New research into the car body repair market in Europe shows that franchised car dealers are losing accident repair work to independent bodyshops as insurance companies take greater control over where cars are repaired following an accident.
The research carried out by independent automotive analysts MFBI, shows that insurance companies are beginning to direct a higher proportion of accident repairs to independent bodyshops in return for repair cost reductions, rather than to franchised car dealers, in an attempt to reduce rising accident repair costs.
MFBI’s data shows that the average cost of an accident repair for a passenger car in west Europe was 1,180 euros in 2002 and that average repair costs increased by 20% between 1996 and 2002.
According to the MFBI, accident repair costs vary significantly between different countries in west Europe, ranging from a high of 1,600 euros in Germany to a low of just 530 euros in Spain. Replacement parts account for the highest proportion of repair costs at 39% with a market value in west Europe of 14.9 billion euros out of a total accident repair market worth 38.2 billion euros in 2002.
In many countries in west Europe, owners of cars under five years old prefer to have their car taken for repair to the franchised dealer from where the car was purchased or to the dealer where the car is currently maintained.
However, because many franchised dealers in Europe do not operate their own bodyshops, a high proportion of car body repair work is often sub-contracted by car dealers to independent bodyshops. The dealer will then invoice the insurance company for the cost of the repairs including any margin or mark-up for the dealer.
MFBI says that accident repairs can therefore be highly profitable for franchised dealers that sub-contract repair work to independent bodyshops. Not only do they not incur the overhead costs of operating a bodyshop of their own, but they can also obtain a margin on the labour repair costs charged by independent bodyshops, plus a margin on any replacement parts used in repairs.
There’s a parts gain for franchised dealers too. A franchised dealer which sub-contracts work to an independent bodyshop will normally supply the parts required for the repairs to the independent bodyshop as well. These costs plus the dealer’s margin are then invoiced to the insurance company.
For insurance companies, the subcontracting of repair work by franchised dealers to independent bodyshops results in higher repair costs than if the work was carried out by an independent bodyshop directly for an insurance company. Consequently, a growing number of insurance companies in Europe are establishing their own claims handling facilities including call centres, to encourage a higher proportion of policyholders to take a damaged car to a bodyshop approved by the insurer.

If you are interested in ordering your copy of this report, or finding out more about this report, please click here: The Car Body Repair Market in North West Europe