Collision Repair Magazine
IBIS Report: China's collision repair industry
News - Collision Repair
Friday, 20 January 2012 16:51

By W. Mike Dineen
Toronto, Ontario -- January 20, 2012 -- It may surprise you to know that the evolution of the Chinese collision repair industry is much different than that of the Canadian. Compared to the well-established systems of regulation, training and recycling of the Canadian industry, China is still in its infancy. But perhaps evolution isn’t the best word to describe the Chinese auto industry, since evolution is a slow process that occurs over a generally lengthy period of time. 

The IBIS (International Bodyshop Industry Symposium) Global Focus Report on China 2011 provides an interesting look into the problematic Chinese collision repair industry. Up until 1990, the majority of vehicles on Chinese roads were taxis, buses, trucks and coaches. A decade later, at the beginning of the new millennium, there were approximately 1 million personal passenger vehicles using Chinese roads. According to the Xinhau News Agency, that number has skyrocketed exponentially to 85 million at present. By estimates in the IBIS report, China’s roads will be flooded by 450 million personal vehicles by the year 2040. 

Researcher Karen Fierst of KerenOr Consultants attributes the shift in the Chinese automotive industry to new government policies. “The government wanted to oil its economic gears and build an automotive industry,” Fierst explains, “so approximately 15 years ago they started to allow multinationals into the country to facilitate technology transfer.” So overwhelming has the boom in auto sales been that the city of Beijing has recently imposed a cap on car sales. Up until 2010, Beijing car sales topped 80,000 each month—but the new cap limits those sales to 20,000 monthly. “When you're in a city in China today, based on our traditional conception of ‘Communism,’ it's hard to believe that it’s a communist country. In the densely populated urban areas, there is a growing and thriving middle class,” Fierst says in regard to the intense boom in personal vehicle ownership.

The IBIS report cites the inexperience of Chinese drivers who are newly licensed as a significant factor contributing to more vehicles accidents. Desmond Chan, president of Wedge Clamp, who has dealings in the Chinese industry, notes that “the majority of the population has not driven before and drivers treat the rules of the road as if they are walking or cycling.” According to sources in the IBIS report, between 60 percent and 90 percent of Chinese vehicles are involved in collisions on an annual basis. To further the problem, the majority of vehicles are four years old or less and still under warranty. As such, it is a requirement that they be repaired in 4S facilities.

Of China’s approximately 100,000 repair facility’s, only 15,000 are 4S (in China car dealerships are called 4S) and thus qualified to make repairs on under warranty vehicles like Mercedes-Benz, Acura and Honda. The other 85,000 collision repair facilities were originally used to repair the country’s taxi fleet and buses. As the auto industry exploded over the past two decades, these facilities were left behind with outdated equipment and little to no training. Counterfeit OEM parts have become rampant in China as a result of the lack of access to 4S facilities.

Along with the inexperience of China’s new fleet of drivers, trends demonstrate that most Chinese drivers choose vehicles based on aesthetic rather than safety. At the most recent IBIS (International Bodyshop Industry Symposium), Karen Fierst reported having difficulty explaining the importance of crash testing after repair vehicles to Chinese engineers. “In China, there isn’t attention paid to the safety ramifications associated with a post-collision repaired vehicle,” explains Fierst, “almost every vehicle is repaired.”

Obtaining accurate, reliable information on the Chinese collision repair industry has posed its own set of problems. Since the vast majority of facilities do not have computers, insurance companies are the only sources generating estimates in the industry. However, many of those companies are under-trained and have no access to repair data. The only source of repair data remains with the manufacturers, the 4S facilities being the only recipients of that data. “Even the car dealerships, called 4S stores, are not yet using shop or management software that is as sophisticated as software available in the West—but they are fast catching up,” says Chan. As a result of the lack of information within China, foreign information providers have attempted to gain access to the market. As of 2010, a new company has emerged whose focus will remain entirely on training the country’s estimators.

According to the IBIS report, the future of the Chinese collision repair industry has a lot of unknowns. As vehicle warranties begin to expire, not a lot is known about how these vehicles will receive the maintenance they require. The used car market is virtually non-existent at present in China, and there is little information about its future development. As it stands at present, the majority of China’s facilities are outdated and lack training, while the small amount of 4S shops are top of the line. Questions about the emergence of “middle of the road” collision repair facilities also weighs on the minds of those invested in the industry. 

Where customer service is tantamount in the competitive Canadian collision repair market, it would seem that in China it has very low priority. Vehicle repair wait times are indefinite, and neither the facilities nor insurance companies provide courtesy vehicles. Customers remain waiting at the mercy of already overworked facilities. 


IBIS Report: China's collision repair industry
Last Updated on Wednesday, 25 January 2012 13:33


0 #1 Andrew Marsh 2012-01-23 22:31 China has some important trading differences compared to other parts of the the world. Firstly, copyright within China is respected, but copyright from foreign imported products is not. Secondly, most Chinese domestic manufacturers have no idea about product support, so if a vehicle is damaged they offer a new replacement. Repair is far, far off the agenda. In time - probably soon - China will realise the issue is doing theor economy needless harm. When this is realised we will see the vehicle repair and support sector blossom.
Best regards, Andrew Marsh (AutoIndustryIn
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