2020 was a heck of a year wasn’t it? Covid has transformed everything, from how all of us live and work, to the commercial landscape for almost every sector, the car repair and salvage market being no exception. And on top of that came Brexit, with all the changes that has entailed for the sourcing and distribution of spare parts.
IE caught up with Jane Pocock from Copart UK to see how they rose to all these challenges, and how things are looking for 2021.
IE: Copart are expanding their sites across the UK, is that because the salvage market is growing despite the reduction in annual mileage for the average UK driver?
JP: It’s an exciting time for Copart UK and we are expanding for a variety of reasons. Previously our sites were almost always full, and through the pandemic we have gained more customers and have grown our automotive division selling undamaged cars.
The weather systems are changing, and all these flash floods mean we need to have emergency capacity too. The primary drivers of change are all to do with customer service.
Having more physical space allows us to park damaged vehicles in secure compounds, without having to stack them. Traditionally, some companies often stacked up cars two or three high, but you add risk when you do that. It means vehicles have to be moved, the racking itself needs maintenance, and then there’s the risk of storms and fires spreading quickly with stacked cars – so placing them separately on the ground preserves the stock far better.
Even if the car is a write-off, it is still an asset we hold on behalf of the insurer, so we have a big responsibility to look after it.
IE: Never thought of it until you described the risks of stacking! I can see that a car could leak petrol or brake fluid and that could then ruin the bodywork on the vehicles below.
JP: Yes, that’s right. On average around 75% of our vehicles go for repair, so it’s extra important that we look after them and prevent any further damage. For the cars sold for breaking, if a panel is damaged then nobody wants it as a spare part, so that’s another thing to consider.
Then there’s the wider environmental issue of repairing as many vehicles as we can, rather than use the earth’s resources to make brand new cars.
IE: How has Brexit affected the movement of parts in the EU zone?
JP: It’s not my area of expertise, but I have heard of issues obtaining parts and customs delays, which hopefully will all be resolved soon. Rising paint and parts costs are not helpful for the repair industry but businesses have to adapt, and green parts can also be used if they can find the right price point too. On the upside, exporting of cars has been a good opportunity for us as demand is increasing and the Euro exchange rate is favourable.
Copart have always thought globally when it comes to parts, so we were already geared up to move stock around the world, with all the compliance and regulation that goes with that.
IE: Has lockdown meant fewer accidents in the UK overall?
JP: Yes, the first lockdown was much more dramatic, but now people have adapted the accident rate is increasing again, although we have seen some more serious damage because there has been more speeding on quieter roads. We have quite a few smashed supercars for sale!
One thing we have streamlined over the last year or so is our triage system, which comes into play once we get the final notification of loss (FNOL) decision. It involves everything from checking personal belongings inside a car, to providing ongoing updates to customers, both to the insurance industry and the policy holder.
The total experience, well handled, can be a very positive outcome if executed quickly and with care. It’s all about looking after people when things go wrong and supporting them through the change process.
IE: So, in that FNOL process, Copart can help build the brand reputation of the insurer to an extent?
JP: We can, and it’s really important to do lots of things to support that. For example – and people often don’t consider this – modern cars often have Apps that manage them and lots of personal data on the Sat Nav and the in-car phone system.
There can be stored data transferring from different phones, including photos, call records, home addresses and so on. All that needs to be protected and sometimes deleted. People are understandably often upset after an incident and forget to do this, or they may not know how to do it. We have professional and DBS-checked drivers who can help people do it, so they can be sure their private data is removed appropriately.
It’s crucial that the FNOL process is compliant, and there needs to be a bit of aftercare too – you need the human touch. Your car can become a second home, with all kinds of kid’s toys, personal effects, laptops, chargers, or other items hidden away in cubby holes and storage areas. All that has to be part of your checklist when you begin the salvage process. I can’t tell you how many favourite children’s toys we have rescued from inside damaged cars and returned to the owners.
IE: Do you think that the rise of electric cars, and those with lots of ADAS, will lead to more write-offs?
JP: It’s hard to say. In some ways a pure electric vehicle is easier to repair. But then it often has an array of LiDAR and cameras, sensors etc. that need trained technicians to assess and repair. Damage to any of the peripheral sensors and lighting systems is certainly very costly to repair and can push it into the total loss arena. However, the time delay in the repair process and the associated extras, like car rental, can make the repair not viable for an insurer but very viable for a Copart customer.
In the long term, we feel it’s better for environmental reasons that where possible cars are repaired then the remainder are broken for parts. Our job is to create the biggest sales audience to ensure the best price is obtained for the insurer. As a society, nowadays we are looking to ensure that as much as possible is recycled, car carcases are now used for new cars, plastics have another life etc. We can no longer just dispose of vehicles – and all the toxic stuff in them – in the way we did in the past.
Another angle to the parts story, and a significant one for us, is the export of cars to the EU zone where there is a strong demand for vehicles that have an undamaged left-hand, or passenger side. Obviously, that is the driver’s side in many countries. Worldwide, about 30% of all countries drive on the left like the UK, so there is a global market for a damaged-repairable UK-spec car too.
IE: What next?
Since the pandemic started, we are selling more and more damaged and undamaged cars, as our website and auction has the ability to sell and deliver a vehicle very quickly. Many people feel uncomfortable about using public transport at the moment, so they are keen for a run-around car.
Looking at the year ahead, we think that the issue with import duty will be resolved pretty quickly, and demand for new and used cars will escalate as soon as freedom is restored.
And digital capability will be fundamental to success. The systems we have in place for interconnectivity, auctions, damage assessment and pricing powered by our sophisticated AI tools – plus the extra physical storage space we’re now managing to provide – all combine to offer real value for insurers.
It’s going to be a busy year and we can’t wait!