This is a condensed version of
the article “Parts Price Index 2003-2013: Inflation & Its Impact on
Severity” by Greg Horn. The full article can be found in the Mitchell Industry
Trends Report at http://www.mitchell.com/industry-trends-report/itr-2013-q2-apd/index.html.
Mitchell has compiled a 10-year-long industry review of inflationary
trends in parts prices and its impact on severity. For this 2003 – 2012 review,
we selected the 20 most frequently-replaced collision parts and performed some significant
number crunching. Our goal was to compare inflationary trends by part type and
vehicle nameplate country of origin.
For the first time, we discovered a decrease in the indexed
price for the 2012 market basket which poses the question as to what part type
of or vehicle origin is driving this decrease.
Our Vehicle Nameplate Origin chart shows that the domestic vehicle parts
market basket experienced such a decrease that it offset the moderate increases
in the Asian and European market basket.
Another note of interest is that all part types in the
market basket split out by part type experienced an increase. However, it’s
important to recognize that we have a larger vehicle car park of domestic vehicles
on the road which led to the overall downward pricing trend of the index,
despite the individual part type inflation.
The decrease in the average OEM part price for domestic
vehicles was a mere $6.33 ($245.12 for 2012 vs. $258.12 for 2011) but that drove
a 0.14% decrease in the overall market basket index.
So what we are seeing is the impact of competitive parts
price matching programs expansion from the domestic OEMs. This is driving the
decrease in the overall index because of the large number of domestic vehicles
in the U.S. car park and the overwhelming dominance of new OEM parts selected
on the average repairable estimate.
