Economic Forces Impacting Tow & Roadside Operators

May 23, 2019 | Luis Quiroga

Every year in the United States over 65 million drivers will experience a mechanical breakdown. This is equivalent to 1 in 3 drivers that will face a flat tire, dead battery, run out of fuel or may need to have their vehicle towed for repair.

To put this in context, the following chart shows that vehicle breakdowns occur more than 3 times more often than windshield repairs, non-drivable accidents and stolen vehicle incidents combined.

Roadside Events Are 3x More Prevalent Than Other Common Car Issues Combined

A breakdown can happen to just about anyone when they least expect it. Fortunately, most drivers have one form of roadside coverage or another through their auto insurer, new vehicle warranty or even a motor club subscription. Service providers (towing and roadside services operators) are the front line for these services and they can have a significant impact on the outcome and the driver experience during a breakdown. According to Agero research, a service provider has the potential to impact the net promotor score (NPS) by as much as 60 points when they miss their estimated time of arrival (ETA).

The service provider community is vital to the roadside assistance industry, and with this in mind, we believe it is important to create visibility of and to start a conversation about the underlying economic forces that are impacting service providers and the challenges they are facing in operating their businesses.

Agero has developed an industry-first economic analysis, the Service Provider Cost Index, that aims to quantify the inflationary forces that are impacting the service provider community, their businesses and their ability to deliver consistent quality and timely services to consumers. As outlined in the figure below, these forces have more than doubled since 2016.

Service Provider Cost Index, Version 1.0

Service Provider Cost Index Measures the Underlying Costs of Running a Roadside / Towing Business Using Gov’t Data

Our goal with the Service Provider Cost Index is to open-source the framework to:

(1)    Inform all stakeholders in the roadside industry (insurers, OEMS, motor-clubs, technology vendors, etc.)

(2)    Encourage industry participation and discussion about the challenges facing our industry and what can be done to maintain a healthy service provider community, and

(3)    Enhance the analysis on an ongoing basis through collective feedback and iteration

A brief video summary of the analysis is available here:

Contribute to the discussion

Service providers are at the front line of all roadside programs and the impact of the challenges they face can reverberate far and wide. It is critical for all industry stakeholders to be informed about and considerate of the current economic state of the towing industry. We encourage industry participants to join us in this discussion by contributing to this work and continuing to monitor these economic forces to ensure a healthy value chain for roadside assistance.

Please access the framework and data model for the Service Provider Cost Index and provide your input.

Additional Resources

Luis Quiroga | VP, Product Strategy & Marketing

Luis is a leader in Agero’s strategy and marketing organization who is responsible for shaping Agero’s product marketing, go-to-market strategy and growth initiatives. Luis has held leadership roles with Asurion, LG Electronics, Motorola and developed his strategy and operations skills with Deloitte Consulting. Luis holds an MBA and MEM from the Kellogg School of Management (Northwestern) and a B.S. in Mechanical Engineering from Carnegie Mellon University.