Following on from the publication of its The UK Motor Claims and Body Repair Report 2024-25, Trend Tracker has been sharing predictions for 2025, a year that will deliver a raft of changes, some challenges but, promisingly, several opportunities for those willing to embrace the changes.
So, what’s on the horizon for 2025 in the vehicle repair and motor claims sector?
Trend Tracker predicts…
Further repair market consolidation
More sites for Steer? Two days into the new year the UK’s largest independent bodyshop group announced its acquisition of ARC Group’s five bodyshops in the South West and this won’t be the last. As Steve Thompson, Industry Insights Director, writes in the Trend Tracker Report:
“The Steer Group will continue to acquire and grow at speed, paying strong multiples for well-run, profitable businesses, the largest now in the market but still only a relatively small market share of vehicle repairs. This is a long way from a consolidated market and if you compare this to other business in the wider motor claims industry, there is a huge difference,” said Steve, referring to the windscreen, salvage and rental markets.
“Painful so it may appear for smaller groups and independent shops to see consolidation (which I get and appreciate), it is required to improve the economics of commercial contracts with clients and to lead innovation and investment. Not to mention raising the profile of our industry to attract more young people into the repair industry.”
Fluctuations in repair demand and repair capacity
As noted in the Trend Tracker report, insurance directed repair volumes had fallen 2023 to 2024 due to road safety, vehicle tech, the rise in the cost of insurance and customer decisions being made when damaging an ageing car parc. 2024 has finished on 1.66 million repairs, lower than all recent years, in fact lowest for a decade (with the exception of lockdown impact).
With the gradual decline in repair volume in 2024 coupled with the increase in capacity “the lines are closing as we enter 2025, with the balance between capacity and demand constantly changing,” said Paul Sell, Trend Tracker Director and author of The UK Motor Claims and Body Repair Report 2024-25.
M&A activity in the insurance sector
2024 ended with the news that Aviva had agreed to buy Direct Line for £3.7bn. Earlier in the month, we saw more insurer consolidation with Ageas set to acquire Saga’s insurance underwriting business, Acromas Insurance Co, for £65m. The Avia Direct Line acquisition is expected to complete in mid-2025 and Trend Tracker predicts more activity across the market.
“Much like the reasons the repair sector is consolidating, this consolidation is necessary for the economics of insurance to work, it is increasingly difficult for Insurers to underwrite motor insurance profitably; size and scale are vital,” said Paul.
In the Trend Tracker report we delve deep into global insurance market trends, look at the leading UK motor insurance companies by GWP 2022 vs 2023, and consider data from the ABI, Nimblefins and the Financial Ombudsman Service to consider a wider view of the market.
M&A activity in the vehicle manufacturer sector
2024 ended with the news that Honda and Nissan are considering a partnership to bring the brands together. Mainstay players such as VW and Stellantis have acquired multiple brands over the years. The two major issues facing the industry are a regulatory push to increase the volume of electric vehicles on the road when demand is uneven thanks to high prices, limited choice and range anxiety; as well as the threat posed by Chinese EV makers who can offer lower cost vehicles thanks to lower manufacturing costs.
Paul added, “a similar market driver of size and scale being vital for the investment in change and the economics of commercial contracts; with a price war brewing on electric vehicles – Tesla and Chinese manufacturers both slashing prices 2022-2023-2024 to fight for the number one market position.”
The bodyshop skills crisis continues
The IMI has predicted that by 2030 there will be a shortfall of 35,700 qualified technicians, something Dean Lander at Thatcham Research calls “the perfect storm: the challenge of wide-ranging technical change, and a demand for updated skills at a time when repair technician training and recruitment is in crisis” in the Trend Tracker Report.
“Whilst demand is low at the moment for vehicle repairs, it is essential that the consolidating market can attract and retain the talent needed to repair vehicles safely,” added Paul.
Understanding consumer behaviour
From intent to buy a new/used car, making choices on their insurance excesses to keep monthly premiums manageable, saving money on maintenance and repairs, and increased levels of insurance fraud, the unpredictable state of the UK’s economy and ever-present “cost of living crisis” – all will continue to drive challenging consumer behaviours that are vital to stay abreast of.
Trend Tracker commissioned some exclusive consumer research with data partners, Consumer Intelligence, covering a range of topics for the Report, with some conclusive views on decisions they make when damaging their vehicle without a third-party involved through to those not yet tempted to switch to an EV and why.
In summary, Paul said, “In 2024, the industry saw significant changes; gains in efficiency (thanks to the streamlined practices of 2023 and major investments), and new sites. These enhancements have expanded repair capacity, resulting in the shortest repair cycle times in many years. However, demand fell at almost the same pace of change.
“With more vehicles on the road, higher average vehicle age, and increased driving mileage, this decline in demand raised questions.
“Our investigations for the report delved into a range of macro factors influencing this trend, such as road safety measures, ADAS technology, historical car sales, shifts in the car parc, and evolving consumer behaviours. Additionally, we explored the influence of rising motor insurance prices and the insurance industry’s automated decision-making processes, often powered by AI, specifically in the area of vehicle write-offs.
“The industry is also adapting to new approaches, driven by heightened focus on corporate sustainability and rapid advancements in technology, affecting not only vehicles but also the broader motor insurance claims journey.
“While the motor insurance sector, from sales to claims, seeks improved ways to balance these goals, the car parc continues to evolve, now encompassing a wider range of manufacturers, models, and powertrains. This transformation, further fuelled by the ZEV mandate, is reshaping the new car sales landscape, with electric vehicles making inroads but still facing hurdles in consumer acceptance, as highlighted in the consumer research,” said Paul.
“Amidst these sweeping changes—societal, economic, technological, and environmental—the vehicle repair market continues to evolve rapidly. Success in this space depends on adapting to these shifts while balancing the need for investment in repair sector and managing insurance costs for consumers.”
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