Greg Horn, vice president of industry relations for Mitchell International
One trend that will really take hold in 2013 is the softening of used and salvaged car values. That will happen for two reasons. First, the European debt crisis continues to make headlines, so the European-to-U.S. exchange rate will favor the dollar. That will make it much harder for eastern European buyers of U.S. salvage to successfully bid on those cars. There will be an increase of cars that end up staying in the U.S.
Second, there are about 250,000 flooded cars that have come out of the aftermath of Hurricane Sandy, which hit the East Coast last fall. That has created a saturation of vehicles that cannot be rebuilt, but that still have perfect panels overall.
Those two issues combined will lead to a glut of cars coming through the salvage system. That will be a good thing for collision repairers because used and salvage parts prices will drop. Used parts prices have recently increased at the fastest inflation rate compared with all other part types. The used parts price index was at an all-time high from 2010 through mid-year 2012. The influx of used and salvaged cars should counteract that and reduce those prices, which will cause an increased usage of salvage parts among repairers.
Another trend that collision repairers should brace for in 2013 is the continuation of inflationary pressures. Paint and materials have gradually increased in price in recent years, and 2013 will be no different. Between both wet and dry repair materials—solvents, paints, sand paper and tape—the industry will experience 3 to 4 percent increases in materials costs.
This article appears in the February 2013 issue of FenderBender.