Enterprise Rent-A-Car has released its third quarter U.S. Period of Rental report.
Enterprise named it “striking,” highlighting the dramatic increase in both state and regional numbers.
Overall LOR for collision replacement-related rentals within the U.S. are up to typically 15.2 days, an increase of almost three full days when compared to this quarter a year ago.
That included replacement rentals for drivable and non-drivable repairs in addition to those for total loss claims.
Every state and also the District of Columbia saw a rise. Twenty-six states, plus DC, saw increases of 2 to 3 days while 19 states had increases of three full days or more. Alabama, Georgia, Louisiana and Oklahoma all had an increase exceeding 4 days annually.
“Repairers are reporting the greatest backlog in five years,” said John Yoswick, the editor of the CRASH Network newsletter. “On average, U.S. shops have work scheduled for the next 2.6 weeks, a full week longer than reported three months ago and in the 3rd quarter of 2022. Just one shop in 20 has reported no backlog, and 55 percent of shops report having two full weeks or more of labor scheduled in to the future.”
While the information suggests a clear transfer of the marketplace, it is important to observe that a lot of the data also points to elongated rental periods being away from control of the repair facility. This becomes especially noteworthy for repair centers who have agreed to performance criteria based on previously-established market averages. The baseline numbers in all states and regions are changing as a result of current events.
Supply chain delays play a big role within this.
“We track parts delivery days by part type and by vehicle make for more than 1.7 million transactions for all part types and also have seen increases,” said Greg Horn, PartsTrader's Chief Innovation Officer. “Interestingly, the amount of quotes has always been steady, indicating there are parts available, but they might have to come from a different warehouse or location.
“We have experienced an increase of just one.Three days for both new OEM and aftermarket parts when compared with Q3 2022. While that may be the highest increase we've seen, it does not tell the whole story. By looking at the median delivery days and using two standard deviations as a stride, we can better capture the outcome of person part delays. We see that OEM parts, in particular for Japanese and Korean makes, have higher delays than for domestic auto makers.
“OEMs are seeing increasing backordered parts, in addition to longer deliveries, because they fulfill using their company parts distribution centers. The aftermarket parts inventory is also lower than it has been, and that is further complicated by the historically large number of shipping containers at the Port of La waiting to become unloaded in the cargo ship, and never capable of being loaded on trucks to be delivered to parts warehouses.”
Other allies according to the report are talent shortages as Seniors retire and much less collision repair technicians are entering the workforce. There also is a skills shortages due to today's rapid pace of car innovation and connectivity that means technicians not only need to be experts in car repair, but additionally technology and engineering.
Then there is the added challenge of so few new vehicles.
“These parts delays and backorders are contributing to a rise in vehicles being declared a fiscal total loss, and also the lack of accessibility to replacement vehicles coupled with record high costs are most likely contributors to period of rental increases,” Horn said.