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Tuesday, 21 August 2018 22:29

Honda Collision Parts Program Sets New Standard

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In the earliest days of the collision repair industry, when shop employees needed a replacement part they picked up the phone and called a supplier, quite often an OE dealer.

 

Simple? Yes. Quick? Maybe. Efficient? Not necessarily if the shop needed multiple parts, some possibly hard to find, and had to keep calling until they were found. Starting in the early 1980s and still true today, the fax machine saved time and effort for both shops and parts suppliers.

 

By around 2006, OEConnection was able to do something no one had done before---electronically connect OE dealers with body shops, allowing the two to communicate, the shop to order parts and the OE manufacturers to run a conquest or price-matching programs utilizing the OEC software. This was a win for everyone, including the shop, the dealer, the customer, the OE and the insurance company.

 

Utilizing OEConnection’s CollisionLink® software, American Honda launched its Collision Select conquest program on July 1, 2009. The program ran very well for several years. The program reached its peak around 2016 when the number of transacting body shops reached a plateau and growth had ceased. So, in true Honda fashion, the Collision Marketing Group went “to the spot” to interview dealers and body shops all over the country to see what was going on. Here is what they heard:

 

• Shops and dealers said, “It is taking way too much time to conquest parts.” In other words, after the estimate had been written using either aftermarket or salvage parts, it then became incumbent upon the OE dealer, using the OEC software, to contact the shop to negotiate the price of certain key OE parts to see if the dealer could change the shop’s mind about what parts to use. Ultimately, this resulted in more parts sales for American Honda and those OEs who followed this model, but it was more work on the part of the dealer and the shop. Plus, dealers were not always consistent using the program, and the number of shops using CollisionLink® was somewhat limited compared to the size of the body shop network.

 

• Shop owners said, “Give me your best price up front and let me make the decision. If I am in the middle of writing an estimate, I will use the OE part if I can. If you have a conquest price, why should I have to wait for a dealer to get back to me when I am ultimately making the decision anyway?”


 

Now, 10 years later, technology has brought parts procurement to the next level. American Honda is again on the cutting edge as the first OE to use CCC One to promote parts ordering at the time the estimate is written, rather than after the fact, and offers an MSRP or promotional price that is consistent across all participating Honda or Acura dealers. They have also made the program’s execution easier, quicker and seamless. It is already changing the culture of many shops that use it.

 

Here’s how it works: Shops using CCC One with the proper software engaged will be provided a list of parts suppliers for each part needed on an estimate. Depending on which parts suppliers have enrolled in the program and are using the software, the shop may see, for example, an aftermarket bumper cover, salvage bumper cover or an OE bumper cover from multiple OE dealers. In each case, the parts will have a price and availability listed.

 

In the case of the OE part from Honda/Acura, each part number will show the MSRP price and a “Promotional Price” that will be the same no matter what Honda or Acura dealer is listed. Assuming the shop wants the OE part, it is then up to the shop to decide from which dealer to buy the part, depending on availability, the shop’s relationship with the dealer and the final price the shop will pay the dealer for that particular part. The program does not pit one Honda or Acura dealer against the other.

 

The “Promotional Price” is what was referred to in past American Honda programs as the “conquest price,” or the price the shop would charge the insurance company to compete with aftermarket or salvage parts. For example, assume a bumper cover is $400 MSRP and carries a “Promotional Price” of $325. Under Honda’s former conquest program, the dealer would negotiate the price with the shop, which could have been between $400 and $325. This led to inconsistencies, even within a single dealership, depending on the parts sales person dealing with the shop.


 

With American Honda’s new “Collision Parts Promote” program, pricing will be consistent and require less work for all involved. Plus, “Promotional” parts, in most cases, are seen as an alt-OEM part. This helps shops trying to meet a parts-type objective as a DRP. And this business model eliminates the negotiation process, thereby saving both the shop and the dealer time and work.

 

Once the shop has selected the parts they want from their vendor of choice, the order can be placed using a “shopping basket” similar to Amazon.com or other online services. For Honda and Acura dealers, a connection exists between CCC One and the dealer’s Dealer Management System (DMS), so the order is placed with the dealer electronically. There is no re-keying. The dealer only needs to bill the parts, pull them and ship them---a real time-saver for all. On the back-side, each dealer knows what they will pay American Honda for the parts and what their rebate amount will be from Honda for all parts sold in this manner.

 

American Honda’s new “Collision Parts Promote” program was officially launched at the last SEMA show in November 2017. In a July 2018 phone interview, Kirk Adams, assistant national manager for American Honda’s Collision Group, noted, “We ran a pilot program for almost a year before we launched nationally last November, so we proved the concept and knew it would work well. In the intervening nine months, we have enrolled 900 Honda and Acura dealers for this program. That’s about 70 percent of our dealers. About 800 have ‘gone live’ and are currently active with the program. On the shop side, CCC One is in about 24,000 shops, and most of those shops are connected to at least one Honda or Acura dealer. About 12,000 shops are currently transacting using this program. If a shop does not have CCC One, we have a manual process to help that particular shop participate.”

 

When asked how this will work with Honda’s ProFirst program, Adams noted, “We currently have 1,350 ProFirst shops around the country. Only 41 of them do not use CCC One. That’s a 96 percent penetration rate. It doesn’t get much better than that.”


 

The Tonkin Parts Center, part of the Ron Tonkin dealer group in Portland, OR, handles wholesale parts operations for the 15+ lines of cars sold by the Tonkin group, including Honda and Acura. The center consists of 125,000 square feet carrying $13 million to $15 million in inventory. American Honda chose the Tonkin Parts Center as one of three pilot dealers for the program.

 

Keith Burtram, senior manager for the center, said, “Honda is one of our fastest-growing lines, and we always take advantage of American Honda’s programs. The Collision Select program from 2009 was alright but not very efficient, so we used it very little. Plus, to make the program work, we had to ask our shops to check the competitors first, then come back to us. The entire transaction was done after the estimate was written and many decisions had been made. Using CCC One and Honda’s new “Collision Parts Promote” program, everything is more efficient for us and the shop. There is no re-keying on our side or the shop side. That saves a shop hours and money. The best part is the shops are using a tool (CCC One) that they are already familiar with, so the learning curve is real short. We have already seen an increase in Honda and Acura parts sales with this program and CCC One.”

 

Jim Kinsherf, vice president of OEM Business Development for CCC, said, “This parts acquisition model started as ‘True Parts’ around 2014 and has morphed into the CCC Parts Network. We are happy to help enable Honda’s Collision Parts Promote and other OEM programs on our platform. ”

 

When asked about the future of the CCC Parts Network and programs such as Honda’s, Kinsherf said, “This technology is very robust and presents many possibilities. A program using a promotional price like Honda’s could be applied geographically, by state for example. Or it could be applied by model year, based on a vehicle’s VIN number. For example, let’s say the same part number bumper cover fits four model years. Ordering that bumper cover for the latest model car may receive a promotional price that is different than a four-year-old vehicle. There are a wide range of possibilities.”

 

Leigh Guarnieri, manager for American Honda’s Collision Group, said, “Due to the complexity of running two programs, we will be sun-setting the Collision Select program, started in July 2009, at the end of 2018. This will leave only the ‘Collision Parts Promote’ program … which is a win-win for everyone. It sets a new standard for the industry.”

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