Toronto, Ontario — February 9, 2017 — This week’s Friday Fun looks into a case of counterfeit parts in Australia, how insurance premiums in Ireland are making it cheaper to rent a car than buy one, the coming age of automotive biometrics and much, much more!
– Australia’s having a bit of a problem with counterfeit parts, at least for one particular car. Car manufacturer Holden has issued a warning that “thousands” of counterfeit hoods for a certain car model could be dangerous. The hoods on Holden’s Commodore are aluminum, but a batch of counterfeit steel hoods made it into the Australian parts distribution network. The steel hoods are too heavy for the struts and that incited the company to issue a warning that the hoods, “… could unlatch, fly open and block the windscreen,” according to a local news report.
The carmaker tested more than 10 hoods and found their latches did not pass Holden standards and were at risk of flying open. “If this was original equipment we would absolutely have a recall,” according to a source quoted in the story. The head of the Australian car industry lobby group, the Federal Chamber of Automotive Industries, was quoted as saying, “We can’t quantify how many of these bonnets have been fitted but we believe it to be in the thousands … Part of the problem is that there is no way of tracing these parts and they have been used on crash repairs for years.” The story notes that the, “… counterfeit bonnets fit approximately 80,000 new Holden Commodores sold since 2014.”
According to an engineer from the company, “We understood there were counterfeit parts on the market and we wanted to test them to see how they performed. To the untrained eye it’s almost impossible to pick the difference between genuine and non-genuine.”
The hoods also had incorrect fastenings, while “critical components” were made of weaker metal. Apparently, the counterfeit or non-genuine, “… bonnets cost about half as much as the genuine item ($350 versus $700).” Over the past 12 months 500,000 counterfeit automotive parts from China and the Middle East have been seized by authorities. The story claims that, “The growing number of non-genuine and counterfeit parts has been traced back to the insurance industry, which has been finding new ways to cut crash repair costs … Many insurers put in their disclaimers that non-genuine car parts are allowed to be fitted during a repair, but few policy holders check the detail.”
– A story in the Irish press notes that insurance premiums in the country are, “… so high that it can be cheaper to rent a car on a regular basis” than to own and pay insurance. The story goes on to profile a driver who now rents a car a majority of the time. According to the story, “Apart from underlining the impact of soaring insurance costs and dismissing widely-held perceptions about renting a car … her experience also reflects a growing trend of people ‘using’ rather than owning their mode of transport.” The subject says she typically keeps her rental for five to seven days a week.
– Collision Week reports that the average length of a rental increased in Q4 2016. According to the latest research from Enterprise Rent-A-Car, “… the U.S. collision repair industry’s average length of rental increased five percent compared to 2015. The recent Length of Rental (LOR) trend continued in the Fourth Quarter of 2016 as the average increased to 12.5 days from 11.9, or 5.0 percent, in the Fourth Quarter of 2015.”
– Experts are warning parents not to use the process of “fronting” when it comes to their child’s car insurance. “Fronting” is a term for parents who insure a car in their own name, and have their kids name on the policy as an occasional driver, “but it’s the child who drives most or all of the time.” A report notes that, “… half of motorists – a whopping 49 per cent – said they felt there was nothing wrong with doing this to save money, according to a new study from AA Insurance. And experts say, with insurance premiums for young drivers so high, it’s increasingly tempting. But, actually, it’s fraud – and it can land you in hot water,” according to the story. A survey finds that, “49% of people thought that premiums for young drivers were a ‘rip-off’ and 38% said that high prices were pushing motorists in this group to hit the road without insurance.” The story goes on to note that, “Unfortunately drivers aged 17-to-20 are twice as likely to make an insurance claim as other drivers and their claims costs will be three times higher. Insurers look closely at their customers when they make a claim and there’s a good chance that any ‘fronting’ will be uncovered if parents do have to claim on the policy … If found out the policy may be invalid and the child may find themselves liable for all of the accident costs and the parent may find themselves in court and unable to get insurance in the future.”
– The North America automotive market is expected to grow at a compound annual rate of growth of 6.27 percent to the year 2020. According to a report, “Mexico will remain as the fastest growing market in North America. Its domestic market, which was playing second fiddle to the export market till now, will see a strong rate of growth as rising disposable incomes in Mexico will allow an increased number of population to purchase the cars being produced in the country. Canada will record the slowest overall growth till 2020. On account of improving relations between United States and Cuba, its market will gradually open over the next few years. This will give American car manufacturers massive opportunities as the population have been deprived of quality products for many years … Canada will grow the fastest in the Heavy Commercial Vehicle segment. Replacement demand fuelled by the change in emission standards, will fuel the growth in the HCV segment in Canada.” The report also notes that, “Aluminum trucks are in high demand from customers, especially the well aware ones who know the benefits of an aluminum construction. Although the sales figures might not show it, the demand of the F-150 is strong and the relatively disappointing figures are more a result of supply crunch than anything else.”
– As might be expected the, “… share of diesel [engines] among new passenger cars in Western Europe dropped last year,” according to a report by the European Automobile Manufacturers Association. The recent VW emissions scandal is presumably partly to blame. According to the report, “The share of diesel went from 52.1 percent to 49.9 percent in the 15 original EU member states … In the EU-15, the diesel share dropped in 13 countries, most sharply in the Netherlands, from 28.9 percent to 18.9 percent.”
– Another new technology wave in the auto industry: biometrics. A report in the venture funding industry finds that the use of biometric technologies is increasing as a way of improving security as well as driver identification and authentication. The report suggests that the market for biometric vehicle access systems will increase from its current, “… $442.7 million to reach $854.8 million by 2021.” Fingerprinting and facial recognition technology is being used for vehicle personalization and authentication. There are also iris-based technologies that authenticate the driver and facilitate custom security and convenience features.
– A report from California notes that “Seven people were arrested Tuesday in connection with an alleged auto insurance fraud scheme involving more than a half-million dollars in alleged fraudulent payouts to seven Coachella Valley body shops. The seven were among 40 people charged by the District Attorney’s Office for their alleged involvement in securing $560,492 in payouts, stemming from up to 40 false insurance claims made for car crashes that were either staged or never happened, according to D.A.’s spokesman …” One of the shops was Ferrari Auto Collision. Another 22 suspects are expected to surrender soon, while 11 remain at large, according to the report.
– A report on Automotive News notes that, “After years of forecasts that the Internet would revolutionize auto sales, auto industry leaders say dealerships are within a year or two of being able to complete an entire vehicle transaction online. That includes pitching finance and insurance products and getting electronic signatures on key documents.” Cox Automotive COO Mark O’Neil is quoted as saying, “Once you figure out it’s a good thing, it takes off like crazy. By the end of 2017, we are going to be leaving that, I’ll call it, ‘slow growth, bumpy, experiment-with-it phase,’ and we’re going to start with the very rapid part of growth.”
O’Neil predicts nearly ten percent of vehicle transactions could be online by 2019. According to the story, “Automakers and dealers are making significant investments in the technology to enable consumers to do most — and someday, all — of a vehicle purchase online. Those dealers who lag behind will have to catch up or face a fate similar to that of independent bookstores in the wake of Amazon, industry experts say.”
– A remarkable story out of the UK notes that, “Criminals have driven off with an estimated £3 million in engines,” from a Jaguar auto plant in an, “… astonishing film-style heist. “A suspected stolen truck was used to, “… steal the huge haul of expensive car parts in just a few minutes on Tuesday night. It is understood the audacious heist took place in full view of security cameras. Police are now hunting the gang behind the theft which insiders say has left management and staff ‘stunned’.” The total value of the stolen parts is about $4.93 million CAD.
– An article about the “Fred Beans Auto Group of Doylestown, PA,” finds that the namesake of the company now runs six body shops to service the dealerships that distribute 19 brands. The story finds that Beans wants to add more auto body shops to the chain. According to the reporter, “The collision repair business may not be as flashy as selling new cars, but income is steady.”
The story goes on to note that, “Fixed operations are an increasingly important source of income for dealerships. Collision centers, as body shops now are known, have not been a prominent part of dealerships’ fixed operations, but that is changing. As dealership groups add collision centers, they may discover that successfully running that portion of their business requires not only specific skills but also a good relationship with insurance companies. Mastering that requirement can make collision centers a profitable addition.”
An interesting stat in the story concerns business at the national chain of dealerships, Auto Nation. According to the story, “Collision center gross profits at Auto Nation grew from $10.3 million in 2014 to $12.5 million in 2015. In October, the dealership group headquartered in Fort Lauderdale, FL, announced it was adding 18 collision centers to its existing 70.” The Fred Beans group has signed a deal to partner with CARSTAR to manage the shops.
