Economic Trends Impacting the Collision Repair Industry in 2019
While new vehicle sales numbers have cooled from the records of the previous couple of years, the strength of the US economy continues to have an impact on consumer behaviors, driving patterns, and thus, the trajectory of the auto claims and collision repair industries. The adoption of advanced driver assistance systems (ADAS) in a larger percentage of the car parc has been predicted to decrease accident frequency, but Mitchell data shows an increase of 4.4% in non-comprehensive claims in the first half of 2019 compared to the previous year. In this article, we’ll take a look at the economic factors that may be contributing to this increase in claims frequency.
According to the Bureau of Economic Analysis, US GDP rose 2.1% in Q2 2019 compared to the previous year, and the Federal Reserve Bank of Atlanta reported 3.5% and 3.9% 12 month rolling average wage increases in June 2019 for hourly and salaried workers respectively.1 2 Additionally, the US Energy Information Administration reported that national average fuel prices decreased from $2.97 per gallon in June 2018, to $2.81 per gallon in June 2019.3 The result of these trends is that Americans are driving more, and purchasing more expensive vehicles than in previous years.
The US Department of Transportation reported a 2.5% increase in miles driven in April 2019 and a 1.0% increase in May 2019.4 The link between miles driven and claims frequency has been well documented by the Insurance Information Institute, who demonstrated in a 2016 study, the direct correlation between levels of employment, miles driven, and ultimately claims frequency.5 The continuing strength of the US Economy in the near term is a harbinger of more congested roadways with no immediate signs of decreasing accident frequency.
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