Nov. 11—The second day of the ninth annual MSO Symposium featured a discussion that concluded how the pandemic plays out will have a bigger effect on the economy than politics, and that the driving force in the collision repair industry, in the near future, will continue to be technology.
Titled "Beyond Consolidation: What is Driving the Economy and Investor Interest in the Collision Industry Today," the hour-long discussion was moderated by Marcy Tieger, managing director of Symphony Advisors, LLC, and featured Lindsey Piegza, chief economist at Stifel, and Rex Green, global co-head of automotive aftermarket investment banking at Jeffries LLC.
Speaking a week after Election Day and with questions still lingering about how exactly it would play out, Piegza said the pandemic and how long it continues will have a larger effect on the economy than the results of the election.
"Growth is likely to slow significantly" through the end of the year, said Piegza, regardless of where political winds blow or the passage of additional economic stimulus, because the coronavirus pandemic is currently worsening.
Piegza said that many of the changes brought on by the pandemic were already happening prior to it, just at a slower pace. For instance, online shopping was already on the rise; she noted that online purchases are now up $15 billion, or 200 percent, over last year.
While home sales are up, Piegza said, commercial real estate vacancies are also on the rise. She said the fastest way to undermine the economy is for consumers to lose confidence and pull back on their spending.
Piegza said she expects interest rates to stay low as far out as 2023, and that an additional $1 trillion to $2 trillion of stimulus could be coming from Congress. How effective that extra infusion of cash is, she said, depends on how long the pandemic drags on.
More specific to the collision repair industry, Green said that while miles driven are only down 5 percent to 10 percent, claims are down because there's not as much congestion on American roadways. Still, he said, people have turned away from public transit and other modes of getting around.
"The personal vehicle has had sort of a comeback and we'll see how sustainable that is," Green said.
On consolidation in the collision repair industry, he said it hasn't waned.
"I look at it almost now as background noise," Green said. "It is simply going to continue predictably and maybe ... even accelerate."
He identified a number of disruptive forces in the collision repair industry. He said the "recalibration challenge" related to advanced driver-assistance systems in vehicles will continue to grow, and that OEMs are now seeking to get their piece of the profit pie with respect to collision repair, while also seeking to have their cars fixed properly.
There's also what Green termed as "digital gold," all the data produced by vehicles. Artificial intelligence will also be a disruptor in terms of changing the ways body shops work, he said, and maybe even more so for insurers.
"[AI] should be welcomed but it will be disruptive," said Green.
Looking back on his first appearance at the MSO Symposium, as noted by Tieger, Green said in 2013 that consolidation was the biggest story for collision repair. In 2020 it's technology, he said, and that seven years down the line he expects large chains to have a meaningfully large share of the market, while more advanced tech, like instant claims sent from the vehicle itself, is going to be a driving force in the industry.
