Wednesday, 24 October 2012 08:57

Ohio Repairers Concerned about Impact PartsTrader Will Have on Profits

More than 125 collision repairers attended two Automotive Service Association (ASA) meetings in Ohio to discuss concerns about State Farm’s parts procurement pilot program through PartsTrader.

The meetings were held in Cleveland on Sept. 18 and in Cincinnati on Sept. 19. The meetings were open to everyone in the collision repair industry at no cost.

Denise Caspersen, manager of ASA’s collision division, presented the elements of the pilot to date, reviewed industry concerns, and collected any additional questions, concerns and suggestions from attendees.

Reductions in parts profits was the biggest concern voiced by repairers. The ASA said several Ohio shop operators also continue to question the reasoning, efficiency and alleged benefits of the program that have been touted by State Farm.

Repairers continue to have concerns about the discounted manufacturer’s suggested retail selling price (MSRP) that is included in the PartsTrader program. Additionally, shops are concerned that lower profit margins will result if suppliers elect to provide a discounted MSRP along with a price quote for a part.

State Farm stated in July that it does not ask for discounts on parts but if a supplier provides a discounted MSRP, this data is available to State Farm.

Repairers are responsible for recommending suppliers and determining their default OEM and preferred OEM suppliers. Once a Select Service shop requests a quote on an estimate, the quoting request is sent to all suppliers whose application ‘preferences’ match the content of the estimate. Suppliers, just like repairers, are able to set preferences. Suppliers are also responsible for setting their market area, parts type, and rates of delivery.

Meeting attendees questioned why State Farm is doing this, what happens to repairers’ parts profits if this goes into effect, where is the efficiency, what State Farm sees as the future for collision claims and the size of their Select Service network—and the biggest question overall—where is the benefit to the collision repairers participating in the pilot?

“We continue to present to State Farm the concerns of ASA members. If State Farm cannot provide data showing how this application benefits collision repairers (operationally/financially), ASA will respond appropriately on behalf of repairers,” said Caspersen. “ASA has provided State Farm with a timeline for data and will be meeting with State Farm to assess future actions.”

State Farm has said its PartsTrader process should improve part availability, process efficiency, order accuracy and create a better experience for customers.

ASA said it will continue to provide the industry with detailed information about the pilot program, and regularly engages with State Farm to address concerns and clarify details. ASA said it is focused on data centering around how this electronic parts ordering application will impact collision repair facilities.

State Farm’s PartsTrader program is currently being piloted in Grand Rapids, MI; Tucson, AZ; Birmingham, AL; and Charlotte, NC. State Farm recently announced that is expanding the pilot in Chicago, which will be used by roughly 450 Select Service shops in the market starting in December.