The increase in auto body repair prices continues above the rate of inflation. Marks largest year-on-year increase since 1982.
The most recent government figures on inflation through November 2021 show the rate of growth of auto body repair prices is above the rate of general inflation for the fifth month in a row. The result comes after increasing at a rate below inflation during the second quarter. The rate of inflation for both auto body repair and general inflation is continuing to accelerate in the fourth quarter. Both measures were markedly higher through the second and third quarters as the
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It is disingenuous to assert that Labor tracks this cost increase as stated in the article
QUOTE -“The auto body repair price typically correlates to the average labor rate nationally.” Please provide the source for this assertion.
To my understanding the SIC Code is for the average cost of overall Autobody repairs … not just labor. Repair costs are being driven by Parts costs and the increasing portion of repairs that are comprised of parts. My understanding is that Labor ‘price’ has been stagnant for decades and tracks far lower than the CPI.
CollisionWeek Editor says
Thank you for your comment. We often get the question about the BLS report and what it represents and include the specific comment you had the question regarding the correlation to labor rates to help our readers better understand what trends the data informs.
The BLS conducts surveys monthly in urban areas on pricing and develops average price inflation indexes for hundreds of commodities and services including for “Motor Vehicle Body Work” that we report on. Prices for motor vehicle parts are included in a separate series we report on in this feature.
The body repair series is produced from telephone or in person visits with providers as part of its Point-of-Purchase Surveys, instead of surveying consumers like for items such as rent paid.
We have BLS data going back to January 1978 for motor vehicle body work and CollisionWeek’s analysis of the BLS index for motor vehicle repair shows a close correlation, typically a correlation coefficient of 0.8-0.9 (where a 1.0 coefficient would be a perfect correlation) to average labor rates in the U.S. on an annual basis. Our analysis is based upon rates from our own research conducted periodically since the late 1990s, published older sources and supplemented by publicly released data from information providers such as those from Solera Audatex, CCC and Mitchell.
We expect that the higher rate of increases seen so far this year represents a higher rate of inflation in “door” rates versus contract rates paid by insurers. In the short term, contracted rates, particularly those paid to DRP facilities, will trail door rate increases that can be changed without an agreement with the insurance carrier. Over a longer period of time, however, the rate of increase will be similar.
CollisionWeek’s editor, Russell Thrall III, specifically asked Susanna Gotsch about how CCC’s labor rate data compares this year to the growth in the BLS statistic in our video interview published on December 17. See: https://collisionweek.com/2021/12/17/interview-susanna-gotsch-ccc-intelligent-solutions-details-collision-repair-claims-trends/
Collision repairers responding to recent CollisionWeek business conditions surveys have been increasingly mentioning that insurance carriers are not responding to requests for higher labor rates to compensate for higher labor costs they are incurring due to the impact of the worker shortage and general inflation.
We hope that answers your question.
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