The New Breed of Autoparts

Aluminum vehicles are everywhere. You don’t have to look very far to find them. You probably see one nearly every day driving to work. You may think there can’t be that many all-aluminum vehicles out there: after all, not many of us drive an Audi A8 or a Jaguar XJ sedan. Still, even though these vehicles are well known for being forerunners in aluminum construction, their production numbers don’t come anywhere near those of one unassuming vehicle — the humble Grumman Olson Mail delivery vehicle. Yes, that’s right: that box truck with the sporty Canada Post paint job is made from aluminum (aluminum exterior panels to be exact).Aluminum construction is an advantage in this case because it’s both lightweight and provides corrosion resistance. But repairing the slab-sided panels of these vehicles is more like aircraft repair, involving the riveting of a replacement sheet into place. People in the collision repair industry, repairers and insurers alike, will have to adapt to these repair methods, since these vehicles are becoming more prevalent on today’s roads. These repair methods include partial construction or, in several cases such as the Audi A8 and the Jaguar XJ, full construction.

As more of these vehicles hit the streets, collision repair facilities need to educate themselves on proper repair procedures for these vehicles in order to keep up with the changes and handle these types of repairs. And it’s not just shop personnel who need to expand their knowledge; insurers also need to be aware of different repair procedures, costs and repair cycle time considerations. Both shops and insurers are partners in the collision repair process, which must meet the expectations of customers demanding quality repairs.

Why aluminum?

Push is finally coming to shove. There’s no denying we like our cars and SUVs big, but we don’t like paying for poor mileage at the pump. Obviously we need a solution to this problem. This factor, coupled with a government requirement to increase mileage capabilities, has put automakers in a position to find an answer to lighten vehicles. Add to this the ‘green’ factor — 70% of aluminum used to construct today’s vehicles is obtained from recycled metal — and you’ve got a near-perfect solution in aluminum, which offers a combination of environmentally-sound construction, lower weight, rigidity and durability. The key here is to recognize this material is only “near-perfect”: some challenges come into play in terms of paint adhesion and collision repair. Despite this, automobile manufacturers of both European and American nameplates are taking notice of aluminum’s advantages.

NOT ONLY THE EXOTICS

European automakers BMW and Mercedes alone together produce more than 700,000 partial aluminum body structures annually. They account for two-thirds of the 570 million pounds of aluminum sheet imported worldwide in 2006 (double the amount shipped in 2002). Their European counterparts, Audi, Jaguar, Ferrari, Rolls Royce and Lotus are also key players, producing about 100,000 all-aluminum body vehicles combined.

American nameplate manufacturers are working to keep pace with European manufacturers, having realized the weight-saving benefits of aluminum. A Ford Motor Company spokesman, for example, has estimated an average of 250 pounds of aluminum is used in each vehicle now produced. It’s clear both American and European manufacturers are using aluminum more often, albeit in different capacities. European manufacturers may be leaders in terms of using innovative aluminum body panel applications, but 2006-model North American cars still exceed their European counterparts in aluminum use by almost 60 pounds per vehicle on average. North American manufacturers achieved this by using more aluminum-intensive engines and a higher percentage of automatic transmissions that are well-served by light aluminum casings.

DID INSURERS AND BODY SHOPS TAKE NOTICE?

When the newest-generation Jaguar XJ was introduced six years ago, its construction was even more advanced than that of

the Audi A8. Using state of the art Alcan Aluminum Vehicle Technology — a joining system that enables the production of a sheet-based aluminum structure similar to, but lighter and stiffer than, a conventional stamped structure — the world’s first volume- produced aluminum monocoque car established new standards in fuel efficiency, handling and safety. However, the collision repair industry as a whole didn’t seem sure aluminum usage would soar. Many collision repairers believed these vehicles were part of a limited, ultra-exotic group of vehicles. Given the low production numbers, the costs involved with becoming a certified cosmetic or structural collision repairer did not seem worth the investment.

Insurers shared the same hesitation. Logically, they felt that since the production of these vehicles would be limited, so too would the number they would have to insure. Their hesitation stemmed also from the tight manufacturer-and dealer-controlled repair processes that prohibited non-certified repair shops from performing repairs and wondered if that would add to repair costs.

ARE REPAIR COSTS FOR ALUMINUM HIGHER?

The simple answer? Yes, some are. Results of our recent comparison between the current aluminum models of the BMW 5 Series and the Jaguar XJ-Series and their steel predecessors, both with certified repair programs, point to this factor. Why was the Audi A8 excluded? The A8 was a completely new vehicle when it was introduced; since there was no previous comparable model made of steel and roughly the same class of vehicle, the Jaguar XJ-Series and the BMW 5 Series provided a more level playing field and more accurate comparison. Results of this comparison revealed some remarkable increases in costs, especially when looking at the costs of labor and parts along with paint and materials costs.

A Mitchell data study of repairable collision estimates found increases in average parts costs, as well as labor, additional items and paint costs, associated with aluminum since the introduction of each model.

Dramatic increases in the cost for average parts jump right out for the BMW. But they are even more striking for the Jaguar. The costs of purchasing the raw material and creating hardened aluminum body and structural parts are expensive; logically, it would be expected for these costs to be passed on in the retail price of collision parts. The cost of joining these certification programs, once nominated by the local Jaguar dealer, can be high for body shops. Some shops report spending between US$70,000 and US$100,000. It appears these costs are being passed on in the form of increased labor and other shop-influenced prices. Additional costs and paint and materials costs spiked as well, partially due to the additional procedures and special preparation needed for aluminum panel refinishing.

Is this dramatic increase also found on the more commonly driven cars moving toward the use aluminum bolts on panels? To find out, we looked at the restyled 2003-06 Lincoln Town Car with an aluminum hood. Ford indicates more than half of its cars have aluminum hoods now, and the manufacturer is moving towards the use of aluminum lift gates on selected SUVs. To illustrate the impact of an aluminum hood, we charted the vehicle model with the steel hood (noting the part price of each). We then charted what we found against the same information found for the Jaguar and BMW.

Overall, the parts and labor costs are high. But for this selected model, data show there was little appreciable change in the repair costs when the aluminum part was limited; in fact, the costs were lower with the aluminum panel car compared to the steel panel vehicle. It is important to note these are both luxury vehicles; in the case of the Lincoln and Jaguar, the manufacturers — up until the announced sale of Jaguar to Tata Motors — were owned by the same parent company, Ford Motor Com pany. Jaguar requires certified cosmetic repair and will not allow non-certified repairers to purchase aluminum collision parts for Jaguar. But every collision repairer can purchase an aluminum hood and repair a Lincoln vehicle.

Taking the question of whether aluminum increases the cost of repairs a step further, data indicate two trends: 1) the more aluminum in use, the higher the repair costs and 2) the more aluminum in use, the more control the vehicle manufacturer will have over the repair process.

So what should we take away from this study? Anytime there are dramatic changes in the repair costs from comparable models, it is important to look at your companies’ individual loss history with the vehicle to verify the premium properly reflects the underwriting risk.