Four News Stories from 2014 that Will Impact the Entire Collision Repair Industry in 2015
Written by John Yoswick, Autobody News
Published December 21, 2014
As in most years, 2014 ended with some unfinished business for the collision repair industry. Here’s a look at four of the news stories from this part year that will likely continue to make headlines in the year ahead.
1. “We are requiring that you have the separation of the work area, but that can be (achieved) using curtains and proper filtration; it’s not going to require brick and mortar.”
Ford Motor Company’s Paul Massie was a featured speaker at many industry events in 2014 as they automaker prepared to roll-out its 2015 F-150 pick-up, the first high-volume aluminum-intensive vehicle. Ford and Massie worked last year to convince about 750 of its dealership body shops – and about 850 independent shops – to invest in the equipment and training to be certified by Ford to work on the vehicle. For shops with virtually no aluminum repair capabilities, that investment likely topped $50,000.
Will that investment begin to pay off in 2015 for those shops and the 1,400 more independent shops Ford hopes to get certified this year? Just as Ford is rolling the dice to some degree in making such a significant change to its best-selling vehicle, shops too should probably be thinking long-term about the investment needed to ramp up for aluminum repairs. One study predicts that even by the end of 2015, there may be only nine aluminum F-150s a month needing repairs in most major markets.
But other automakers are expected in 2015 to announce new aluminum vehicles coming. So while shops equipped to do aluminum work may see only a trickle of such work this year, they’re getting ready for what is likely more to come.
2. “(Shops are left in) the untenable position of either performing incomplete or substandard repairs and thus breaching their obligations to automotive owners to return vehicles to pre-accident condition, or performing labor and expending materials without proper compensation.”
That’s the description used in almost 20 lawsuits filed by shops in 17 states in 2014, accusing insurance companies of conspiring to manipulate labor rates and other shop charges to reduce costs. The suits allege that State Farm is at the heart of an effort by the insurers to suppress labor rates, to coerce shops into accepting less than actual or market costs for materials, to refuse to pay for a list of required procedures, and to punish non-compliant shops through steering.
The suits allege these actions constitute tortuous interference, unjust enrichment and violation of Sherman Act price-fixing and boycotting prohibitions. They seek unspecified damages for lost revenue and damages suffered by the shops, and treble damages and attorneys’ fees for the Sherman Act violations. They also seek an injunction prohibiting the insurers from “directing, advising or otherwise suggesting that any person or firm do business or refuse to do business” with any of the named shops; from using boycott, coercion or flat rate manuals to establish or control repair shop pricing; and from requiring the shops to participate in any parts procurement program.
As 2014 came to an end, most of the lawsuits were being consolidated into one U.S. District Court in Florida, a court whose first decision on them in 2015 could be whether to dismiss them or allow them to continue. If they are not dismissed, the judicial process could easily extend not only through 2015 but on into 2016.
3. “There’s probably some disruption and some unintended consequences in this process.”
Within 24 hours of surprising almost everybody by announcing in November that General Motors was discontinuing the publication of traditional list prices for crash parts, GM’s Kris Mayer had clearly heard a lot about those disruptions and unintended consequences. In less than a week, GM backed off a December 1 launch of the change, pushing it back into sometime in early 2015.
As described by GM, the new system means that parts prices will no longer be available within the estimating systems. Instead, shops will need to upload all estimates requiring prices for GM parts to MyPriceLink, which will then return the estimate back with current, competitive prices. Mayer said the prices returned by the system will be dynamic, based on “the market or a particular price and its competition.” Mayer said GM does not intend to “change margin structure for the people who are involved.”
What happens in 2015 may depend a little on what the real reason was for GM delaying the launch. Publicly, GM said that “workflow pressures on outside parties have brought to light enhanced solutions and the increased desire for integration opportunities,” necessitating the delay. In a memo to its dealers, GM said it had “uncovered a system issue that could negatively impact the performance of MyPriceLink across a number of industry work streams.” Some sources have said a major technology partner working with GM on the system pulled out based on push-back it received from shops and insurers.
In any case, whatever GM decides about launch of the system, it definitely will be among the major news stories in 2015.
4. “We really want to put this information into technician’s hands.”
I-CAR’s Jason Bartanen said the goal of I-CAR’s “Repairability Technical Support Portal,” launched back in August, is to get OEM repair procedures and vehicle information as close to technicians as the nearest computer, tablet or smartphone screen.
The portal (http://rts.i-car.com) is a hybrid of both a guide to what procedures each automaker makes available (on their own websites) and increasingly a source for the actual procedures themselves. In late 2014, for example, the portal posted 51 collision repair instruction sheets from Ford for the new F-150.
I-CAR promises to offer similar access to even more OEM information in 2015. The portal also enables a technician to submit an inquiry about OEM information he or she can’t locate, and the responses to those inquiries will be posted to the portal as well. That may make it an increasingly valuable resource in 2015 – and beyond.Also Heard Around the Industry in 2014
“If they want to return a part, you need to tell them, ‘You bought this through PartsTrader; you need to return it through the system,’ so you get credit for the return. If they don’t want to return it through the system, then I hate to say it, but they are probably up to no good.”
– PartsTrader’s Ken Weiss telling non-OEM parts distributors at a conference why the system will help vendors “avoid some of the games and will help bring down (parts) returns.”“We have most of the U.S. large cities or population areas covered. We’re not targeting to be in all 50 states. We’ve got the vast majority of Americans covered for what we need to do from an insurance perspective.”
– CARSTAR CEO David Byers on the company’s plans to work for growth in key markets (it now has about 440 franchises in 32 states) rather than specific states.“We’re giving you guys a lot of instructions. Yet I could walk into three-quarters of shops in the country and they’re not doing it right.”
– Rick Leos of Toyota, expressing frustration with what he sees as the industry’s failure to use the OEM collision repair procedures that do exist.“The shop didn’t sell a rental coverage policy, and they didn’t profit from the sale of that policy.”
– Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, on why it’s unfair for an insurer to expect a shop to pay the cost of a rental vehicle if cycle time for a job exceeds an unrealistic formula adopted by the insurer.