Every facet of society is being re-worked and reimagined—no industry is immune to the ever-evolving ‘normal,’ which seems to shift by the quarter. Mitchell, parent company of NAGS and a provider of technology, connectivity and information solutions to the collision repair industry, released its second quarter Industry Trends Report (ITR) for 2021. The Auto Physical Damage Report, one of two editions in Mitchell’s quarterly report, analyzes the automotive industry from a COVID-19 point of view.
“Just two years ago, some experts predicted the end of private vehicle ownership and the growth of shared mobility or Mobility as a Service (MaaS),” said Ryan Mandell, director of claims performance at Mitchell. “Then came COVID-19. The pandemic and its effect on mobility patterns has disrupted original forecasts and shifted expectations. Today, the future of transportation looks dramatically different than it did 12 months ago—and it continues to evolve.”
Mandell said that some COVID-19 effects could impact the bottom line of collision repair shops.
“There is no doubt that COVID-19 has permanently altered the way we work and move about our world,” Mandell said. “Those who eulogized the personal automobile are now reimagining its role in society. More than any time in the last decade, vehicle ownership—especially EV ownership—is primed to take center stage when it comes to mobility. For insurance carriers, this likely means that loss costs—while drastically reduced in 2020—could begin a steady climb in 2021 with more cars on the road and miles driven. And while collision repairers have been especially hard hit economically throughout the pandemic, the expected increase in claims volume will provide welcome relief.”
Mandell said that three emerging trends are shaping mobility’s “next normal.” One of those trends is a diminished reliance on shared transportation due to a pandemic-spurred shift to virtual work.
“It wasn’t long ago that the ridesharing sector was booming,” Mandell said. “Between 2013 and 2016, Uber and Lyft went from 30 million vehicle miles traveled per month in the US to 500 million, a compound annual growth rate of more than 150%. . . . The reduction—and in some cases elimination—of daily commutes combined with an overwhelming desire to minimize individual risk of infection has led to significant declines in public transit ridership. In the fourth quarter of 2020, the US experienced a 62.16% ridership reduction, according to the American Public Transportation Association. Canada saw numbers that were even higher at 65.83%.”
In addition to reduced reliance on shared transportation, Mandell cited growth in personal vehicle ownership as a mobility-shaping trend.
“A September 2020 study conducted by McKinsey & Company’s Center for Future Mobility found that reducing the risk of infection was the key consideration used by consumers when selecting their mode of transportation,” Mandell said. “What better way to prevent exposure to a pathogen than owning a vehicle? According to Jonathan Smoke, Chief Economist at Cox Automotive, ‘The vehicle, in many ways, has become our own personal bubble’”.
Mandell cited an increased interest in hybrid and electric vehicles as another trend sparked by the pandemic.
“Another recent McKinsey & Company study found that 56% of North American respondents are more interested in the purchase of a hybrid or electric vehicle (EV) because of the pandemic, with half of those individuals indicating that they were ‘significantly more’ interested,” Mandell said.
Mandell said that further analysis has found environmental awareness to be a driving force behind the up-tick.
“Twenty percent of those surveyed stated that sustainability concerns were one of the top three reasons for their interest in hybrids and EVs and 19% cited recent air quality improvements (as a result of fewer vehicles on the road),” Mandell said. “This data—coupled with available government stimulus funds and incentive programs—suggests we may experience a more rapid uptake of alternative energy automobiles than previously anticipated.”