TMCnet News
New Research Points to Economic Challenges Impacting the North American Towing IndustryMEDFORD, Mass., May 23, 2019 (GLOBE NEWSWIRE) -- Agero, Inc., a market leader in software-enabled driver assistance services for automotive manufacturers and insurance providers in North America, today released an industry-first public framework and research paper assessing the significant economic and business challenges impacting the towing industry, and calling for industry-wide discussion and action. The Service Provider Cost Index leverages published government economic data to quantify and understand dramatic business cost escalation for the towing and road services industry, reflecting inflation from 3.28% per year between 2012 through 2015 to 7.36% starting in 2016. An accompanying research paper, developed in conjunction with the Towing and Recovery Association of America, Inc.® (TRAA), further details the cost framework, highlighting the specific issues facing towing operators. Approximately 65 million Americans, or 1 in 3 drivers, will experience a breakdown each year. These stranded motorists turn to a variety of roadside programs delivered through automotive OEMs, insurers, credit card or wireless providers and motor clubs for assistance, all of which depend on towing and related service providers for support. Approximately 57% of consumers report that next to price, the roadside assistance experience is the most important factor they consider when renewing auto insurance policies. In addition, automotive manufacturers are increasingly using value-added services like roadside assistance to maintain driver satisfaction scores, increase differentiation and support peripheral revenue streams, such as repairs. Demand for roadside services continues to rise as both miles traveled and average vehicle age climb. But rising costs across labor, fuel, commercial insurance and other expenses are pushing service providers to a breaking point, such that 40% of providers believe that without changes, many towing businesses will not survive the next five years. Compounding matters are significant personal risk and emerging labor competition from ridesharing and delivery companies. “Service providers are the single most important variable in a positive roadside experience,” notes Jeff Blecher, Chief Strategy Officer at Agero. “This is a critical role impacting bothconsumer safety and satisfaction, yet these providers are experiencing increasing economic pressures. It’s incumbent upon the industry to both recognize and understand this new reality so we can better act to keep the market healthy – and keep consumers satisfied.” Service providers are operating in a challenging environment of increasing demand, higher customer expectations, difficult hours and conditions, escalating costs and threats to retention and hiring. To better understand these issues, Agero conducted a quantitative analysis of service provider costs reflecting relevant data from the U.S. Bureau of Labor Statistics and developed an open and public framework to track fluctuations across more than a dozen factors. The model, supported by additional research in Agero’s co-developed paper with TRAA, identifies a 2016 inflection point where costs significantly accelerated compared to historical rates – and well outpaced both the general rate of inflation and any changes to per-incident compensation. Key findings include:
“For many industries, there is strategic value in providing roadside assistance, from increasing customer engagement and loyalty to bolstering additional sources of revenue. The current economic environment is creating pressure on the provider community that is detrimental to the value of the service,” said Blecher. “A fundamental shift in economics is necessary, but change cannot be enacted in a silo. Industry-wide discussion and collaboration is needed.” “Experiencing economic challenges, as our members do, and understanding the underlying factors are two different things,” notes Elizabeth Martineau-Dupuis, Director of Education at TRAA. “We’re grateful for Agero’s work creating a rigorous and transparent model of the conditions we’re seeing in towing and recovery, and look forward to input and conversation across the industry on the best way forward.” The Service Provider Cost Index, as well as the white paper developed with TRAA to put these costs in a larger industry context, are available for download and comment. Public contribution from industry members, researchers and others is welcomed. About Agero Media Contact:
|
