 10
2009 / 11
2009 / 12
2010 / 01
2010 / 02
2010 / 03
2010 / 04
2010 / 05
2010 / 06
2010 / 07
2010 / 08
2010 / 09
2010 / 10
2010 / 11
126,000
124,000
122,000
120,000
118,000
116,000
114,000
112,000
110,000
June 10
Apr 10
15 percent.
May 10
Mar 10
Feb 10
Jan 10
Dec 09
Nov 09
Oct 09
Aug 09
Sept 09
July 09
June 09
Apr 09
May 09
Mar 09
Feb 09
Jan 09
Dec 08
Nov 08
Oct 08
Aug 08
Sept 08
July 08
June 08
ACV & Percent of Estimates Flagged
as a Potential Total Loss
Figure 3: Total Loss Estimates - Average Age & Miles
(Source: Audatex Insight, Estimatics Premium)
12
Audatex Directions
Vol 9
Industry Leadership
Substrate
Identification
Improves the
Collision Repair
and Estimating
Process
By Michael T. Anderson & Rick Tuuri
The use of aluminum and other non-traditional
metals has increased steadily over the past
decade. In addition, the use of high- and
medium-strength steel (HSS and MSS) in light
vehicle construction rose by more than 60
percent from 1995 to 2008. Plastic and plastic
composites and stainless steel also saw
increased use during that period, while iron
castings decreased by about 35 percent.
Though there has been greater use of lightweight
materials during this period, the overall material
weight in light vehicles has increased by 376
pounds – from 3,694 pounds in 1995 to 4,070
pounds in 2008 (Figure 1).
Proper identification of the substrate isn’t always
easy, and mistakes can not only impact repair
quality, but also materially alter the
crashworthiness of the vehicle if not performed
properly. While some materials, such as plastic
and aluminum, are easily identified via the use
of a magnet, others, such as UHSS and boron,
are not always so easy. Detecting HSS often
requires the use of a metal strength tester,
such as a boron steel analyzer.
Compounding the challenge is the change in
metals from one model year to the next, which
requires the estimator and repairer to know the
specific substrate for that vehicle year, make and
Example: 2010 Mazda 3, Front Body Interior
Sheetmetal
High Strength Steel (Dark Blue)
Mixed Substrate (Green)
Material Content per
Light Duty Vehicle 1995 and 2008
600
500
Pounds
In recent years, changing fuel economy and
recycling regulations have intensified weight
reduction attempts by automakers. Substrates
such as aluminum offer ideal engineering
solutions, providing one-third the density of
steel, which satisfies vehicle tension and
stiffness requirements.
400
300
200
100
0
High and
Medium
Strength
Steel
Stainless
Steel
1995
Iron
Castings
Aluminum
Plastic and
Plastic
Composites
2008
Figure 1: Average Weight by Substrate
(Source: Ward's Automotive Group, Ward's Motor
Vehicle Facts & Figures, 2010.)
model. In the repair process, the collision
repairer also needs to ensure that they employ
the proper equipment and procedures to safely
repair the vehicle.
For example, an important consideration for
aluminum repairs is the risk of an electrogalvanic reaction when cross-contaminated with
steel, which can result in corrosion and potential
failure of repair. Aluminum repairs must be
performed in dedicated work areas, where only
Continued next page
www.audatex.us
13
Industry Leadership
C o n t i n u e d f ro m p re v i o u s p a g e
aluminum vehicles are
repaired. Tools dedicated
for use on aluminum only
must be employed to
avoid cross-contamination
of materials and to ensure
a proper, long-lasting
repair.
To a great extent, the
collision repair industry
and organizations such as
I-CAR have adapted to
the changes in vehicle
substrates through
additional investments in
training and equipment.
As vehicle designs
continue to evolve, those
involved in the collision
estimating and repair process require access to
timely, accurate, comprehensive and easy-torecognize vehicle substrate information. To
varying degrees, the identification of the
substrate has been contained within the
estimating systems for years. However, it was
often embedded within text and not readily
visible when preparing the estimate or repair
plan.
To address the “easy-to-recognize” need of the
industry and to help ensure that proper repair
techniques are used, Audatex recently
introduced color-coded substrate identification
within Audatex Estimating. To achieve this,
Audatex undertook a comprehensive database
effort to research OEM data and ensure that
substrate identification is included in the
database. The Audatex system currently
identifies materials including HSS, UHSS, highstrength low-alloy steel (HSLA), aluminum,
boron, magnesium, carbon fiber, sheet molded
compound (SMC) and combinations of these
various substrates (multi-layer parts that are
comprised of more than one substrate, such as
UHSS and HSLA).
With Audatex 3D Graphics and color-coded
substrate identification, each material has its
own color. For example, aluminum parts are
Example: 2004 Ford F-150, Radiator Support:
Magnesium (Red)
yellow, carbon-fiber parts are gray and mixed
substrates are dark green. To ensure usability,
Audatex also considered the needs of those
with common color-impaired vision so that the
feature would work for virtually everyone.
How commonplace are
these materials? The
vehicle that comprises the
highest percentage of
HSS in its construction
isn’t a European luxury
car, but the 2011 Ford
Focus. Over 55 percent
of this vehicle’s body
consists of HSS, while 26
percent of the vehicle’s
structure is made of
UHSS and boron.
Continued next page
14
Audatex Directions
Vol 9
Industry Leadership
C o n t i n u e d f ro m p re v i o u s p a g e
Conclusion
Not that long ago the use of “exotic” materials,
such as boron and magnesium, was limited to
high-end vehicles. With increased fuel efficiency
requirements, the adoption rate towards these
metals is rapidly increasing with no indication
that the trend will change anytime soon.
Forecasts for the 2015 model year indicate that
mild steel may represent less than 30 percent of
the total vehicle body and closure.
Relying on magnets and text identification to
identify the substrate, or requiring a technician to
become a de-facto structural engineer, increases
Several European OEMs have already
implemented branded repair certification
programs—a trend that may continue as
complexity in repair continues to rise. Many,
but not all, repairers have made the investment
in training and equipment to ensure proper
repair techniques.
Ensuring that the right parts, repair equipment
and procedures are used on every repair is a
mutual goal for all professionals in the industry.
To do so, it begins with access to the necessary
information. Audatex Estimating with substrate
Relying on magnets and text identification to identify the
substrate, or requiring a technician to become a de-facto
structural engineer, increases the risk of a failed repair,
which can prove costly.
the risk of a failed repair, which can prove costly.
In addition, it increases the risk of an improper
center sectioning of an AHSS A or B pillar.
Clearly, now more than ever, it is important to
know which materials you are working with.
identification is the only estimating product that
color-codes substrate materials in 3D views to
accurately and easily identify substrate materials
and assist in the collision repair and estimating
process. 
2010 Toyota Prius, Quarter and Rocker Panels
High Strength Steel (Dark Blue)
www.audatex.us
15
New Technology
Keep Boomers Safe
on the Road with
Brain Training
Scientifically-proven technology
helps older drivers reduce
accidents and stay on the
roads longer
Written By: Posit Science
The U.S. population is shifting dramatically.
Currently there are more than 38 million drivers
over the age of 65 and the first of nearly 78
million baby-boomers turned 65 in 2010. This
shift presents both a risk and an opportunity for
auto insurers who want to keep seniors safe on
the road: this age-group has the highest
accident-related injury and fatality rates, the
highest citation rates for non-speed-related
infractions, and aside from teens, the highest
crash rates. Many states have taken proactive
measures in an attempt to improve those rates
by mandating premium discounts for seniors
who choose to take defensive-driver training
courses. While many of these behavioral-based
driving courses have been in existence for a long
time, there is little research indicating that they
are effective.
So what other alternatives are available
to underwriters, product teams and
executives to reduce losses and retain
this cohort of drivers?
Strong cognitive function is key to being a safe
driver, particularly in mature adults who tend to
experience cognitive decline with age. A recent
study published in the Journal of the American
Geriatrics Society (JAGS) found that at-fault
crashes can be reduced by 50 percent among
drivers over the age of 65 with as little as 10
hours of brain fitness training. Unlike traditional
behavioral-based programs that teach safer
maneuvers and driving techniques, brain training
programs target improvements in the cognitive
capabilities that enable an individual to process
the thousands of pieces of information thrown at
them each second behind the wheel and react
better and faster. Posit Science, which provided
the brain training exercises for the study, is
leading the way in this innovative and exciting
crossroads of science and technology.
In 2010, Posit Science released DriveSharp™, a
computer-based training program that has been
clinically proven to stimulate deep-seated
unconscious improvements in the speed and
accuracy of the brain’s visual processing system.
This is important for older drivers who
experience a decline in the amount of
information their brain can process in their
peripheral vision, also known as “useful field of
view” (UFOV), as they age. UFOV declines with
age due to the slowing of the brain’s visual
processing speed and ability to divide its
attention.
Continued next page
16
Audatex Directions
Vol 9
New Technology
C o n t i n u e d f ro m p re v i o u s p a g e
DriveSharp™ Exercises
EXERCISE
COGNITIVE FOCUS
GAME CONCEPT
Jewel Diver
Divided attention
A deep sea diver tracks
sunken treasure
Road Tour
Useful field of view
A driver looks for signs
on a tour of Route 66
Sweep Seeker
Visual processing speed
and working memory
A treasure hunter identifies
patterns to find gold
Each exercise has a specific primary cognitive focus, but they work
together to help individuals improve their driving skills and safety.¹
A Targeted Brain Workout to
Improve Driving Skills
Proven Science Delivers
Proven Results
DriveSharp features three challenging, interactive
exercises that are easy to use, even for
individuals with no computer experience. These
exercises are scientifically designed to enhance
the visual system by:
Numerous studies have shown that individuals
with poor UFOV are twice as likely to be in a
crash. However, a growing body of research has
demonstrated that UFOV can be improved with
only 10 hours of training on Posit Science’s
proprietary brain fitness exercises. In addition to
seeing a reduction in at-fault crashes of 51
percent in the five-year study published in JAGS,
participants in another study conducted by Dr.
Daniel Roenker at Western Kentucky University
saw a reduction of 36 percent in reckless
maneuvers on a 14-mile open road circuit, along
with improved reaction times that enabled the
ability to stop 22 feet sooner when traveling
55 MPH.
• Improving divided attention: This skill helps a
driver track multiple moving objects at once,
such as cars at a busy intersection or people
crossing the street.
• Expanding useful field of view: For a driver
watching the road ahead, this ability might
mean noticing a child running into the street
after a ball or seeing another car that’s trying
to merge into the lane.
The exercises feature game-like elements that
make the program effective but also fun for
users. Each exercise has a primary cognitive
focus, but they work together to help individuals
improve their driving skills and safety over time.
DriveSharp includes a built-in assessment tool
that enables users to find their starting baseline
and track their progress in each exercise. As the
exercises are completed, the programs adapt to
individual performance so that each person has
a customized experience and trains at his or her
optimal level.
www.audatex.us
As recent studies and real-world results with a
number of top-10 insurers indicate, Posit
Science has uncovered new opportunities for
insurance carriers to increase profitability by
retaining and acquiring tens of millions of older
drivers. 
For more information
on Posit Science
and the DriveSharp
Program visit
www.positscience.
com/partners
References:
1. www.positscience.com, “DriveSharp_FactSheet2010.pdf”
http://www.positscience.com/sites/default/files/pdfs/DriveSharp_FactSheet2010.pdf
17
Audatex News and Events
Audatex Launches New
Educational Institutions Program
The Audatex Educational Institutions Program
was launched in November 2010 to provide
vocational and technical schools across North
America with free Audatex Estimating software
licenses, Web-based training, customized
curricula, accreditation—including continuing
education units (CEU) and I-CAR® points
reported—along with curriculum consultation
and technical support.
Under the program, the following products and
services are offered to qualifying schools at no
charge:
Software
• Audatex Estimating™ with 3D Intelligent
Graphics - multi-user software license
(two users)
• Add-on products such as Tire Database,
Frame Dimensions and 3D Graphics
Courses
• 24/7 access to the 10-hour Audatex
Estimating computer-based training program,
which offers 1.0 CEU
• 24/7 access to the Online Training Center,
which contains reference materials, webinars,
computer-based training, training workbooks
and job aids
• Private access to the Online Training Center’s
new Vocational & Technical Schools web
page
Consulting and Support Services
• Curriculum courseware (with anywhere from
one hour to three weeks of customizable
curriculum content)
• Dedicated toll-free phone support for all
vocation/technical schools in the U.S. and
Canada
• Technical support
• Curriculum/training support
Accreditation
• Access to curriculum that offers both CEUs
and I-CAR® points (reported to I-CAR on
behalf of the students, as Audatex does not
issue I-CAR points)
To qualify for the Audatex Educational
Institutions program, schools will need to
complete an online Collision Repair School
Solutions survey conducted by the I-CAR
Collision Repair Education Foundation. The
survey can be accessed from the Audatex
website at: www.audatex.us/repair_facility_
solutions/educational_institutions_program.aspx.
The Foundation will use the survey results to
track key academic performance indicators such
as enrollment, placement, personnel, facilities
and equipment. In addition, the survey will be
used to identify program needs for new training
tools and equipment and to create metrics to
measure the success of the collision education
system going forward. Schools will be required
to retake the survey on an annual basis in order
to renew their subscription to the Audatex
Educational Institutions Program. 
• 30-minute curriculum consultation (one
instructor per school)
18
Audatex Directions
Vol 9
Audatex News and Events
C o n t i n u e d f ro m p re v i o u s p a g e
Catch Audatex at the next industry event or trade show.
Feb 18-19
I-CAR North Central & South Central
Regional Conference
New Orleans, Louisiana
Feb 24-26
The 2011 VeriFacts Fix It Right Symposium
Newport Beach, California
March 11-12
I-CAR Northeast & Southeast Regional
Conference
Nashville, Tennessee
March 15
2011 WACTAL Spring Conference
Wausau, Wisconsin
March 17
Collision Industry Conference (CIC)
Secaucus, New Jersey
March 18-20
Northeast 2011 Automotive Services Show
Secaucus, New Jersey
April 18-20
ABRA Franchise & Leadership Meeting
Scottsdale, Arizona
April 18-24
Liberty Mutual Legends of Golf (Sponsored Event)
Savannah, Georgia
July 19-21
www.audatex.us
I-CAR Industry Event
Salt Lake City, Utah
19
Parts & Substrate
Materials Color-Coding
Unlimited Zoom
Parts In Perspective
360-Degree Rotation
The future is here.
Audatex 3D Intelligent Graphics
Dramatic improvements in estimating speed and accuracy—that’s what
Audatex brings you with 3D Intelligent Graphics. Audatex is the only North
American provider to give you the ability to view and move parts and complex
assemblies as if you were holding them in your own hands. Experience
Unlimited Zoom, Color-Coded Parts and Substrate Materials, 360-Degree
Rotation and Parts in Perspective. Now let our 3D Intelligence work for you.
800.237.4968 | www.audatex.us
© 2011 Audatex North America, Inc. All Rights Reserved.
Intelligence. Built In.