By Jeff Sanford
Toronto, Ontario — September 22, 2016 — This week we look into the aging and retiring pool of insurance adjusters, a leaked memo suggests the Jeep Wrangler will be getting more aluminum and Tesla needs a lot of lithium. It’s worth noting that “a lot” in this context actually means “literally all the lithium produced on Earth.”
– A memo written by an Alcoa executive ended up on a forum for owners of the Jeep Wrangler this week and ended up going viral. According to the leaked document the new version of the Jeep will feature a hood and inside door panels made of aluminum. This wasn’t unexpected. The CEO of FIAT-Chrysler, Sergio Marchionne, has indicated the vehicle will begin to use more aluminum parts.
– Hoping to repeat the success Toyota had with Lexus, Hyundai is preparing to launch an upscale car brand, Genesis. According to a review on the Bloomberg network, the cars are fantastic. Hyundai is a long way from the Pony.
– Mitchell just issued another of its always-interesting trend reports. Some of the interesting items: By 2025 OEMs will use 90 percent more advanced high-strength steel in their vehicles. Also by 2015, “projected percentage of body and closure parts for light vehicles in North America that will be made of aluminum by 2025 (measured by volume rather than weight),” will be 26 percent.
The report also says that, “More consumers are looking for outside information sources to aid them in making decisions on what collision repair shop to work with, and social media is increasingly influencing this decision … collision repairers are going to need to be smart about how they leverage social media and their presence on the web in order to position themselves for success.”
Another trend that’s having a big impact on auto casualty insurers is the fact that “both frequency and severity [of claims] continue to rise. There has been, “about a 12 percent increase in bodily injury claims costs over the last five years. The average use of medical services is up about 18 percent, and many injuries are becoming more expensive to diagnose and treat.”
The Mitchell report also notes that insurance adjuster workforce demographics are starting to change. “Many seasoned adjusters are now reaching retirement age, so there is a loss of expertise in an extremely complex space. It’s becoming imperative for the insurance industry to adopt technologies that allow them to codify in a system the best practices of their third party adjusters.”
– Thousands of Ontario licence plates may have to be replaced. A flaw in the manufacturing system sees the film on the front peeling off, obscuring the plate. An investigation by CityNews found that, “132,000 plates have been returned and replaced free-of-charge to Service Ontario centres since January 2014. That’s a 65,000 jump in returned plates since April of this year.”
– European regulators have cleared for approval a “salt water” powered car, the Quant e-Sportlimousine. The vehicle uses fuel cell-like technology. Intricate and delicate membranes strip protons from water molecules. The electromagnetic forces at play are then tapped to power a car. Apparently the efficiency of this system reaches about 80 percent, which is incredible. The high efficiency is due in part to the fact that it has almost no moving parts.
The system delivers a whopping 920 horsepower, goes from zero to 62 mph in 2.8 seconds and can hit a top speed of over 217 mph. The only problem is that the market price is estimated to exceed $1.7 million.
– Lithium shortages could turn out to be a big challenge for the electric car industry. The material is widely used to make high-quality batteries. Demand is currently outstripping supply by about 15 percent and that’s likely going to get worse. Chevy is releasing the Bolt this year, and that will eat up some of the supply, but it’s Tesla that will really put the pressure on lithium producers.
The company has already pre-sold around 500,00 Tesla Model 3s, and the company’s CEO, Elon Musk, has publicly stated the the company is going to need the entire world’s supply of lithium to meet demand.
– A US couple had to get the local media involved when they couldn’t get their damaged car out of a bankrupt collision repair business in Pittsburgh.
“It’s horrible. It’s just horrible. We haven’t had our car in more than a month,” says Helen Frazier in an article carried by the local CBS affiliate. The couple, “brought their Kia Sorento to West View Auto Body for repairs after a fender bender. The car needed about $1,000 worth of work on it … Turns out, the owner of West View Auto Body went broke. The business was bankrupt, auctioned off at sheriff sale.”
The couple couldn’t get anyone on the phone, so they turned to the television station, which, “called the new owner, who agreed to open the building … Shults Ford of Harmarville towed the car from the garage and agreed to finish the repairs for free.” All’s well that ends well, and good publicity for Shults Ford.
– A Japanese company, Alpha Corporation, is the latest auto parts maker to plead guilty to price fixing. The company admitted to “rigging bids for door handles, locks and other devices people use to enter and start their cars.”
-An interesting article appeared in the Shanghai Daily this week. The CEO of Axalta, Charles Shaver, made a local appearance as part of the company’s ongoing 150th anniversary celebration. The exec had some interesting views on the development of the Chinese collision repair market.
According to the report, Shaver noted that, “A few years back, Chinese car owners started to move away from dealerships and turn to independent body shops for cheaper and faster repairs.”
Every dealership in China has a collision repair shop. There are relatively few independents. But a shift is occurring. According to the report, the shift is “expected to continue as reforms in China’s auto insurance industry usher in sharp premium increases that may discourage motorists from filing claims for small dents and scratches.” That is, they’ll go to an independent and pay for it themselves. Shaver said he saw this, “trend earlier in the US and European auto markets,” and said he is not “worried that increasingly price-sensitive, cautious car owners may have second thoughts about touching up their cars.”
Shaver is quoted as saying, “We have seen in other countries how insurance changes drivers’ behavior … As motorists drive more safely, accident rates go down. That’s what everyone wants to see. China’s collision rate is still high. We hope people will still want to get their cars fixed, and expect our business to keep growing because of the big volume of new car sales each year.”
The report went on to note that new cars are “the key driver of the refinishing paint business in China, where the average age of its car population is 10 years. That has become a psychological threshold for car owners to keep a vehicle. As a result, as cars approach six years of use, many owners are less inclined to touch up the finish.”
Axalta now does 60 percent of its refinishing paint business with dealerships and independent or chain body shops, which only deal with cars less than five years old and “compete for customers after car warranties expire,” according to the report. As well: “A popular replacement for traditional solvent coating overseas, water-born coating has just started to gain official attention in China because of its environmental friendliness. All new passenger car factories in China have been ordered to convert to water-born coating to reduce volatile organic compounds, and the city of Beijing has extended that initiative to include the after-sales and used-car markets … The regulation is a good start in protecting the environment. Most people don’t have a clue about the paint on their cars. But the industry, looking out for its own interest, certainly sees the writing on the wall.”