The deployment of AI technology in vehicles and on roads promises a reduction in the need for auto body shops in the nearest future. Also, the growing influence of OEMs in the auto body repair industry has created a culture shift, as repair shops now rely on promotions and referrals created by OEMs.
1. Artificial Intelligence (AI) Technology
- The development of smarter technology products for use in navigation and driver-assisted operations is expected to reduce the number of vehicle collisions that occur on roads in the nearest future. The auto body shop industry is mainly driven by the number of vehicle collisions that occur on the road. According to a recent report by GMInsights, collisions account for 40 percent of the auto body repair market.
- Artificial intelligence (AI) technologies are increasingly being deployed in cars and road management technologies. There will be over 150 million AI-powered automobiles on the road by year-end 2020, according to estimates from IHS. Also, 25 percent of all vehicles are expected to be driverless by 2030, further reducing the occurrence of collisions.
- Early reports on the adoption of AI in automobiles and on roads have demonstrated the potential of the technology to reduce collisions. The use of artificial intelligence on a Las Vegas highway resulted in a 17 percent decrease in the rate of vehicle crashes along the highway. The Nevada Department of Transportation applauded the result and stated that the state plans to further utilize AI in reducing collisions in the future.
- In another recent report, AI technology was found to help reduce road collisions by a much wider margin. Nauto, an AI-powered system consisting of sensor devices, computer vision, and cameras, helps vehicles predict and reduce possible collisions on the road. The AI software, which is integrated into vehicles, reduces on-road collision by up to 80 percent.
2. Increasing OEM Influence
- The increasing level of sophistication maintained by modern cars has created a “culture shift” in the auto body repair industry. Auto body shops have to constantly retool and retrain to meet up with the ever-changing technologies introduced by original equipment manufacturers (OEMs) every year.
- The majority (83 percent) of auto body repair shops are independent, family-owned businesses that do not possess the capital required to modernize the business to meet up with the growing demands of modern vehicles. The knowledge and material gaps are now being closed by OEMs through a variety of processes.
- A number of OEMs have recently begun partnering with auto shops to provide easier and cheaper access to training, technology, equipment, and jobs. In addition, OEMs are beginning to offer branded insurance services to cover damages to vehicle parts, allowing automakers greater influence over the repair process. According to a recent report by RDN, the majority of bodywork repairs will be managed by OEMs in the next 4–5 years, as against typical insurance firms. The article added that consumers are increasingly being directed to precertified body shops through mobile apps created by OEMs.
- Toyota and Tesla are examples of OEMs that have announced their own auto insurance services. Tesla announced its own OEM insurance service in late 2019, which plans to use vehicle telematics to determine vehicle insurance rates. Toyota also recently launched a similar service in 2020. The insurance services provide consumers with original OEM parts and are based on actual driving data of insured vehicles.