Call it what you will. Growing pains. Challenges. Opportunities for innovation. The auto glass industry is going through a difficult time of changes.
“I think number one, that’s pretty obvious: the supply chain challenges,” says Ryan Mandell, director of performance consulting for Mitchell International, of the biggest challenges facing the auto glass industry. New vehicle assembly is affected by the supply chain, which also impacts car repair when it comes to parts availability and total-loss decisions. Mandell says the frequency of total-loss decisions is declining as used cars gain in value. “We’re actually above pre-COVID total loss repair coverage.”
Today’s auto glass shops, Mandell says, experienced lower volume for more than a year and lost employees due to the COVID-19 pandemic. But, business is returning to pre-COVID expectations. “There really is a situation where there’s more demand than supply,” he says. Just as demand returns, however, auto glass shops are struggling to find products, particularly because so much product comes from Asia. Closures due to a resurgence of COVID-19 in China are keeping supply chain challenges a concern in 2022. “There’s very little comparative replacements out here,” Mandell says of auto glass options. “It’s really a challenge to be able to get products and be competitive in price.” Finding aftermarket product is more difficult than Original equipment manufacturer (OEM).
As if the supply chain challenges weren’t enough, auto glass shops are also paying increased costs for materials. Mandell says cost of materials typically increases by 2% year over year. In 2021, the industry saw a 5.5% increase, and a 6.5% increase in 2022 so far. The cause is supply and demand. But also the cost to ship glass from Asia to North America, especially with increased gas prices in recent months. Mandell says that delays to unload containers is also a factor, as well as the fact manufacturing was disrupted during the COVID-19 pandemic lockdown in early 2020.
“This is a tough situation, and there’s a lot that’s out of control,” Mandell says. Auto glass shops, however, can get creative with supplies. They can rely on recycled parts to ensure supply. Mandell says right now there is no solution to the increase in costs of materials, and auto glass shops cannot control pricing, but they can control sourcing. “And that’s really where you get into servicing the customer the best,” he says. Sourcing gives shops an opportunity to find even better ways to serve customers so that they spend less time without their vehicles.
A View of the Future
“Unfortunately, I think it’s going to get worse before it gets better,” Mandell says of the supply chain issues and materials costs for the rest of 2022. A lot happening in the world right now is affecting the United States, especially the conflict between Russia and Ukraine. “I think we’re going to continue to see a ripple effect,” Mandell says of the conflict’s effects on American industry. He warns about what may happen between China and Taiwan. “I think we’re going to feel a lot more pain this year.”
However, Mandell sees economic situations improving for the auto glass industry in mid to late 2023. “Glass is now so much more than glass. It’s part of the safety system [of a vehicle],” he says.
On a Positive Note
Mandell says auto glass shops and technicians can expect some positives in the coming year. They can prepare themselves to be on the forefront of technology. “There’s a unique opportunity for those in the industry to be creative.” Don’t offer calibration services? Your business can make more money by offering calibration, especially if you offer mobile services.
Mandell ran an auto body shop in Seattle until going into auto recycling 10 years ago. “It’s a good time to be in the glass industry,” he says. Many factors are beyond a shop or technician’s control, but what they can focus on is what the industry will look like in five to six years. How will your business fit into that future? “Service is so important,” Mandell says. Shops and technicians can control the quality of service they offer and make an impact on the customer experience. “That’s how you set yourself apart.”