Helped By Hybrids, Auto Collision Costs Reported Up 13 %

The average appraised cost of auto crash repairs went up 13 percent in the second quarter, while the price for fixing hybrid vehicles is sharply higher than standard models, a new study reports.

The data was contained in the latest quarterly "Industry Trends Report" produced by Mitchell International, a San Diego-based electronic processing provider for the collision industry.

Compared with last year's second quarter, the initial average gross appraisal value for comprehensive coverage estimates processed through Mitchell servers was $2,373--a 13 percent increase, compared to $2,100 in 2007, the company said.

Applying the prescribed development factor for this data set produces an adjusted value of $2,367--an increase of $273 over the same period last year, according to Mitchell.

The study examined the severity of hybrid auto damage costs by comparing repairs for hybrids with manufacturers' standard gasoline versions of the same vehicle, and found an 18.4 percent difference.

Greg Horn, Mitchell vice president of industry relations, said he believed that currently most property-casualty insurers haven't fully factored in hybrid cars in their underwriting and looking at car makes, "they don't get down into the submodel.

"We do know the frequency of hybrid accidents have been lower primarily due to the driver profile. It's a select group. He said. For hybrid cars, "primarily the actual cost of the drive train and surrounding electrical pieces are a big driver of the overall cost of repair," said Mr. Horn.

The average severity of a hybrid repair was put at $2,769, compared with $2,338 for the gas-only vehicle.

The sharpest difference among car models was found for the Mercury Mariner, with average severity at $3,868 for a hybrid, compared with $2,716 for the gasoline model--a 42.4 percent difference.

Looking at all repairs in the second quarter, the report found that at $13,400, the average cash value of vehicles appraised for collision losses in the period was $177 more than last year, and also reflected slightly older vehicles.

In examining hybrid versus standard vehicle repair costs, Mitchell's report noted that there are marked variations in the average severity of repair cost by state.

According to the report, "one potential explanation for the differing severities is that hybrid vehicles might be more populous in geographies where the cost of living is more expensive, and consequently where parts and labor costs are higher."

The disparity between repairs costs for standard and hybrids was found to be greatest in Virginia (22 percent) and New York (18.8 percent). Costs were closest in Washington (5.6 percent) and Ohio (6 percent).

In all cases, the report found average parts and labor dollars associated with hybrid vehicles were greater than for gas counterparts.

Both labor rates and labor hours were found to be higher for hybrids, which the study said might be the pass-along of the cost of additional training needs in hybrid mechanics. Working with unfamiliar vehicles may also boost labor times, it was suggested.

"The ever increasing gasoline prices have affected virtually every aspect of our economy, including increasing the demand for hybrid vehicles," Jamison Day Mitchell, senior director of information services for Mitchell International, said in a statement explaining the genesis of the report. "Given their increasing popularity, we thought it would be interesting to see how the hybrid's average estimate amounts compared and explore what might be driving the differences."

The full report can be found online at www.mitchell.com.

Mitchell provides information, workflow and performance management solutions to the automotive insurance claims industry, serving carriers, collision repair facilities, and other commercial participants in the physical damage and auto-related medical claims markets.