Paint & Panel
The CRA is warning the nationwide expansion of an insurer owned collision repair facility could leave the industry under-resourced to manage the expected growth in EVs.
Australian owned IAG has now announced it will open branches nationwide in the coming months with Christchurch, Wellington and Hamilton to join outlets in Auckland.
The expansion programme will see large numbers of owners in these cities obligated to have their vehicle repaired through the IAG facility branded “Repairhub”.
Neil Pritchard, general manager of the Collision Repair Association (CRA), says the move has created a competitive imbalance in the market – which will ultimately impact New Zealand consumers.
He says new industry research has shown the relationship between the panel beating industry and IAG is at an all-time low with the multi-national insurer’s overall rating the poorest performance of all 13 insurance companies operating in this market.
“There are several fundamental issues that manifest when an insurer with a dominant market share operates a vertically integrated business model in this way.
“The model reduces consumer choice and removes any natural mechanism for third party quality control – in other words, if the insurer is paying for and implementing the repair, who is there to advocate for the consumer and have quality-control oversight?” he says.
Pritchard says IAG’s new Repairhub facility works by choosing the most profitable cosmetic repairs and outsourcing the more complex structural repairs.
He says the materials and technology in the automotive industry are constantly evolving – requiring an investment of up to 10 percent of a repairer’s annual revenue in equipment and training to adapt to the change.
“The collision repair industry in New Zealand is tightly controlled by insurers – ultimately there is no flexibility for repairers to set their own prices. Industry research has shown the relationship between the panel beating industry and IAG is at an all-time low...
“IAG also imposes a high ‘cost of mistrust’ on panel beaters, with the administrative time required to photograph and document each stage of the repair, before seeking approval to proceed – a cost and barrier to efficiency that their own repair brand does not have to shoulder.
“As a result, repairers need the mix of smaller and larger structural jobs to help make the business model sustainable.
“By strategically removing the more lucrative work, the insurer is compromising the ability of repairers in the industry to prepare for predicted surge in the number of electric vehicles expected over the next decade.
“Already we have seen evidence of this new insurer model becoming a factor in the closure of one collision repair business and feedback from our membership base is that it is compromising their ability to adequately invest in training and equipment.
Pritchard says 100 electrified vehicle models are set to arrive in showrooms by next year – each bringing with it a higher degree of complexity and safety risk than those powered by traditional internal combustion engines.
“What we know about EVs is that they present a new set of challenges to repairers – high voltage batteries present a risk of electric shock, and the use of complex structural materials necessitates a longer repair time – with some figures suggesting an average of four hours or 17 percent more time per repair.
“Our concern is that this insurance model is now expanding into New Zealand’s largest population centres, which is set to adversely impact thousands of consumers, preventing them from buying locally, and could leave the industry underprepared to manage structural repairs on the new EVs and other modern vehicles set to land here in the coming years,” he says.