Smart cars require smart decisions by the collision-repair market
Smart cars require smart decisions by the collision-repair market
Insight

Smart cars require smart decisions by the collision-repair market

The collision-repair market will soon need new reliable sources of profit as smarter cars create safer roads and fewer accidents.

“Smart” devices impact our daily lives, and modes of transportation are not immune. Smart phones led to an increase in the number of distracted drivers. According to the American Automobile Association (AAA), incidences of people reading a text or email while driving increased by nearly a third between 2011 and 2017.1 Rising and typing texts while driving also increased, and National Highway Traffic Safety Administration saw a correlation between smartphone adoption and the rise in car collisions. But that’s about to change with the integration of advanced driver-assistance systems to create smart(er) cars, leading to fewer collisions and a reduction in the collision-repair market.

Making cars smarter

Despite the total number of vehicle miles traveled (VMT) increasing by 1.2 percent between 2016 and 2017, 2017 saw a slight decrease in total vehicles collisions.2 Coupled with cell phone adoption flattening in 2018, analysts predict 2017 to be a potential tipping point for a reduction in crashes as the effects of safety technology start to overpower dangerous driving behaviors.


A calculation of collision trends, taking into account cars equipped with ADAS and the effectiveness of safety technology, reveals an estimated drop in collisions by 20 to 30 percent by the end of 2030. Autonomous MaaS cars with the highest level of precautions could drop collisions as much as 70 percent by 2040.

Getting smart with strategies for collision-repair businesses

Ultimately, the collision-repair market—body shops, auto repair shops and insurance companies—will start to contract in the mid-2020s and could be as much as 26 percent smaller by 2030. These forecast results will also affect the highly profitable replacement-part business of automotive original manufacturers (OEMs). 
 

In order to find success beyond ADAS integration and mitigate the risk to collision-parts businesses, OEMs must take proactive measures.

Auto manufactures should consider:

  • Identifying suppliers, dealers and regions where advanced safety technology will have the greatest impact.
  • Analyzing and anticipating the decline in collision types and the impact on the business.
  • Developing a plan to scale the collision parts business in response to the shrinking market.
  • Exploring M&A options to reduce the impact of the declining collisions-parts business.
  • Investigating additional sources for profit from new service and business models.

As smart cars become even smarter, the automotive manufactures will need to get smart, too, and take a pre-emptive approach to their business as ADAS begin to make autonomous transportation a reality. Though automotive OEMs have been investing in more sophisticated ADAS, eventually the increased safety of self-driving cars will have a negative effect upon the OEM collision-parts business, which accounts for up to 20 percent of their operating profit.

Be smart with preemptive actions        

KPMG can help transform your business to succeed during this time of transportation disruption. We’re currently assisting several OEMs and suppliers to address concerns regarding autonomous vehicle technologies, and our KPMG U.S. Manufacturing Institute Automotive Center helps industry experts to share knowledge, gain insight and collaborate on relevant issues in the automotive market.

Find out how your business can start forming smart strategies to embrace the growth of ADAS in Smarter cars, but more distracted drivers, too

1 AAA Traffic Safety Culture Index
2 National Highway Traffic Safety Administration, U.S. Depart of Transportation