Page 28 - Australian Paint & Panel Magazine May-June 2019
P. 28

Business Matters
LEFT: Mercedes- Benz E-Class front radar sensors.
increase in investment in product
and the consumer is not necessarily being expected to pay that and, in a softening market, margins are being squeezed further. These margins are skinny to start with says Marsh. “Porsche reports the biggest margin at 9%, but the market average is around 3-6%. This is not attractive to financial investors when the sums required are circa €1 billion per model range, and faster as well as strong- er returns are available in other sectors.
“The upshot of this for the global auto- body repair industry is that it needs to get to speed with how to handle high voltage – if you don't do it other people will.
“It’s a great route to market – although not something you need to go out and do tomorrow. You do need to act in the next five years as there will be more high volt- age cars coming to your shops. We’re not talking prestige but mass-market vehicles.”
Every car manufacturer is heading towards electrification – although this doesn’t necessarily mean pure electric but more likely hybrids. These cars will be more complex to repair than their petrol or diesel forefathers. “Electric cars have two different cooling systems
Itmightbeabitpainful at first but collision
repairers should benefit in the long run.”
and repairers will need to learn a whole new language. In order to repair the electrified car you have to put the bat- tery to sleep and then wake it up after the repair. The only way you can do this is by using diagnostics. This is the transition. The industry is heading to- wards a far great emphasis on knowing how software works and interacting with software.”
“Most people think of diagnostics as an ‘ah give it to the dealer’ situation. Why? You’re giving away money. There’s so much more that repairers can do with their diagnostic equipment but this means learning new skills.
“Meanwhile panel, which I would sug- gest is an undervalued commodity, is losing technicians and shops too - the
capacity is gradually wasting away be- fore our very eyes. Primarily this is be- cause of commerce. Commerce will eventually drive the hourly rate up, but we’re not there yet in Australia. When that happens its value to people like in- surers will increase.
“There is a bottom point as the down- ward price pressure continues and the consequence is that the only solution is to increase the labour rate, because there will be more repair demand than supply. That’s already happened in the UK – we’ve gone past that point.
“Of course if insurers can’t get the cars fixed they will look at writing them off instead of paying for storage – then we’ll have an increase in loss. There comes a point where that will cost too much and the insurer decides they can pay a few bucks more on hours and, hey presto, they move up the repair queue faster. That’s how the pricing mecha- nism works in the free market. “In the UK the hourly rate has gone from about £23 towards £30 and it's heading to- wards £35 or higher.
“Of course, the industry has itself to blame for essentially spending two dec- ades undercutting the competition – in the vehicle service sector that

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