Issues, Trends in Automotive Glass ReplacementPosted 2/10/2005
By Levy Joffrion
Well, rocks are still hitting windshields, vehicles are still colliding, more cars than ever are on the road, and the amount of glass used in vehicles is ever-increasing, so the business is still there - but it's harder than ever to make a nickel.
According to Autoglass magazine, which is published by the National Glass Association, the amount of glass used in a car has been growing steadily at 2 percent to 3 percent a year - meaning that vehicles have 25 percent more glass than 20 years ago.
The magazine also reports:
Bigger-bodied vehicles, like SUVs, have more glass for auto technicians to replace. Manufacturers are also producing cars with bigger sunroofs.
Moreover, buyers want the vehicles they purchase to have more and more creature comforts, like tinted windows, integrated heaters, solar controls, laminated side- and back-lites to reduce noise, and integrated antennas.
Increasing popularity of electrochromic mirrors represents another growth trend for vehicles in 2005. They lessen the glare from car lights, a feature "buyers really like," says Pete Dishart, global product marketing manager of automotive glass OEM products with PPG Industries Inc. in Harmarville, Pa.
Also popular is the use of laminated glass in vehicles. According to Dishart, about 1 million pieces of laminated glass for automobile doors were sold in 2004, and "it will more than double that in 2005 - 2.5 million in the United States."
Laminated glass offers improved sound control, and many buyers like the idea of a quieter vehicle. Vehicle owners also want glass products to absorb more of the sun's ultraviolet rays and heat.
In summary, more glass than ever is being used in vehicles and the demand for new vehicles is still there. Mark Orcutt, vice president of flat-glass products for PPG Industries Inc. in Pittsburgh, says the automotive market has remained surprisingly resilient in the midst of a weak U.S. economy.
"Automakers continue to promote favorable interest rates to lure car buyers into the showrooms. Sales of 16.6 million units was predicted for 2004 - an increase over 2003. Therefore, any changes in demand for automotive glass should be negligible," says Orcutt.
In short, there's plenty of glass to be repaired or replaced. So what's the problem?
According to an analysis released in September 2004 by Frost & Sullivan, insurance companies have dramatically affected the prices of auto-glass replacements and repairs.
In the highly competitive auto-glass industry, installers, distributors and manufacturers tend to yield to the insurer's terms - placing immense pressure on their profit margins, says Kellenberger.
For example, there is a growing number of windshield repairs.
The National Glass Association has quoted Bill Bailey, president of the National Windshield Repair Association, as saying: "Insurers have begun to recognize repair as the most effective tool they have in reducing windshield claim costs. To insurers, the increased customer convenience of repair and reduced exposure to the risk of improperly replaced windshields are considerations as they build and execute programs to increase customer satisfaction and reduce costs." This trend has been building for years, says Bailey.
Other factors, including consolidation and competition, are also influencing the auto glass industry.
In discussing the effects of consolidation, AutoGlass magazine reports Kellenberger as saying:
"The automotive glass aftermarket has helped itself by offering fast and efficient service, setting very high standards for repair time and product availability. At the same time, the development of nationwide delivery networks curb competition and require massive capital investment and coordination and serve as deterrents for people looking to enter the industry.
"Auto-glass retailers and service providers are increasingly turning to online services such as online claims systems, on-site replacement services and online ordering to improve their marketability and facilitate sales."
According to Kellenberger, the Internet has assisted in streamlining the service-delivery process and improving the overall transparency of the automotive-glass aftermarket to the consumer. She says use of the Internet also forces installers to be more competitive.
In summary, there's a big market out there, and it's still possible to make a buck, but those profits are increasingly harder to come by.
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