New Zealand’s car repair industry could lose up to 15% of its revenue to offshore-owned rivals, an industry trade body has claimed.
It comes as insurers under Australian-owned IAG (AMI, State, NZI and Lumley), rapidly vertically integrate their operations throughout New Zealand.
The groups, with a 60% share of the local market, have opened high-volume panel repair shops in Auckland, Wellington, Hamilton and Christchurch.
The insurance group’s facilities, which operate under the ‘Repairhub’ brand, can process four times the amount of work of an average repairer, representing 15% of industry volume, the CRA said.
Neil Pritchard general manager of the Collision Repair Association (CRA) claimed insurers could selectively channel the more profitable, cosmetic repair work through their claims process directly into their own repair network.
Pritchard said prior to 2019, almost all 500 collision repair shops in NZ were locally owned and the additional competition faced by the new insurer model could not have come at a worse time for the industry.
“Since its inception, the local collision repair industry has been made up of hundreds of New Zealand owned panel repair shops,” he said. “With prices dictated by insurers, the industry does not operate under the same competitive forces that most other service providers do.
“The absence of these forces creates a high level of vulnerability to external cost changes for businesses and when this is coupled with the introduction of an insurer network which can artificially capture high volumes of work from the most lucrative jobs, it places our ability to develop infrastructure for more complex, structural repairs in jeopardy.”
“What we are seeing at the moment is the culmination of several economic factors which are threatening the long term viability of the industry and could see the reduction in services for Kiwi consumers,” he said.
Pritchard called for more oversight of the sector.
“Most consumers would be unaware that the repair facility being advocated by their insurer is also owned by the insurer and the profits flow offshore rather than being retained by local businesses.
“Our concern is that with the insurance industry now effectively self-monitoring the quality of their own work, and the resulting loss of transparency in the relationship with their repairer, there is little in the way of consumer protection.”
IAG responds
IAG rejected the CRA claims and said it remained committed to its existing approved repairer network across New Zealand.
Dean MacGregor, executive general manager, adjacencies and supply chain at IAG, rejected the CRA view that the repair market would be adversely impacted by the group’s Repairhub facilities.
“IAG has been open and transparent about our Repairhub facilities. This includes confirming that our approved repairer network will remain a critical part of our national operation,” he said.
“We have strong quality control standards, and quality is checked at every stage of the repair. We know that Repairhub quality is as good as you can find in the market, given we have the latest equipment, high-quality parts and paint, and excellent training and processes.”
MacGregor said IAG customers would continue to have freedom of choice and the group was committed to working alongside the repair industry.
“The customer is our first priority – the customer can choose which repairer they go to, whether that’s a member of our approved repairer network, Repairhub, or another repairer of their choice.
“IAG takes its responsibilities seriously as an industry leader. We are using the insights we gather at Repairhub to continuously improve the service as we move forward.
“Our goal is for Repairhub to operate alongside repairers. Together, we can continue to deliver a great customer experience.
“We continue to have a very strong relationship with the industry and industry bodies, and we look forward to a continuation of that.”
