I’ve been getting some phone calls recently from shops concerned about materials reimbursement when refinishing vehicles with three- or four-stage finishes.
I thought I’d address this---and the subject of materials reimbursement in general---here.
First, it’s important to know all three estimating systems have formulas related to three-stage finishes. CCC Information Services and Mitchell International do not have formulas for four-stage. Audatex says it believes the three-stage formula should apply to a four-stage vehicle---that’s a whole conversation for another day.
As I outline any time I talk about negotiating payment for something, materials reimbursement comes down to four key questions: Is what you’re asking for required? Is it included? Is there a pre-determined time? And if not, what is it worth?
You can watch a new three-minute video I created with SCRS on those four questions here.
So let’s walk through those.
First, is added materials reimbursement required for three- and four-stage vehicles? One way to document the answer is yes is to check the OEM repair procedures. When you decode a VIN in Toyota’s Technical Information System, for example, it identifies the paint code, and if it’s a three or four-stage finish, it lists that as a special color.
But here’s another cool idea: You can check online for sales literature from the vehicle manufacturer related to that vehicle. I’ve found Honda and Toyota brochures, for example, that clearly show new car buyers who choose vehicles with certain colors pay a premium for those finishes.
It seems to me that rather than telling shops they won’t pay more for the necessary materials when specialty finishes are involved, insurance companies should be assessing premiums based on the paint code, given it takes more to refinish those vehicles.
Another possible source of negotiation help...