Page 18 - Australasian Paint & Panel Nov-Dec 2022

BUSINESS & TECHNOLOGY
18
PAINT&PANEL NOVEMBER / DECEMBER 2022
24 BUSINESS MATTERS
WHAT’S IN STORE FOR 2023?
THERE’S NOT DOUBT THAT 2023 IS GOING TO BE A CHALLENGING ONE WITH PROFITABILITY CONSTRAINTS AND LABOUR SHORTAGES. WE ASKED SOME KEY INDUSTRY PLAYERS WHAT THEY THINK MIGHT BE IN STORE.
and with that they will start to want re- pair deals to match.
OE part prices will have to flatten to maintain share, as repairs soften, and sec- ond hand, aftermarket and parallel will be pushing even harder in a quieter market. Look for discount % opportunities.
My smoky is, the international invest- ment world will (finally) start to look at the broader Australian repair market, with lower $A, and an Australian econo- my which is better than most. Some in- teresting investments, buyouts and pri- vate equity deals. Maybe even an IPO later in the year as the investment mar- kets start to get hungry. But more likely the private markets will get active for good assets. Consolidation.
Lastly, the cost base of the repair indus- try isn’t going to improve. Wages of good tradespeople aren’t dropping, and there generally isn’t enough people to do the jobs. However, borders properly opening will see a flood of Brexiters arriving.
ROB BARTLETT
SUPPLYSIDE
Continued higher in- terest rates, slowing economic growth (lo- cally and globally)
and lower discretionary income as in- flation impacts will see frequency (claims) fall through the year as peo- ple push up insurance excesses (even further) and delay non urgent repair. Lower severity will decrease as a per- centage of jobs, pushing ARC up slightly (big jobs continue). Back log of repairs will cushion this for a while.
Salvage has been at records, but will drop by end of year as steel prices fall and repair volumes come off. Plenty of competition for the available salvage, so this will take a while
Very competitive for insurers with policy prices keen (big rises already done), and profits improving from softer frequency, but that won’t last as by the end of the year they are being used to keep and get customers with pricing and promotions.
Second tier insurers through acquisi- tions and customers shopping around their limited dollars are starting to get reasonable share, creating some scale,