Is it fair?
IAG’s announcement that it will open its own paint and panel workshop in Auckland later this year has raised a few questions within the sector.
Insurance company, IAG, has the largest share of the New Zealand insurance market, over 60 percent. If its first non-structural collision repair centre is a success it seems likely more would follow.
IAG Executive Manager Claims Services Dean MacGregor says, “It will evaluate the success of the trial and consider next steps.”
In a meeting with MTA, Dean MacGregor and other IAG representatives said it was embarking on the trial because it wants to improve the customer experience, create more capacity and get vehicles back on the road faster. IAG will be providing what it describes as “mobility solutions” as part of the trial, which may include loan cars.
Dean says any learning from the trial workshop will be shared with the repairer network. “It goes without saying that companies like IAG will always need a strong repairer industry to partner with.” Collision repairers spoken to by Radiator believe IAG will have an unfair advantage. “By doing only minor, non-structural repairs, they don’t have to invest in any of the expensive chassis- straightening equipment that they required their authorised repairers to have.
“By avoiding structural repairs, IAG will also need fewer qualified technicians – they may not even need welding certificates.” Another repairer noted that IAG would be able to guarantee itself a high number of repairs each week or month - something it does not do for its authorised repairers.
Dean MacGregor says the workshop will be focused on high- quality repairs undertaken by technicians with all the relevant qualifications. “It will undertake welding as part of a defined scope of work at the workshop.”
MTA Advocacy & Strategy Manager Greig Epps says, “MTA is seeking advice on these matters to determine if these insurance company-owned collision repair centres have any unfair competitive advantage, or breach any other trade practices.”
IAG’s argument is that it needs to set up its own high-volume, non-structural repair centre, because no other player has emerged to take on this role in the market.
Around the world, there is a trend for small, family-owned paint and panel shops to be replaced by large, high-volume process-driven companies. These bigger companies are gradually consolidating and becoming ever bigger. This gives them buying power and the efficiencies that come with a larger physical footprint and high throughput. Some are owned by insurance companies, others are part of large consolidated, international networks.
“It’s difficult for smaller businesses to compete, particularly if they have nowhere to grow. It costs a lot to buy or lease a much bigger building if you need to expand to stay competitive. It’s also quite a risk to take if you have to move to a different part of the city, away from your traditional customer base,” said one repairer.
In the long term, New Zealand can expect to follow the international trend for bigger and faster collision repair centres, says MTA Repairer Sector Manager Graeme Swan.
“We already have one other insurance-owned repair network in New Zealand: Capital SMART, which is owned by Vero and AA’s parent company Suncorp. The big repairer Gemini also has a foothold here.
“Small businesses can’t compete with high-volume, non-structural rapid repairers. Those who can’t grow bigger, or don’t want to, need to start thinking now about their future. For some, this may mean specialising – perhaps building a name for themselves in custom paint work, or structural repairs. In our industry, many owners are nearing retirement, so the next few years may be the time to firm up succession plans.”
He says MTA is on hand to provide information and advice to collision repairers on ways to tweak their businesses or plan their futures. “We are also doing our best to keep members up to date with the trends that are emerging in our sector.”