Negotiations between Manitoba Public Insurance (MPI) and the associations representing the body shops have broken down. In a press release on March 15 Manitoba Public Insurance announced, “MPI has determined that negotiations cannot proceed and, under the terms in the existing agreement, has provided a written 90-day notice terminating the current industry agreement with the automotive trades, including existing repair rates, effective June 13, 2021.”
This breakdown in negotiations has brought more uncertainty to both vehicle repair businesses and their customers. MPI states, “After an extensive review of labour rates and other compensation for the repair industry across Canada, the Corporation proposed a compensation package with increases to labour and material rates as well as adjustments to several estimating standards that would result in additional compensation to the trade. MPI believes that the proposal was fiscally responsible for our customers.”
The Automotive Trades Association of Manitoba, and the Manitoba Motor Dealers Association are the organizations that had been in negotiations with MPI. They recently hired BDO Canada LLP, to completean analysis of the profitability of the Manitoba auto body repair industry.
This analysis showed that in 2019, the labour rate percent change was 0% and the Consumer Price Index (CPI) percent change was 2.3%. Since 2016, the discrepancy between these two metrics has resulted in the labour rate lagging CPI by over 4.1%. This reduction in purchasing power is having an effect on profitability, as prices for paint and other supplies continue to rise, while rates allowed for these items have been frozen.
During the 90-day notice period, customers with outstanding claims or repairs in progress will continue to have the ability to have their vehicles repaired at any accredited repair facility.