Inflationary Insights 

Inflation is not a sector-specific challenge; businesses throughout the supply chain have all been facing steepling costs for months. 

However, the consequences and coping mechanisms put in place have varied widely. 

This was addressed during two sessions, Inflationary Insights Parts One and Two, that were held during the Exclusive Motor Claims Conference at Landing Forty-Two, London. 

Taking part in the first of these were Stuart Sandell, Assistant Vice President – Sales – UK and Ireland, Enterprise and Donna Scully, Director and Owner, Carpenters Group; before Dave Sargeant, Managing Director, Gemini Accident Repair Centres and Tom Rumboll, Managing Director, IAA / CEO, Synetiq, provided insights from the front line of repair and recycle. 


Stuart began by explaining that despite the size of the Enterprise organisation – a UK workforce of 7,000, more than 150,000 vehicles and a repair network that completes 170,000 jobs a year – scale alone does not soften the effects of inflation. 

He said, “Operating a business of this scale does bring some economies, but often it’s just a big multiplier effect of inflation. Our personnel costs have gone up a third, fuel costs have gone up 15% and operational costs have gone up by a third.” 

The Enterprise business in founded on vehicles. As such disruption to supply of both new vehicles and parts has had a substantial impact.  

Stuart revealed that fleet acquisition costs have escalated by 40% in the last two years and, at the lowest ebb, sales to car rental organisations such as Enterprise were down by 80%. 


“Manufacturers were sending cars straight to forecourts where they get the biggest margins,” Stuart said. “So we’ve had to put in place some fleet preservation strategies. That includes halting or slowing down the sale of vehicles, increasing our total loss threshold so we repair more cars, and actually going to buy used cars from the forecourts to sustain our fleet.” 

Exacerbating the challenge, longer repair times meant Enterprise needed access to an even larger fleet that before in order to meet customer demand. Stuart said that Enterprise had seen vehicle off-road times increase by 50%, while vehicle maintenance costs have risen 128%. 

He said, “Pre-pandemic, we had never MOT’ed a single car. No cars in our fleet got to three years. But in the last 12 months we’ve carried out 22,000 MOTs.” 

He concluded, “It sounds bleak, but on a brighter note we are seeing a greater supply of vehicles from manufacturers and we’re working hard with our supply chain to ensure we’ve got capacity. Individually and collectively we’ll get through these challenges and we’ll do this while making sure we have great outcomes for customers.” 


Meanwhile, Donna provided a broader view of inflation from the personal injury side. She said that the whiplash reforms and launch of the new OIC portal had gone some way to mitigating the effects, with a 39% fall in the total number of claims and lower legal costs. 

She said, “There has definitely been a good side to the OIC. Claims volumes are at their lowest level since 2004, which in terms of inflation is a help, there has been a reduction in damages and there are no legal costs up to £5,000,  

“It has also squeezed the market. Claims management companies in the UK are down to about 100, with more than 300 claimant law firms leaving the sector. A squeezed market and getting rid of people who weren’t doing things properly is a great thing but if we become too squeezed you could have massive consolidation.” 


However, counting against this are the massive delays since the OIC portal went live. The new OIC portal was meant to deliver a more efficient, streamlined and simple claims service, but claims are now taking double the time to be processed compared to the previous portal – although Donna admitted there have been improvements – while there is now an average of 78 weeks between the issue of a case and the time it goes to hearing. 

She said, “That’s not good for anyone, particularly customers. It’s a huge problem for the whole industry and it’s just getting worse every day.” 

Looking ahead, she predicted that a number of factors will have an effect on the inflation within claims in the coming months. The OIC Tariff review will take place next year, while the Supreme Cort will announce a decision on mixed injuries in the first quarter of the year. Furthermore, the Discount Rate will be reviewed next August. 


From a repair perspective, rising costs have been well publicised over recent months with labour rates, parts supply, longer key-to-key times, vehicle technology, higher energy prices and mobility challenges all having a negative effect. 

Gemini, which operates 34 sites with 700 staff and completes 45,000 repairs a year, has witnessed this first-hand. 

Dave said, “Parts have become a major challenge to us, more so in supply, so it’s good to see green part parts being used more. That’s a big help to us and I hope it becomes even more widespread.  

“Meanwhile, labour rates for technicians are at an all-time high, I’ve never seen anything like it, and new vehicle technology has also increased a lot of cost for us because we’ve got to invest in a lot of technology to repair cars safely, and also the technicians who are capable of doing it. On top of that, new technology has changed the percentage of non-driveable vehicles that come to us. It’s at 40% now.” 


While many of these challenges are uncontrollable, Dave argued that there is still a lot of wastage in the vehicle repair supply chain, which is too convoluted with too many parties involved all adding cost and inefficiency. 

He said, “We need to do something to reduce costs. One example, why have we got an engineer and an estimator butting heads? Let’s remove one of them. Or both of them.” 

However, Dave believes one of the most pressing challenges facing the industry will actually provide the solution. A lack of skills has been amplified by the pandemic. Gemini is ahead of the curve here as it committed wholeheartedly to apprentices in 2017 and is now reaping the rewards, both in terms of numbers and new ideas. 

Dave explained, “We decided to go down the apprenticeship route in 2017 and we’ve got more than 100 in our business. That is 14% of our workforce. They are not just technicians but front of house too, and I’ve had more success in meetings listening to what they’ve said than I have for years of sitting around the table with the same people who have been in this business forever. Their approach is refreshing and it makes you think you can change things.” 


If rising costs can ever be a good thing, there are perhaps positives to be found in the growing demand for recycled parts, which are both cheaper than OEM parts and often quicker to source.  

An industry leader in this sector, Synetiq has responded to this by increasing the number of parts it stocks to more than 300,000, which represents a 21% rise, while delivery times since January to September have come down by 24%. 

Tom said, “We’re using data to create an improved on-shelf inventory, which means the most in-demand parts are available for same-day despatch. We hope this encourages even more demand.” 

Green parts are not immune to inflationary pressures though, and have experienced double-digit prices rises, although Tom says there will still be a ‘clear differential’ in the price between green and OEM parts. 

Total loss 

Equally as significant in the recycling and salvage sector now is the growing number of total loss EVs. As EV sales continue to surge, their numbers are only going to increase. 

Tom said that while EVs represent just two per cent of Synetiq’s business today, and hybrids only four per cent, the company is already gearing up for change. 

He said, “In the vehicle salvage industry our job is to maximise the economic and environmental value of every vehicle we receive. We are working with partners to ensure that when an EV comes to the end of its life there are economic and environmentally sound channels for that vehicle to go down. While this is a challenge it’s also an opportunity and we’re seeking to collaborate more on projects to maximise the economic and environmental value of every vehicle we receive.” 

The Exclusive Motor Claims Conference was created in partnership with ILC’s Motor Corporate Partners: Activate Group, AkzoNobel, Autoglass, BHR Assist, CAPS, Carpenters Group, Copart, DAC Beachcroft, e2e, Entegral, Enterprise, Gemini ARC, GT Motive, Innovation Group, Kennedys, S&G Response, Solera Audatex, Synetiq and Thingco, and sponsored by headline partner Enterprise along with sponsors BHR Assist, Clearspeed, EDAM Group, LexisNexis Risk Solutions and Wiser Academy. 


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