Q&A: Average LOR for Repairable Vehicles: Q1 2019
Mitchell International released its Q2 Industry Trends Report in June, including an analysis of the length of rental during Q1.
According to a report by Dan Friedman, assistant vice president in replacement and leisure division of Enterprise Rent-A-Car, the average length of rental (LOR) for Q1 2019 landed at 12.8 days in the U.S., an increase of .3 days compared to Q1 2018.
The report indicated that the quarterly result for the U.S. was not reflective of a genuine national trend. In the graphs included in the report, LOR consistently trends up, Friedman says.
Despite no significant trend being visible, the average LOR tells important information about shop processes.
At the state level, Rhode Island, Puerto Rico and Colorado were the high-end outliers at 16, 16 and 15.4 days, respectively, while North Dakota and Iowa produced the lowest numbers at 10.5 days each.
One shop, Rydell Collision & Detail Centers, located in Grand Forks, N.D., for example, said it has totaled out more vehicles over the last few quarters than in the past years, when they believed they could have repaired them. Since vehicles were totaled, customers were not in rental vehicles for the same amount of time should the vehicle have been repaired
And, there has been a big push from insurance companies to make sure the vehicle inspection report (VIR) that is completed by the shop on every vehicle close to a total loss is completed within a 24 to 48 hour time frame of the shop taking possession of the vehicle. So, if the insurance company can push for this and settle claims within a few days instead of a few weeks, the cost for rental vehicles would be reduced.
FenderBender sat down with Friedman to gain more insight on what the LOR data shows.
What was the trend in LOR? If there was no trend, why do you think the quarterly result was not reflective of a national trend?
In the first graph in the report, the LOR is trending up. It’s consistently up, quarter over quarter, year over year.
But, the LOR baseline varies across each state. Some are much higher and some are much lower.
I’d say that the conventional wisdom is that there are a variety of factors contributing to the report. There is a shortage of technicians, increase in the severity of weather events and increasing complexity of technology in vehicles, which could all be contributors. It’s important to remember that these are hypothesis, though, based on information we’ve gleaned from the industry.
What factors drive LOR?
Ultimately, the length of time it takes to repair a car drives the length of rental.
It’s possible that shops had excess capacity and were able to repair cars faster, which could in turn lead to shorter length of rental.
What does the data in this report mean for collision repair shops?
There’s always a big delta between the best in class, average and bottom-tier performers. There is a connection between the shops that leverage reporting, continual training and use the ARMS Auto application and routinely outperforming market-average LOR metrics.
There’s a sort of best-in-class bell curve from the report. Some shops are undoubtedly, significantly higher in LOR and some are lower in LOR. The ones that leverage the practices I mentioned like reporting, training and ARMS Auto application, are the ones that are the best-in-class along that bell curve.