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Total Losses and Roof Strength Standards

Publish date: March 30, 2009
Source: Automotive Body Repair News
File/SearchAutoParts.com

Full Text of Article (Written by News Editor of ABRN)

Let’s get this out of the way right now: Saving lives is and always will be the most important criteria in designing car safety. Nothing is more important than that.

Now that the disclaimer is out of the way, I’d like to get feedback from collision repairers on roof strength standards. I posted an article to our Web site this week that said the Insurance Institute for Highway Safety is launching a new roof strength rating system to help consumers pick vehicles that will help protect them in rollover crashes.

More than 10,000 people a year are killed in rollovers. When vehicles roll, their roofs hit the ground, deform and crush. Stronger roofs crush less, reducing the risk that people will be injured by contact with the roof itself. Stronger roofs also can prevent occupants, especially those who aren't using safety belts, from being ejected through windows, windshields, or doors that have broken or opened because the roof has deformed. Roofs that don't collapse help keep people inside vehicles as they roll.

Basically, the stronger the roof, the fewer people will be killed or maimed when their vehicle rolls over during an accident.

My question though, is how would stronger roofs on vehicles affect collision repairers? I was under the impression that most vehicles that rollover incur so much damage that they typically are scrapped rather than repaired. Is that the case?

Are there repairers out there who get the opportunity to repair vehicles involved in a rollover? Or is a vehicle rollover more likely to result in a total loss, which takes the vehicle out of the repairer’s shop and puts it into the salvage market?

If the roof is stronger, less damage should occur to the car. Does that mean that stronger roofs will permit more cars that are involved in a rollover to be repaired rather than scrapped?

While saving lives always will be the most important criteria in designing vehicle safety, stronger car roofs might be good for the collision repair industry if they minimize damage during a rollover enough to keep cars from being totaled. As the recent series of articles appearing in ABRN has determined, there already are far too many factors causing an increase in totals.

Diamond Standard Brand Response from Geoff Crane,
Business Development Manager

Why should you use Diamond Standard or OEM safety parts? We applaud the opinion expressed in the thought provoking and challenging article below that priority one in designing car safety (and we would add collision management systems) is saving lives. The collision management systems of the vehicle are designed to meet federal standards of crashworthiness performance, MINIMIZE DAMAGE, and support proper and timely air bag deployment. Proper system performance is essential given the forces in play driving up total losses.

Certainly rising repair material/labor costs and sinking Actual Cash Values (ACV) have contributed their share of totals. The increasing median age of the vehicle population as reported by R.L. Polk & Co.’s in the 2007-2008 Annual Vehicle Population Report, now 9.4 years is contributing. As is the older average age of vehicles involved in a collision.

Yet below the roof line, and like the article below suggests, stronger bumpers, steel reinforcements, and energy absorbers would crush less and prevent greater damageability and potential occupant injury vs. substandard parts which substitute cheap non OEM and Diamond Standard Brand materials incapable of absorbing and deflecting crash energy to the standard which was built into the original vehicle part and collision management system. Diamond Standard Brand Safety Parts are engineered and produced to exacting standards that meet OEM standards of quality, safety and performance and dynamically and destructively tested to assure functional performance within the vehicle’s collision management system. Meeting the standard on the vehicle and federal standards of crashworthiness minimizes damage to the vehicle. Use of substandard performing parts less resistant to crash energy will increase damageability, repair costs and potentially delay air bag deployment, risking occupant safety.

We believe Diamond Standard Brand Safety parts help reduce total losses, hold down repair costs and are a safe alternative to OEM parts. We advocate the use of Diamond Standard or OEM parts (bumpers, step bumpers, reinforcements, absorbers) as the best way to ensure the optimum results in the areas of safety and damageability.


Half Million New Car Shoppers Steered to Used Cars

Publish date: Feb. 26, 2009
Source: Automotive Body Repair News
File

Diamond Standard Brand Response from Geoff Crane,
Business Development Manager

Why should you use Diamond Standard or OEM safety parts? The article below describes a situation which can further increase the average age of the vehicle population resulting in the following:

1) Older vehicle age and diminishing values
2) Increased scrappage rates (currently est. 5.6%)
3) Increased total losses (currently est. 16.0%)
4) Increased repair cost threshold as vehicle owners rationalize expense vs. buying new vehicle
5) Downward pressure on premium cost given older/less valuable vehicle(s)

In a February 26, 2009 ABRN article on vehicle population aging, it was reported according to R. L. Polk & Co.'s Annual Vehicle Populaton Report (covering the July 1, 2007 - June 30, 2008 period), the median age of passenger cars increased to 9.4 years, breaking the previous two-year record of 9.2 years age.

The current environment, coupled with the higher gas prices of last spring/summer have resulted in consumers delaying the purchase of vehicles as discretionary income fell. The precipitous drop in new vehicle sales has continued through February 2009 with steering of sales to used cars further exacerbating the decline. With the uncertainty surrounding the economic outlook, tight credit continuing and low consumer confidence suggests what had been the sale of a new vehicle will continue to be steered to used.

In this period of higher material, part and repair costs, Diamond Standard Brand Safety parts represent the true alternative to OEM Safety parts at a substantial savings; thus helping to reduce repair costs and total losses. Please note some total losses may be attributable to use of substandard performing safety parts from some Offshore Aftermarket suppliers which have been been sold and distributed over the past 8 years. These substandard parts fail to perform to Federal levels of crashworthiness, the OEM standard, and Diamond Standard Alternative and can lead to increased damageability and potential occupant safety issues.

We believe Diamond Standard Brand Safety parts help reduce total losses, hold down repair costs and are a safe alternative to OEM parts. We advocate the use of Diamond Standard or OEM parts (bumpers, step bumpers, reinforcements, absorbers) as the best way to ensure the optimum results in the areas of safety and damageability.

Full Text of Article

At a time when automakers are desperate for every sale, a large number of shoppers are drifting out of the new car market and purchasing a used car instead. Edmunds.com has determined that approximately 511,000 used cars sold in the past three months would have been new car sales in a more normal economy.

Projecting ahead, this could represent a seasonally adjusted annual rate (SAAR) of more than 2 million vehicles, which equates to more than 15 percent of total new car sales. In manufacturing terms, that amounts to about two assembly plants' new car production, reports Edmunds' AutoObserver.com. This impacts collision repairers because used cars are on average worth less than news cars and are more likely to be total losses after they are damaged in wrecks.

“It is safe to assume that many shoppers who normally would be tempted by 'new car smell' and the latest automotive technology made a more cost-conscious decision because of economic pressures,” says David Tompkins, Edmunds.com senior analyst, whose team studied historical ratios of online research and actual sales of new cars versus used cars.

According to Tompkins, about two-thirds of incremental used car sales, about 343,000 cars, were sold to consumers who, in a normal market, would have considered a new car but instead began their shopping process with a used car focus. The remaining one-third, about 167,000 vehicles, were bought by people who demonstrated purchase intent for new vehicles, but, at some point in the buying process, switched to used cars.

“Right now, dealers need to maximize their short-term profitability more than ever,” says Edmunds.com CEO Jeremy Anwyl. “So it is really no surprise to learn that salespeople are directing some car buyers toward used cars, which have historically delivered a much higher profit margin to the dealer.”

Edmunds.com's research shows that recent model year used vehicles have been sold at a faster rate by franchise dealerships lately; in the past, vehicles that were one model year old made up about 11 percent of all dealership sales, but lately they have jumped to 16 percent.

What does this mean for the car buyer?

"Deciding whether to buy a new or used car is something that should be done after careful consideration, not while you are on your feet at the car lot," says Philip Reed, senior consumer advice editor. "It requires more research to successfully choose, negotiate and buy a used car. But it also offers significant savings for the savvy shopper.



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Total Loss Percentages

(Mitchell’s Regional Trend Report 2nd Half 2008)

Diamond Standard Brand Response from Geoff Crane,
Business Development Manager

Why you should use Diamond Standard Brand or OEM Safety Parts. The total loss article in Crash Network referenced Mitchell’s Regional Trend Report wherein total losses reached 16.2% of all uploaded estimates for the 2nd half of 2008. We believe there are some important additional, contributing reasons for this but which were not cited in the article.

1) The average vehicle age involved in a collision is approaching 6 years; combined with a precipitous drop in used vehicle valuations

2) Use of substandard bumper system components in previous collision repair, specifically steel bumpers, foam energy absorbers and steel reinforcements. Testing has shown these parts to fail federal standards of crashworthiness and the standard of performance, the OEM part, which came on the original vehicle designed to provide a level of crashworthiness that met FMVSS 214. Use of parts which fail to provide the level of crashworthiness of the original safety part will lead to a greater level of damage as confirmed by GM in their 2004 bumper system test analysis of a 2001 Chevy Cavalier. Compared to the GM bumper system in an IIHS low speed dynamic test, use of non conforming Offshore Aftermarket parts led to repair damage $1,500 greater than the system with OEM parts. This test was repeated by Diamond Standard Brand in early 2005 using Diamond Standard absorbers and rebar vs. OEM and showed similar crashworthiness to OEM with a significant $126.94 savings in repair advantage. Based on current repair costs, the use of the Offshore Aftermarket parts would create damage in excess of $2,500 rendering the car a total loss vs. repairable with OEM or Diamond Standard Brand Alternative parts.

3) While OEM and Diamond Standard Brand utilize high strength steel for bumpers and reinforcements and high density EPP polypropylene for their absorbers, some Offshore Aftermarket manufacturers substitute low cost non high strength steel for reinforcements and low cost polystyrene for energy absorbers. These materials do not match the strength nor the energy absorbing and crashworthiness of the OEM and Diamond Standard Brand material as proven in extensive testing which is very concerning.

The Crash Network Article stated the following Mitchell Regional Trend Report statistics on total losses:

16.2% of all estimates uploaded in 2nd half 2008
North Dakota had lowest rate @ 10.9%
States with less than 13% included IL, MA, CA, HI, DC
States with more than 20% included AL, LA, MO, SC, TN, GA, WI, WV, NC
AL had the highest total loss @ 24.2%


Frequency of Total Losses on the Rise

Publish date: Nov 1, 2008
By: Bruce Adams
Source: Automotive Body Repair News
File

Diamond Standard Brand Response from Geoff Crane,
Business Development Manager

Why should you use Diamond Standard Alternative or OEM parts? The article below states the frequency of total losses are going up and will continue to increase through 2009. We believe there are reasons that contribute to this trend that go beyond what is mentioned in the front page article.
  1. Substandard bumpers, steel rebars and brackets that are made from low alloy non-OEM carbon steel vs. OEM or Diamond Standard high strength and ultra strength steel. High and dual density energy absorbers using polystyrene vs. OEM or Diamond Standard high density EPP polypropylene are being sold as like, kind, quality, fit, form and function by Offshore manufacturers and some USA based distributors. The ability to prevent damage under FMVSS 208 is certainly compromised. This was documented in a GM bumper system test showing use of substandard Offshore system parts on a 2001 Chevy Cavalier resulted in $1,500 greater damage than experienced using GM parts based on 2004 costs to repair while Diamond Standard parts saved an additional $126.94 vs. OEM. Today that same test would generate a total loss using Offshore Aftermarket parts vs. repairable with either OEM or Diamond Standard Parts. Diamond Standard conducted the same test using using the OEM fascia as a constant and comparatively tested the OEM energy absorber and HSS rebar vs. Diamond Standard in dynamic and destructive testing using IIHS low speed impact protocol at 5MPH. Diamond Standard parts exhibited the same level of crashworthiness as the OEM parts, generating a significant savings in damage repair vs. exclusively using OEM parts.

  2. The use of these substandard repair parts for the past 10 years since introduction of high, ultra high and advanced strength steels and high density EPP foam are a major concern damage claims and total losses are outrageous. “I believe that vehicle diminished value and substandard materials used are a cause for great concern for safety, total loss numbers which lead to lost jobs at the shop level, loss of tax revenue at state and federal levels, environmental issues at scrap level (note: polystyrene used in Offshore Aftermarket energy absorbers is not biodegradable) and higher premiums for car owners. Beyond the increased damage which results from use of these substandard parts, the increased likelihood the trend in total losses will continue beyond 2009”.

Full Text of Article

A steady decline in the frequency of total loss vehicles since 2004 is changing, as total losses increased slightly in 2007, continue to rise in 2008 and are expected to continue that upward trend into 2009, according to research from information provider Audatex.

The rising cost of raw materials, a steady decline in used vehicle wholesale prices, actual cash values in some vehicle segments and an older insured vehicle population on the road are contributing to this trend, which does not bode well for the collision repair industry.

As prices for basic commodities used regularly by the automotive industry such as steel, aluminum and petroleum continue to rise due to increasing global demand, the intrinsic value of the materials in vehicles is increasing, according to Mike Anderson, senior director of data analytics and industry trends for Audatex.

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Total Loss % of Claims

"These price increases will likely impact replacement part prices," says Anderson.

The price of hot rolled carbon steel, a major component in vehicles, has nearly doubled to $1,035 per ton. Aluminum, used in many newer vehicles, has increased 22 percent to $2,270 per ton. The price of platinum, which is used in catalytic converters, has increased 70 percent to $2,073 per ounce.

Some experts blame these increases on global demand for raw materials from countries such as China and India, along with inflation and a weak U.S. dollar. Many raw material suppliers are passing these increases on to automobile manufacturers, who are raising new car prices. For example, in June Chrysler announced that it will raise prices by 2 percent to its dealers, and GM recently announced a 3.5 percent price increase for 2009 models.

The increase is attributable to rising commodity prices, including steel, according to Chrysler. The added costs of raw materials to automakers and part suppliers will likely make their way to part price increases for replacement parts used by repairers, according to Brian Grainger, director of product management for Audatex.

"The net result will be increased repair costs, which is likely to reduce the number of vehicles that ultimately get repaired instead of totaled," Grainger says. "As the gap between repair costs and actual cash value of the vehicle narrows, total losses are likely to increase."

While increasing costs of raw materials also drive up new car prices, that doesn't necessarily affect the average repair or total loss decision made by the insurance company.

"The actual cash value is generally governed by supply and demand of the vehicle, not necessarily by how much that 2009 model costs," Anderson says. "Under most insurance policies, the replacement cost of a new model year vehicle is not a consideration in the decision to repair or total loss a vehicle. It is more a supply and demand issue."

Used Vehicle Wholesale Prices

Wholesale prices, as reported by Mannheim's Used Vehicle Value Index, have declined by more than 7 percent during the last six months and 5.6 percent the past year. ADESA's Average Wholesale Used Vehicle Prices Index reflects a decline of 2.4 percent during the first four months of 2008 compared to the first four months of 2007.

Leading this decrease is the decline in demand and value of full-size pickup trucks and large sport utility vehicles, according to Audatex. Traditionally, wholesale prices tend to be a leading indicator of retail used vehicle prices, and these retail prices are used in establishing actual cash values.

"There are people who are upside down on their vehicle loans — they owe more than the car is worth — as large SUV prices have dropped," Grainger says. "That does not impact the repair vs. total loss decision made by the insurance company. The insurance company only pays based on the value of the vehicle, not the loan amount."

But as used vehicle prices drop, they bring the value of cars closer to their total loss value. As that chasm narrows, cars that previously may have been repaired are more likely to be considered a total loss.

Older Insured Vehicles on the Road

According to Federal Reserve data, the weighted average maturity of new car loans by auto finance companies in 2008 is averaging 62.8 months. In 2000, the average maturity of new car loans was 55.2 months. The loan-to-value ratio is now averaging 94.8 percent, compared to 91.5 percent in 2000. This translates to an additional 7.6 months of first-party coverage, required by lien holders. In addition, R.L. Polk recently reported that the current median age of vehicles on the road of 9.2 years is at its highest point since 2001.

According to Audatex data for the first half of 2008, the average model year involved in an accident is 5.9 model years old, versus 5.6 model years during the same period last year. This suggests a 6.0 percent increase in the age of vehicles on the road in the last year. The average model year for a totaled vehicle is 1999.

"The loan-to-value ratio shows that more people are financing more with less vehicle equity. That by itself does not impact the actual cash value," Anderson says. "But the maturity ratio does affect it. When the loan-to-value ratio and maturity ratio are both high, fewer people can sell their vehicles because they are likely to owe more than the value."

For example, when people owe more on their loans than the car is worth, they will keep those cars longer because they can't afford to do anything else. That impacts the percentage of new vehicles on the road.

Extended loan maturities requiring first-party coverage on aging vehicles may lead to more insurance versus owner paid claims than in past years on highly depreciated vehicles.

"Once a vehicle is paid off, some people drop comprehensive and collision coverages," Anderson says. "At the end of the loan term, they can drop all but liability coverage. If they do that and their car is in an accident, the owner covers that loss instead of the insurer."

When a vehicle has a longer loan maturity, insurers have a responsibility to the lien holder and the vehicle owner has the responsibility to keep first-party coverage, Anderson said.

"We don't know to what extent that occurs, but it impacts the number of insurance paid total loss vehicles," he says.


Insurance Premiums Jump for Third Consecutive Quarter

Publish date: Oct 24, 2008
File

Diamond Standard Brand Response from Geoff Crane,
Business Development Manager

Why should you use Diamond Standard or OEM parts? The article below shows the rates going up and we believe there are reasons that contribute to this trend centered around use of substandard Offshore Aftermarket parts!
  1. Substandard bumpers, rebars, energy absorbers and brackets that are made from low alloy carbon steel and polystyrene are being sold as like, kind, quality, fit, form and function by Offshore manufacturers and some USA based distributors. The ability to prevent damage under FMVSS 208 is compromised. This has been going on and continues to go on still. The use of these repair parts for the past 10 years since introduction of high, ultra high and advanced strength steels and high density EPP foam are a major reason damage claims and total loss numbers are outrageous. The mandated use of OEM parts exclusively also contributes to total loss in older cars but does safely protect occupants and property in any subsequent collision. “I believe that the diminished value and substandard materials used are a cause for great concern for safety, total loss numbers which lead to lost jobs at the shop level, loss of tax revenue at state and federal levels, environmental issues at scrap level and higher premiums for car owners. But the increased likelihood of injury to occupants is the most troubling.”

  2. Our latest testing shows a significant lag time in air bag deployment for the substandard rebar/absorber combinations tested recently at MGA Design Research in Wisconsin. Higher injury claims hammer the loss ratios and contribute to higher premiums. Plus this substitution of substandard materials is pre-meditated, dangerous and open to legal issues.

  3. Product liability insurance does not protect distributors from the sale of dangerous products which you have reason to believe are not the same material strength or have the ability to absorb crash energy as the original equipment that came on the car from the factory. If risk equals reward this is certainly one risk away from losing the rewards of years of honest business to a distributor or manufacturer. Being competitive is one thing; being stupid is another one altogether.
We think Diamond Standard Parts help reduce total loss while providing a safe alternative to OEM parts. We advocate the use of Diamond Standard or OEM parts (bumpers, reinforcements, absorbers) as the best way to ensure the optimum results in the areas of safety and damageability.

Full Text of Article

CLEVELAND – Auto insurance rates continued to rise throughout the third quarter this year, according to a study by online auto insurance agency Insurance.com’s RateWatch for Car Insurance, which found that the lowest car insurance quotes, on average, were up 3 percent over the previous quarter, rising from $1,893 per year to $1,949 per year. This 3 percent hike follows a 3.4 percent increase in the second quarter. 

Insurance.com says RateWatch is based on real-time auto insurance quotes from more than a dozen insurance companies given to consumers at Insurance.com during the third quarter. It marks the third consecutive quarter of rate increases, causing concern among cash strapped drivers who are already struggling in this challenging economy.

“The increase in rates this quarter represents a trend that will most likely continue into 2009,” says Sam Belden, VP – Strategic Alliances at Insurance.com. “Drivers should take some time to understand how the type of car they drive, and their driving habits, affect their rates.”

Car insurance rates vary by state, and some locales experienced rate quote increases in the third quarter that were greater than the average. For example, Washington, D.C. had an 8.3 percent increase in rates, while Nebraska and Rhode Island saw rates jump 8 percent and 7.4 percent, respectively.

“There are many things consumers can do to save on car insurance, like comparing rates from several companies before they renew a policy, driving more carefully, and never letting a current policy lapse,” said Belden. “When a driver does not have continuous coverage, he or she may not qualify for the best available rates, and may be placed in the same risk category with drivers who have violations and accidents. This can cost a driver significantly more money for years.”

A Solution For Totals

Blog Entry By Tim Sramcik
Editor-In-Chief
File

Geoff Crane and Mike O’Neal met with Mr. Sramcik @ the ABRN booth on the NACE floor November 6th, 2008 to discuss their great concern for increasing total loss and compromised vehicle safety due to use of substandard Offshore Aftermarket safety parts which have demonstrated in dynamic and destructive testing to fail to meet the crashworthiness and ability to prevent damage under FMVSS 208. We believe Diamond Standard Parts help reduce total loss while providing a safe alternative to OEM parts. We advocate the use of Diamond Standard or OEM parts (bumpers, reinforcements, absorbers) as the best way to ensure the optimum results in the areas of safety and damageability. The following blog statement was posted by Mr. Sramcik November 7, 2008.

To contact Geoff Crane directly please call 901-398-5759 M-F 8:00AM to 4:30PM CST geoff@diamondstandardparts.com

Full Text of Blog Post

NACE day 2: A Solution for Totals

For the past three years, I've read volumes about the impact of totals on the collision repair industry. It's an issue that hurts shops, insurers and consumers, so you'd think someone might have a solution. Today, finally, I heard one possible solution. I spoke with Geoffrey Crane of Diamond Standard Parts and Michael O'Neal of Reflexxion Automotive Products. O'Neal pointed to two of the factors leading to the rising number of totals: The high cost of OEM parts and the impact of substandard aftermarket parts. O'Neal points to a GM study that showed the use of substandard parts results in six to eight times the expected damage in any followup crashes. In short, poor parts means more totals. Their solution - provide the industry with cheaper alternative parts that are the equal to OEM parts in safety and protection (function!). These cheaper parts make repairs less expensive and protect a vehicle in crashes, also cutting repair costs. So, they attack totals on two different fronts. Crane and O'Neal are working hard to bring such products to market. I encourage you to speak to both of them.