It’s been a while since Insurance Edge caught up with Jane Pocock, CEO – Copart UK & Ireland. This year has seen dramatic price inflation across the board, plus a spike in used car values as the new car supply chain continues to experience disruption.
One part of the vehicle repair solution is increasing interest in the use of green parts, which is why more insurers are working with Copart, and why Copart has acquired Hills Salvage & Recycling – The Green Parts Specialist.
IE; Jane it’s been a volatile time for the used car market, what’s your take on values and spares supply right now?
JP; It’s stressful for everyone in the motor claims supply chain for a combination of reasons. The pandemic caused a shortage in the supply of semi-conductor chips, which are essential components for manufacture. Many new cars were not produced during this time, causing price increases in the used car sector.
The shortage is still with us, and the consensus is that we have another year or two before chip supply can fully recover.
Also, the war in Ukraine has obviously caused serious problems with parts supply as many factories are based there.
IE; The old just-in-time model isn’t coming back anytime soon then?
JP; Supply chains are all strained due to increased demand and overheads and if a vehicle is not deemed repairable, it is a big challenge for the policy holder to find a like-for-like replacement due to lack of choice in the car market.
This situation has identified an opportunity to use green parts as an effective and sustainable solution. Marketing, inventory, and logistical improvements have all added to the viability of green parts usage within the insurance sector.
It isn’t just good for the planet to re-use parts, it also allows repair specialists, salvage companies, and even manufacturers to provide a wide range of standard vehicle parts at a local level.
Wherever possible, of course it is always better for the environment to repair a vehicle. However, if that vehicle is condemned to breaking, safely reusing as many of its parts as possible is the next best option. That means one less brand-new car being manufactured and shipped around the world.
IE; Which part of the car is most damaged typically?
JP; It tends to be front end driver side damage primarily, followed by rear end damage.
As many modern cars have sensors and cameras built into the bumper sections, repairs often prove to be challenging. This means Advanced Driver Assistance Systems (ADAS) recalibration checks are required.
Copart has been working hard with insurers to provide up-front estimates of the salvage value so that a swift decision can be made on the fate of the vehicle. If the vehicle is deemed uneconomic to repair by the insurer, then it comes to Copart to be inspected, where it is assigned a damage category and is ultimately sold for repair or breaking. We can now sell parts through our Copart Recycling division to assist with the repair process.
Copart has always collaborated closely with insurance partners to optimise the claims process, and this will remain a top priority for us.
IE; Let’s talk vans because one of the effects of the Covid lockdowns has been a huge increase in home delivery of food, pharma products, clothing, gadgets etc. That means lots more smaller and medium sized parcel vans on the road. How is the spares and repairs side of things working in the van sector?
JP; We have seen a significant shift to online shopping and van usage. The SMMT found that the total number of vans increased by 4.3% to just over 4.8m last year, over 10% of the 40.5m vehicles on our roads.
However, similar to the new car market, new vans that fleet managers would like to buy aren’t readily available, so they are holding on to older vans. When those older vans sustain damage, it can be tricky getting the new parts, and so we are seeing more green parts being used on the commercial side too.
IE; How are used van values, compared to cars?
JP; One interesting trend is modified, or job specific vans. Some vans are fitted out with specialised tools or racking etc. and that can mean higher salvage value or repair costs. Also, many vans have luxurious cabin areas now, since drivers are effectively using this space as their mobile office; communications, cameras, food storage and more are now part of the cab environment. These modifications all need assessing in the context of repair and value in the event of damage.
The van market is also splitting into niches, similar to the car market. We are seeing more examples of one-off customised vehicles, as well as general fleet delivery vans and privately owned small vans on the road. It’s all keeping us busy at Copart, but thankfully we’ve anticipated these changes and are already working with our insurance partners to help them navigate successfully through the current challenges.
IE; Jane thanks for your insights.