Your Plan for 2017
Four Important Parts Trends
The Mitchell Collision Parts Price Index (MCPPI) has been tracking collision parts trends for nine years. The latest version offers an extensive look into the most common parts replaced, the impact of foreign currency changes, and the effects of a growing OEM parts index.
Jack Rozint has over 20 years of experience in the collision repair business, offering his expertise to CCC Information Services and improving telematics systems for Bosch. And now, as Mitchell International's vice president of sales and service, he’s helping to develop Mitchell Parts, a new parts procurement solution.
As parts prices further influence the overall cost of an estimate and parts procurement systems regularly offer new options for improving efficiency, it’s important to stay ahead of parts developments, Rozint says. Here, he details four parts trends and how you can stay ahead of the curve this year.
1. Growing Parts Procurement Options
Mitchell Parts is yet another addition to the growing list of parts procurement systems available. Rozint says to never limit your shop to one system, and to instead use 2017 to evaluate your options, which include PartsTrader, CCC TRUE Parts Network, CollisionLink, Auto PartsBridge, and Car-Part. Use various systems and see which parts—whether they be OEM, aftermarket, remanufactured or recycled—offer the greatest profit margin without sacrificing quality.
“You want what’s going to work with all of your suppliers, that’s going to work for all of your estimates,” Rozint says. “Don’t use a system that your insurance company mandates. Choose one that is actually bringing operational efficiencies and benefits to you and is going to translate into increased profit and revenue.”
2. Rising Parts Inflation
Since its inception, MCPPI has tracked the relationship between parts prices and inflation, which signals changes in estimate severity and average claim estimate. Overall, this reveals the influence of parts prices on the overall cost of an estimate, which is tracked through a number representing parts inflation in the industry called the “combined total value of the index.”
“It gives you good insight into the pricing that’s most impacted by competition in any given area,” Rozint says.
The index shows a steady year-over-year overall increase, showing parts prices are rising at a higher rate than national inflation rates. And in the first half of 2016, it rose by 3.19 percent up to 137.24—more than most full-year increases over the past nine years.
"Choose [a parts procurement system] that is actually bringing operational efficiencies and benefits to you."
— Jack Rozint, vice president of sales and service, Mitchell International
3. Aftermarket Parts Rising in Prominence
Although OEM parts make up nearly 65 percent of all logged repairs, the aftermarket parts index is a full 14 points higher than OEM, offering greater profit margin potential for shop owners.
“I’ve talked to many shop owners that now say they actually prefer to use aftermarket now,” Rozint says. “The quality has gotten to the point where it’s not creating any problems with production, they’re not having to do any additional work to fit the parts, and they don’t believe there’s any actual difference in the quality of the part.”
While Gibson believes aftermarket parts could offer great profit margin potential, Gibson believes, in the long run, it’s more sensible to use OE parts.
“I give my customer a better product by purchasing what I know is a quality part,” Gibson says. “If I make $10 less in the long run, I still make out on that deal.”
4. Recycled Parts Experience Biggest Growth
The index shows a nearly 10-point rise over 2015 in recycled parts—an increase that’s higher than OEM, aftermarket and remanufactured parts. This shows that parts removed from a salvaged vehicle and remarketed through recyclers are are being recognized as a quality and cost-efficient alternative in the industry.
This may be an opportunity to diversify with your parts procurement system, Rozint says. Several parts procurement systems offer features for finding recycled parts, providing online access to a parts database with hundreds of U.S. recyclers.
While Gibson prefers OE, he believes there’s value in considering recycled parts. Aftermarket and recycled parts make up approximately 15 percent of his parts usage.