Both Automanagement and Fleet Management Services are warning that bodyshops face being crippled by the spiralling costs of running an increasing number of courtesy vehicles at insurance companies' insistence. The warnings come as another well-established accident repair business, Knightsbridge Bodyshops, went into receivership despite steady turnover of more than a £1 million a year and a fleet of 90 courtesy cars.

Automanagement operations director David Thacker said: 'Presently bodyshops are paying very little every month for group A courtesy cars. This is possible because the manufacturers are making the cars available at very low cost and the interest rates used to fund courtesy cars are low. If either of these factors change, the cost of providing courtesy cars will go through the roof, with monthly rates rising by 50%. This could be enough to see the large number of bodyshops which make only a marginal profit finally go under.'

Fleet Management Services director, fleet services, Derick Perkins said such a scenario could drag down the most up-to-date repairers, leaving a rump of second or third rate operators. 'The relentless pressure on margins has meant that body repair shops have not only had to keep reducing their labour rates to win business, but also provide a courtesy car - the cost of which they have to bear themselves,' said Perkins. He said the only way to avoid increasing costs and declining quality was to buy in courtesy cars from a rental company and recover the expense from at-fault parties.