WESTERN NEWS (703)
California, Arizona and Nevada
Autobody News Western print edition is mailed to 8,500 body shops monthly
The ASA AZ Committee for Consumer Fairness met recently with Director Germaine L. Marks of the Arizona Department of Insurance. The goal of the Committee is to ensure that consumers, as outlined in Title 20-461 of the Arizona Revised Statutes, are dealt with in a fair and ethical manner when processing insurance claims. Three issues were addressed with the Director:
• Types of replacement vehicles allowed in 3rd party claims as well as reimbursement for loss of use when the renting of a vehicle is not practical
• Direct billing of rentals in 3 rd party claims
• Underpayment of claims to vehicle owners as a result of poorly written insurance estimates
Rodney Pierini has been the President and CEO of the California Automotive Wholesalers Association (CAWA) for the past 17 years. The CAWA a non-profit trade association representing automotive aftermarket parts manufacturers, jobbers, warehouse distributors and retailers in California, Nevada, and Arizona. The organization was formed in 1955 and serves as the voice of the aftermarket parts industry in the West. We sat down with Pierini recently to discuss his organization and how its role affects and impacts the aftermarket/warehouse parts business within the collision industry in the three states he represents and also on a national level.
ABN: While representing your membership, how do your goals feed into the collision industry and how do you support your membership in these areas?
RP: The collision industry is a segment of the automotive aftermarket and as such we are in the business to promote and protect the industry, particularly, in the government affairs arena. Through legislative and regulatory alerts we keep our membership apprised of what is happening in government that will impact their business. Many of our members supply the collision industry with parts and products required to service customers in a qualitative and timely fashion, as well.
ABN: Why do you think business professional groups like the CAWA help the industries they serve and maybe cite some specific examples?
RP: As an automotive aftermarket trade association, CAWA was founded by members of the aftermarket industry to collectively speak as one voice, to promote training for themselves and their employees and to come together to improve their purchasing power in business service programs and products, e.g., business insurances.
ABN: You’ve been the President/CEO of the CAWA for many years and have seen the automotive parts industry change. What are the most significant changes your members have encountered?
RP: Consolidation and a more intense and sophisticated competitive business environment.
ABN: There’s an on-going push and shove when it comes to the aftermarket/recycled/re-manufactured parts industry vs. the manufacturer’s OE parts industry. Talk about how the aftermarket parts sector has become more efficient and responsive to changes within the market and how the quality is equal with OE parts, in many instances.
RP: In many cases, the major OE supplier is also manufacturing replacement parts in the aftermarket. These parts are as good as, if not better than the part that rolls off the assembly line (because of the improvement in manufacturing post assembly). Also, the remanufacturing segment is at the forefront of reduced emissions and a greener industry footprint in the automotive sector of today’s economy. In the government affairs process we continuously stress the quality of aftermarket replacement parts and their contribution to the overall economy and public good, i.e., the aftermarket gives the consumer the choice of where to purchase their parts and where to have their vehicles serviced.
ABN: If you wanted to give any feedback or advice to body shops or the manufacturers of aftermarket collision parts, what would you tell them?
RP: Look to the CAWA membership who offers quality collision parts and products. Also, see the hard parts manufacturers, manufacturer representatives, distributors and retailers as an ally in promoting and protecting the collision segment of the industry. This notion strengthens all segments of the industry.
ABN: What changes do you think will occur in the auto repair industry overall within the next 10-20 years that will impact the aftermarket parts industry?
RP: Parts generally are manufactured and re-manufactured to high quality standards today and will continue to improve as the industry adapts and changes to new technologies and the vehicles of the future. As technology becomes more sophisticated, we’ll see more repair specialization that will require the parts industry to remain nimble and responsive to this emerging trend. New vehicle technology will also add to the ever-changing future and the parts industry will adapt and , as always, find ways to respond to the yet unforeseen future of the automobile.
ABN: New legislative bills emerge all the time, and if passed, they can greatly affect your membership. Tell us how you play a role in staying on top of these proposed bills/laws and how you stay vigilant on these developments as they arise?
RP: Perhaps the greatest service we provide to the aftermarket industry is our legislative work. If CAWA were not in California, Nevada and Arizona, the industry would feel the void in uncontested intrusion through legislation and the regulatory powers of all levels of government. If the aftermarket voice is not heard in these state capitols, business owners would find themselves helpless to the governments’ presence in the conduct of daily business. CAWA monitors legislation, regulation and other government programs to assure our members and the industry are not ill served by these processes and the insatiable financial appetite of political operatives. And we promote legislation that supports our members and makes doing business more palatable in the face of government politicians and bureaucrats throughout the western states.
ABN: How have aftermarket/warehouse parts businesses figured out how to survive the collapse of 2008 and has it become a more competitive market as a result?
RP: There is no doubt that the market is more highly competitive today and has been so for several years. That’s one reason we still see parts warehouses and jobber stores going out of business. Those that are purchasing right, managing right, constantly monitoring revenues and expenditures and going to market in an efficient manner will continue to be successful. Those not up to the challenges of todays and tomorrow’s competitive environment will not be around in 5-10 years. Those that have survived have also created alliances with other aftermarket business to strengthen their buying power and position in the market place. There are many very competent and entrepreneurial owners and managers in this industry that adapt well and quickly to survive and stay competitive.
ABN: You’ve been working closely with other organizations and sponsored a joint series of meetings between the CAWA and ASCCA earlier this year. What is the purpose for this partnership and how has this alliance worked?
RP: As you know, ASCCA represents the mechanical repair garage owners in California. We have enjoyed a very rich and long termed relationship with them. We meet regularly with our lobbyists to assure we are speaking with one voice at the Capitol and, if not, we understand why and respect each other’s positions on issues. Parenthetically, being on opposite sides of an issue is very rare and virtually non-existent.
About four years ago, the boards of directors of both associations wanted to strengthen the relationship among the volunteer leaders of both groups. So, an Industry Summit was developed whereby the leaders and members of both associations would come together for a dialogue of contemporary issues affecting the industry and to better understand each segment of the industry. Since then it has developed into one of the premiere industry events in California. So much so, that more groups and associations want to co-sponsor the 2014 Industry Summit. The national Automotive Aftermarket Industry Association (AAIA), the California Automotive Business Coalition (CalABC), the California Automotive Teachers (CAT) will join with CAWA and ASCCA to sponsor next year’s Industry Summit.
ABN: In the collision industry, there has been a trend where MSOs (Multiple Shop Operators) are flourishing, while many small independent body shops are struggling to survive. It’s all about centralization and the convenience of dealing with one large entity rather than 10-15 smaller ones. Is this also happening in your industry?
RP: Yes, unfortunately the smaller distributors are, for the most part, struggling to survive. Unless they are specialized, in a niche market or geographically situated with less competition, they are challenged to continue. It’s not unlike other industry evolutions, however. When I think of all the past and future family business that did not or will not survive it makes me sad. My father had his own family business and I remember the nights when mom and dad struggled to “make ends meet”. Somehow, though, his business survived and he retired at 70 with no regrets. Like my father’s business was to the aircraft industry, aftermarket family businesses are important to this industry and there will be those that do survive and continue the tradition embodied within this great industry!
In a landmark and long-anticipated ruling, the California Supreme Court held Aug. 1 that policyholders can accuse insurance companies of false advertising and other violations of the state's extensive unfair competition law. The ruling finds insurers are not immune from unfair competition claims over this kind of conduct, resolving a split between courts on the question.
The case resolves a significant issue for insurers doing business in California in that they are potentially subject to a private action under the California Unfair Competition law, UCL (Cal. Bus. & Prof. Code §17200) for conduct that violates California's Unfair Insurance Practices Act (UIPA) (Cal. Ins. Code §790 et seq.).
The UCL is a consumer protection statute that broadly proscribes "any unlawful, unfair or fraudulent business act or practice." California's Unfair Competition Law requires that a plaintiff must show he or she "has suffered injury in fact and has lost money or property as a result of . . . unfair competition."
The Supreme Court thereby affirmed the Court of Appeal’s decision and concluded that “UCL claims may be based on claims handling practices, as long as they do not rest exclusively on UIPA violations.” The UIPA does not immunize insurers from UCL liability for conduct that violates other laws in addition to the UIPA.
Although relatively narrow, the ruling appears to pierce the shield that insurers have previously enjoyed from unfair competition, potentially inviting more class actions and creating a new avenue for plaintiffs to score injunctions, refunds of premiums and attorneys' fees. The ruling applies only to first party claims (those brought by the insured against the insurer.)
The Los Angeles Chapter of the California Autobody Association (LA-CAA) met June 19 with 110 members in attendance to view a special showcase of the new BMW i3 technology.
Guest speaker Tom Brizuela, body and paint technical team leader for BMW North America, introduced and reviewed the new BMW i3 platform that features carbon and aluminum composite technology. The meeting included an actual cutaway view of the BMW i3 platform to review the repair methodology crash worthiness of its new generation platform.
Brizuela began working on cars at age 15, with the dream of someday working for a car manufacturer. He served in U.S. Marines as a diesel/automotive technician and graduated from National Technical College in Los Angeles with an AS degree in Automotive Diagnosis and Repair.
Over the years, he worked at independent high-line and exotic auto body repair shops, restoration shops, and a Mercedes Benz dealership, and in 1988 as head paint technician for BMW of North America, Inc. at their Vehicle Processing Center in Oxnard, CA.
In 1990, Brizuela was promoted to the BMW Service Training Department and began developing BMW’s Body & Paint Service Technician Education Program (STEP). From 1991 to 1995, he was responsible for STEP training at the BMW Montvale New Jersey facility.
In 1995, Tom accepted a Body and Paint training/curriculum development position with Toyota Motor Sales, USA, at their Los Angeles corporate headquarters. During this time, he was promoted to Body Service Group Supervisor where he became responsible for Toyota and Lexus body and paint training development, technician certification, and training facility management.
In 2000, BMW of North America committed to build a new body and paint-training center in Oxnard, CA., to train entry-level technicians, and BMW dealer technicians. He saw this opportunity and returned to BMW as Body and Paint Technical Team Leader.
The meeting was held at Nick Alexander Los Angeles Imports in Huntington Park, CA.
A special tradeshow and training event was held June 26 in Cerritos, CA, for southern California shops. The unique tradeshow included an evening of training for advance vehicle technology repairs. Approximately 50 vendors and nearly 400 people attended. The event was also a fundraiser for California Autobody Association chapter president Linda Holcomb of the Glendale/Foothill chapter. Holcomb is currently in treatment for breast cancer and $8,500 in funds raised from this event will go towards her medical expenses.
Attendees included independent shops, MSOs, consolidators franchises, insurance field appraisers and OEMs representing Toyota, Audi, Porsche, and BMW.
The tradeshow was organized by industry leaders Toby Chess and Lillian Maimone. The tradeshow was held from 2-6 p.m., with dinner from 6-7 p.m., and OEM training sessions were held from 7-9 p.m. Vendors showcased their new products and services.
Representatives from the following companies were in attendance:
1st Class Collision of Murrieta
AP Auto Services
Auto B Craft Collision Center
Auto Center Auto Body
Auto Club of Southern California
Auto Collision Solutions
Automotive Equipment Solutions
Autopark Appearance Center
Axalta Coating Systems
Banh Collision Center
Bay cities Auto body
Beverly Hills Autobody Group
Bistagne Bros Body Shop
Blue Mountain Collision
Brotman Auto Body
California Autobody Association
California Marketing Group
CCC Information Services
Chaffey Auto Body
Class Auto Center/Spectrum Collision
Classic Collision Center
Craftsmen Auto Body
D J S Fabrications
Douglas Auto body
Dynamic Collision Centers
Eli's Collision Repairs
Fix Auto USA
Full Color Paint & Supplies
Global Collision Center
Grand National Auto Body
Greenleafs Auto Body
Greg's Auto Body
Greg's Collision Center
Honda World Body Shop
Inter-Industry Conference on Auto Collision Repair
J&L Body and Paint Shop
Jim & Jack's Collision Center
La Sierra University
M@M Paint & Body Sho
Marco's Collision Centers
Marina Auto Body
Markham Boling Collision
Martin Auto Color
Modern Auto Body
National Oak Distributors
North Ranch Bodycraft
Number One Auto Collision
Pacific Produx, Inc
Precision Auto Body
Pride Collision Centers, Inc.
Rancho Auto Body
Reliable Automotive Equipment
Reseda International Collision Center
Robaina Industries Inc./Eurocar Bench System
Same Day Auto Body and Paint
Santa Monica Ford
Santana's Auto Body
SATA Spray Equipment
Schiro's Collision Repairs
Selman Chevrolet Collision Center
Sherwin Williams Automotive Finishes
Specialty Body Works Inc.
State Farm Insurance
Valspar Automotive Refinish
Van Nuys/Cerritos Collision
VMS Auto Collision Center
See our print edition for photos.
Windshield repair technician Jacob Dufur, 22, has pled guilty to a felony charge of insurance fraud for submitting fraudulent work orders on windshield repairs, according to a statement from the District Attorney (DA) for Sacramento County, Calif.
An investigation by the California Department of Insurance’s Urban Auto Task Force uncovered the situation, DA Jan Scully said in the statement.
Dufur and an accomplice were employed as windshield repair technicians for a Chipio franchise that specialized in repairing small windshield cracks.
“Between May 7, 2011 and March 19, 2012, Dufur and an accomplice submitted 121 fraudulent work orders to the parent company, Chipio Inc., for payment on windshield repairs that neither of them had repaired,” according to the DA.
“After paying Dufur and his accomplice for the alleged cost of the windshield repairs, the parent company then submitted the work orders to the customers’ automobile insurance companies for payment,” the DA continued. “The franchise, the parent company and the insurance companies ended up paying $7,373 on the fraudulent work orders.”
Dufur faces a sentence of two years in state prison. Sentencing is set for July 24 in Sacramento County Superior Court.
An arrest warrant for insurance fraud has been issued for Dufur’s alleged accomplice, Jeremy Horstman.
California's Autobody Association (CAA) is asking shops to report any insurer violations of the new insurance regulations which took effect in March of this year.
Insurance Regulation Amended Section 2695.8 addresses aftermarket parts and procedures for adjusting shop estimates. The CAA has been working with the department to clarify the areas of aftermarket parts usage and claims settlement.
The CAA is now asking shops that are aware of non-compliance by an insurance company related to the new regulations, to submit an Complaint Form to the CDI.
1) Require the current insurer's warranty of aftermarket parts be expressly stated in the estimate of repair generated by the insurer;
2) Require an insurer to cease use of a part known to be non-compliant, and notify the part distributor within thirty (30) days.
3) Require an insurer to pay for an amount to repair the damaged vehicle to its pre-loss condition in a good and workmanlike manner, based upon the repair standards required by auto body repair shops licensed to the BAR.
4) Require an insurer to pay for the costs associated with returning a defective part and the cost to remove and replace the defective part with a compliant non-OEM part or an OEM part;
5) Insurers' estimates cannot deviate from the standards, costs, and/or guidelines provided by the estimating software used by the insurer.
The CAA notes that the section of the new regulations, dealing with the shop estimate and how insurers may make adjustments, is extremely important and shops need to know how this section specifically applies.
The section states that, if a claimant contends that necessary repairs will exceed the written estimate prepared the insurer, the insurer shall reasonably adjust the shop's estimate by either 1) providing the claimant with an edited copy of the shop estimate or, 2) providing a supplemental estimate based on the itemized copy of the shop estimate.
The section states, "The adjusted estimate shall identify the specific adjustment made to each item and the cost associated with each adjustment made to the claimant's shop's estimate."
In January the Association of California Insurance Companies (ACIC) had complained that the new regulations "essentially require insurers to pay whatever auto repair shops demand" and that insurers "no longer have the ability to negotiate the most effective, less costly repair."
Armand Feliciano, ACIC vice president, said in a published interview at the time, "Auto repairers have resorted to legislation via the regulatory process. We feel that some of these regulations that have been put into place are outside of what the CDI has the authority to do."
CAWA has retained Gary Conover as their California legislative advocate and are “pleased to have engaged him effective July 1, 2013,” according to CAWA President & CEO, Rodney Pierini.
Conover will join the legislative team and ensure CAWA’s continued presence and effectiveness in the government affairs process out west as the industry’s first line of defense. Pierini said, “Gary’s experience in the legislative and regulatory processes of the State will be very valuable to CAWA and will serve us well into the future.”
Conover has been legislative advocate for the Western United Dairymen for a number of years and has dealt with regulatory agencies , such as the California Air Resources Board (CARB), the Department of Toxic Substances Control (DTSC) and other State agencies that regulate business. Well known to legislators and regulators “He carriers an impeccable reputation at the Capitol and with the regulatory agencies,” Pierini noted. He also has a keen understanding of the automotive aftermarket industry through his relationship with the Certified Automotive Parts Association (CAPA).
Conover will be formally introduced to CAWA’s leadership at their meetings in September in San Diego.
Fix Auto recently announced the consolidation of their Orange County and San Diego administrative offices into a new San Diego-based headquarters. The move is a response to Fix Auto’s recent growth, as the new state-of-the-art facility will allow Fix Auto to best serve their growing membership through improved organizational efficiencies.
Last year, Gov. Jerry Brown signed a law allowing Google’s self-driving vehicles to operate in California.
Now, Sacramento officials are working to come up with a whole new set of rules of the road, the Sacramento Bee recently reported. Several questions need to be addressed: Will blind people be allowed to operate a self-driving car? Can kids drive themselves to soccer practice? Can the vehicles handle all types of weather? And, who is at fault when a robotic car crashes?
The Department of Motor Vehicles is tackling these and other issues in the latest scramble to keep up with technological advances.