John Yoswick is a freelance automotive writer based in Portland, Oregon, who has been writing about the collision industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).
He can be contacted at firstname.lastname@example.org
20 Years Ago In The Collision Repair Industry (October 1994)
Responding to complaints from the collision repair industry, ADP will be pulling the plug on a program that allowed dealers to promote discount retail parts prices using ADP’s “Parts Exchange New” system.
“As a result of the issues that responsible parties of the industry brought to our attention, we will be taking discounted OEs off the ‘Parts Exchange New’,” ADP’s Rick Tuuri announced at the Collision Industry Conference (CIC) held in Nashville, TN. “They will be off the system by January 1, 1995. I want to emphasize that this is no reflection on the way the discounted OEs themselves are doing business.”
Recent government data (see paragraph below) show that for a 5-year period ending early this year, the overall cost of autobody repair barely exceeded inflation over that same period (with the price of auto insurance rising even more during that period).
If the collision repair industry does not get clearly focused on what the mission is, it will be doomed to dance to whatever tune the insurance industry wants. Probably something like that old AC/DC hit, “Highway to Hell.”
PartsTrader proposed state limits on use of non-OEM parts, and challenging the automakers’ patent designs on crash parts were all being discussed when non-OEM parts manufacturers and distributors met recently in Austin, Texas.
The Automotive Body Parts Association (ABPA) allowed only members in the room during discussion at its convention of the association’s pending lawsuit challenging the validity of six of Ford’s design patents on collision repair parts. But proposed federal legislation that would reduce how long automakers can use design patents to prevent other companies from producing replacement crash parts was among the topics discussed at the event by Louisiana tax lawyer Cassie Felder, who is running for Congress.
Felder, a Republican who believes in tax reform and repealing the Affordable Care Act, told attendees at the ABPA event that having grown up in her parent’s Baton Rouge business, Felder’s Collision Parts, she has a good understanding of the issues facing the non-OEM parts industry.
“This industry hasn’t had a real friend in Congress,” Felder said. “For many of you who have been to the legislature, who’ve been up there trying to get some of these bills passed, fighting against some of the things that affect you, there aren’t a lot of real friends to the industry there, not a lot of people there who really understand this industry. And so it’s really important for you to pay attention to this race, and I’m asking for your support in this race.”
One of the issues Felder mentioned she would go to Congress understanding is the “PARTS Act,” an ABPA-supported bill that would slash automaker design patent protection from 14 years to just 30 months.
Felder also discussed the “devastating” impact that automaker parts price-matching programs have had on her parent’s business and others in the non-OEM parts industry. She said she drafted the lawsuit that Felder’s Collision Parts filed in 2012 against General Motors, alleging that General Motor’s “Bump the Competition” price-matching program was an illegal predatory pricing scheme designed to drive non-OEM parts distributors out of business. (A U.S. District Court judge dismissed the case in April, but Felder’s Collision Parts has filed an appeal of that decision. See Autobody News June 2014 issue.)
Felder asked ABPA members to support her campaign to represent Louisiana’s 6th Congressional District. She is seeking financial contributions (www.cassiefelder.com) both from individuals and through business political action committees.
“Obviously there are a lot of issues that are going to be affecting my district,” Felder said. “But this industry has been so important to me and my family, that this was absolutely one of the industries I wanted to target.”
State legislation related to non-OEM parts was also the focus of another presentation at the ABPA convention in Austin. Ray Colas, director of government affairs for LKQ Corporation, told the non-OEM parts suppliers that the body shop industry seems reinvigorated.
“PartsTrader is something that has motivated them, not only through legislation but also litigation,” Colas said. “With that momentum, they’re throwing us under the bus as well.”
In the past, Colas said, most of the legislative challenges to aftermarket parts came from automakers.
“But the body shops have really taken it over,” he said. “Now the automakers are supporting the body shop association initiatives.”
Colas talked about a number of bills his company successfully lobbied against, including one introduced in Maryland last year that would have prohibited the manufacture, sale or installation of a counterfeit or substandard airbag.
“Some of you may wonder: Why are we concerned about airbags? There are no aftermarket airbags,” Colas said. “Well, that’s true today. That doesn’t mean that in the future they may not exist. So we want to protect that market today in case in the future there is an opportunity for that. We don’t want to be restricted from selling any alternative part.”
Colas said after a “long, drawn-out fight” and “a very, very close call,” aftermarket parts supporters were able to convince Maryland lawmakers this year not to pass a bill that would require insurers to pay for new OEM parts for repairs to vehicles manufactured within the previous three years.
“Jordan Hendler (executive director of the Washington Metropolitan Auto Body Association, which backed the Maryland legislation) has done a great job educating these legislators, meeting with them year after year,” Colas said. “It’s something we really want to keep an eye on.”
A lawmaker in Iowa also needed to be “re-educated” about the aftermarket parts industry, Colas said, after he introduced at the behest of body shops a bill that included a provision similar to the one in Maryland. Colas said that lawmaker’s district includes an LKQ facility.
“We got there and told him, ‘Hey, you’re really going to affect our business,’ ” Colas said. “This is how many jobs we have in your district.”
Colas said the Iowa bill also included provisions prohibiting an insurer from recommending a shop without also telling the customer they aren’t required to use a recommended shop, and from requiring a shop “to use a specific vendor or process for the procurement of parts or other materials.” Colas said those provisions will likely be included in a future piece of legislation.
“There will be a bill that’s reintroduced, but it will not include the aftermarket parts restriction,” Colas said.
Ken Weiss, director of business development for PartsTrader, also spoke at the ABPA convention, just days after his company completed national roll-out of its system, now reportedly used by more than 7,500 body shops and 8.500 parts suppliers. Weiss said that by the end of this past April, parts lists from more than 700,000 estimates had been put out for quote through PartsTrader, and more than 1.25 million orders totaling more than $450 million had been placed through the system.
Weiss said although State Farm “is a little bit restrictive with regard to aftermarket parts,” he expects non-OEM parts orders through the system to increase as shops use PartsTrader for non-State Farm jobs.
He cited a number of benefits that PartsTrader offers suppliers, including “increased sales opportunities and fewer parts returns.” However not everyone at the ABPA convention agreed with Weiss on this last point.
“We have not noticed a lower return rate on (parts ordered through) PartsTrader versus phone calls versus faxes versus anything,” Bob Petty of Collins Collision Products in Loveland, CO, told Weiss. “Our return rate is higher than it’s ever been in the history of the company.”
Petty also asked if returned parts are taken into account in the fees PartsTrader charges to suppliers, which are based on average monthly sales. Weiss said they are, provided that parts purchased through the PartsTrader system are also returned though the system.
“We all know the games today where repairers will buy multiple parts, sometimes just to get a receipt that they can show somebody else, and then return the part,” Weiss said. “With the PartsTrader system, you can only buy a part once unless you return it. Then you can buy the part again from another supplier. So we think that will avoid some of the games and will help bring down the returns.”
Weiss was asked if there’s a way for a shop to bypass the system to return a part.
“Only if you let them,” Weiss told the parts distributors. “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.”
Looking for tips, tools and resources to help your business, defend your positions or do your part for the industry? Here’s a collection of links to sites, documents and information you may find interesting and useful.
Retired Automotive Service Association (ASA) lobbyist Don Randall told the group that current antitrust laws are strangling collision repairers by giving insurers an unfair advantage to meet and set policy language and contract definitions. In essence, he said, insurers have the ability to set market prices while collision repairers do not.
Much of the agenda at the Collision Industry Conference (CIC) held in Palm Springs, Calif., in January was devoted to CIC’s biennial planning session, where participants discuss what topics CIC committees will take on in the coming year or two. But the quarterly meeting also included a number of informational sessions for attendees.
I-CAR CEO John VanAlstyne, for example, offered an update on not only his organization’s training activities, but also its efforts to improve the availability and accessibility of OEM technical information for collision repairers. He said that I-CAR had budgeted over $1 million on that ongoing project over two years, and that the website portal I-CAR is developing to improve access to OEM technical information is being beta-tested and will launch soon.
He said I-CAR also has worked to make its training more affordable. For the fourth year in a row, he said, there would be no price increase for training for Gold Class businesses, and pricing has been reduced for I-CAR newly-renamed “Welding Testing and Certification.” The welding program discounts increase based on the number of students a company is registering, part of I-CAR’s effort to get training to more technicians, VanAlstyne said.
He said I-CAR soon will be rolling out aluminum welding and other training courses specific to Ford’s 2015 F-150 pick-up, which hits showrooms late this year.
About half of the I-CAR training that students choose to take is now online, up from just 3 percent three years ago, VanAlstyne said. That and the expanded focus on being a source of technical information beyond training is part of I-CAR’s shift in scope.
“We’re working to make information on-demand and accessible, so people get the training and information they need when they need it,” he said.
Also during the meeting, CIC committees offered a preview of some of what they hope to address at upcoming meetings. Steve Regan, chairman of the Governmental Committee, said his committee will have a presentation on the topic of “most-favored nation” clauses at the next CIC, being held April 9–10 in Portland, OR. The clauses are often found in insurer direct repair program agreements, requiring participating shops to give the insurer the best pricing offered to any other. Several states have now banned the clauses in health insurance contracts, and the Automotive Service Association has urged the U.S. Department of Justice to review most-favored nation clauses in DRP contracts.
Regan said his committee is also planning a presentation for later this year on legal and liability issues related to autonomous (or “self-driving”) cars.
Gene Lopez, chairman of CIC’s Education and Training Committee, said his committee is working on presentations related to coaching and developing mentoring and peer-to-peer training relationships within an organization.
CIC Chairman George Avery led a discussion about the future of CIC’s Data Privacy issue, which may be renamed to incorporate a broader scope of “information technology” issues. There appeared to be general consensus the committee is still needed. Several attendees noted the recent controversy when a Ford marketing executive said the automaker tracks customers through vehicle GPS and other technology—only to later retract the statement. A recent Government Accountability Office (GAO) report found that automakers and navigation system providers gather a lot of data on where drivers have been, and there are no standards for how long the data is retained nor a way for drivers to ask that their data be destroyed. Avery said he would be seeking a new chairman for the CIC committee that works on data privacy issues.
Chris Northup of the CIC Parts and Materials Committee cited a laundry list of topics still to be addressed by subcommittees, including: aftermarket parts certification standards, parts inventory/availability issues, recycled parts clean-up times, multiple recycled parts standards, impact of OEM price-matching policies, etc.
Randy Hanson of Allstate this year becomes chairman of the CIC Insurer-Repairer Relations Committee. Outgoing chairman Rick Tuuri said the committee will continue to “identify areas for insurers and repairers to work together for efficiencies.” CIC attendee Rick Sherwood suggested that the committee go back to some of the recommendations the committee developed – such as best practices related to digital images, which was finalized in 2010 – to find out if insurers are aware of them and whether or not they’ve adopted them.
“So rather than just bring a recommendation, which I understand is CIC’s mission, get some feedback that might assist in refining these things as we go forward so they are more actionable at the end of the day,” Sherwood suggested.
It’s easy as a shop owner to get so caught up in day-to-day operations that it can be a challenge to follow just the news directly affecting collision repairers.
But there’s plenty of insurance-related news that shops also should know about, because it can help them educate their customers, market their business, and maybe even alter how they vote or shop for insurance themselves.
As a new year kicks off, here’s a look back at a significant or interesting news story from each of the last 12 months—including some stories that are likely to continue in the year ahead.
After a non-drivable car gets towed into your shop, how long do you generally have to wait to get a signed authorization from the customer to tear-down or begin work on their vehicle?
Would that customer be more apt to sign the form more quickly if they didn’t have to come to your shop in order to do so?
And could getting customer signatures more quickly in some cases allow you to start and finish work more on their vehicle more quickly, potentially improving your cycle time and cash flow while reducing rental car costs?