Colonnade Advisors Releases Whitepaper Covering Extended Warranty Claims Sector
Chicago-based firm is a leader in automotive related mergers and acquisition space
Colonnade Advisors recently released a report addressing the of the auto inspection and warranty claims management sector. Colonnade is a market leader in the Automotive F&I mergers and acquisition, recently assisting in the sale of Smart AutoCare to Tiptree, Inc.
The auto inspection and warranty claims management sector presents an intriguing opportunity for investors interested in the automotive sector without bearing the weight of the typical macroeconomic trends that impact the new vehicle industry.
The whitepaper addresses the post-pandemic demand for auto inspection and warranty claims management services. Although new auto sales in 2020 are predicted to decline by more than 25%, "as the economy gets back to work," the report says, "the frequency of motor vehicle accidents will rise, and mechanical breakdowns will return to pre-crisis levels."
According to the report, the auto inspection and warranty claims management industry has four main components:
• Accident investigation
• Warranty inspection and management
• Pre-purchase vehicle inspection
• Floorplan audit
Customers of the industry include:
• Insurance companies
• F&I product administrators
• Auction houses
• Private auto buyers and sellers
"The auto inspection and warranty claims management industry has favorable dynamics, including the trend toward outsourcing, the increasing severity and cost of accidents and warranty claims, the expansion of the vehicle service contract market, and the increase in sales of private and certified pre-owned vehicles. Companies in this sector generally have high levels of recurring revenue or multi-year contracts. Technology is playing an important role in transforming what was once a cottage industry of local and regional inspectors into a national opportunity of scale.
"The auto inspection and warranty claims management sector presents an intriguing opportunity for investors interested in the automotive sector without bearing the weight of the typical macroeconomic trends that impact the new vehicle industry. Numerous companies of size exist, but few acquisitions have occurred in this sector to date. We expect significant M&A activity over the next several years."
Read more at Colonnade Advisors