Bodyshop profits hit by high tech vehicle costs

Increasing technology in vehicles is driving up the cost of repairs and impacting profitability a new report has found.

Bodyshop association ABP (Auto Body Professionals) Club has published its ’State of the Industry Report’ which revealed while the current average net hourly labour rate for UK bodyshops has increased average profits are down.

The research looked at the performance of 21 of the UK’s largest bodyshop repair companies with a combined turnover of £425 million. It found that the average labour rate for 2019 is £34.43 per hour, up from last year’s figure of £32.75.

While 32% of respondents to the ABP Club’s survey said they believe that £50 per hour was a fair rate for body repair shop labour only 3% of the sites surveyed said they were able to charge £50 plus. 

The average annual turnover per member of staff is now £100,730, however, the average pre-tax profit margin for these 21 bodyshop groups has fallen to 4.92% (from 6.68% last year) – the first fall since 2014.

Of the 21 bodyshops included in the research, 14 of the 21 saw their pre-tax profits fall in the last year. These 21 bodyshops made an average of £86 pre-tax profit on a £1,748 insurance job.

ABP Club, chairman David Cresswell commented: “After five years in a row of improving profit margins in the UK body repair industry, it is disappointing to see that our analysis has revealed a fall in the average profitability over the last year.

“The ever-increasing level of technology being fitted as standard to new cars means the bodyshops are continuing to make major investments in their businesses on the equipment and training needed to repair these cars safely.

“The insurance companies and accident management companies need to be aware of the situation as a 4.92% pre-tax profit margin - £86 pre-tax profit per job - is insufficient to fund the investment needed.”