David Mello recently celebrated two notable anniversaries: his 30th as the owner of Anderson Behel in Santa Clara, CA, and his 40th in the collision repair industry.
While many independent shops in Silicon Valley have come and gone, Mello has made all the right moves to thrive in a highly competitive market.
Mello has held almost every leadership position available in the California Autobody Association (CAA) over the past 26 years and has worked hard to make a real difference in the collision industry since day one.
Mello's love for cars while growing up in Santa Cruz, CA, led to a career in collision repair.
"My dad was a dairy farmer who eventually ran a creamery. I always loved cars more than I liked cows, so when I was in high school, I got a job at a service station where I could mess with vehicles," he said. "While I was attending junior college, I got a job as a parts guy at a local Oldsmobile dealership where I was making $600 a week---decent money for a kid out of school. I was promoted to parts manager and then was hired at a body shop. I worked there for 10 years and then in 1989, I purchased Anderson Behel, a shop that had been there since 1960."
Mello has changed with the times, gravitating more toward working with car dealerships while shedding DRPs, he said.
"We've always depended on dealership referrals and a healthy amount of repeat customer business. Dealership referrals are great because once you've proven yourself, they will hand you more and more work. We still work with all of the insurance companies, of course, but we don't have any DRPs, and that's why we don't have to discount our prices as a result,” he said.
Regarding DRPs, Mello has been there, done that. Those days are over at Anderson Behel, he said.
"The pressure to contain prices from the insurance industry will always be there, just like with the medical health industry,” he said. “It makes it hard for a lot of shops that rely on DRPs because many of them are less than informed about charging, so they accept the insurance company's price pressure. I mean, if you've got a $1,200 repair and they offer you $800, and you accept it, you're falling right into their trap. Now you've fixed it to their price point rather than back to OEM standards. They're trying to apply cost-saving [tactics] rather than what it really takes to do a safe repair.”
Mello realized five years ago that OEM certifications were going to become more valuable, especially for an independent shop like Anderson Behel.
"We recently added Porsche and Volvo and also have certifications with Honda, Acura, Nissan and Subaru, as well as most of the domestics,” he said. “They give the consumer peace of mind, [as they] know we have the training and tools to fix their car right. It also helps our image because customers say 'I see all these Porsches here, so they must be a good shop.'"
Mello has seen some improvement in the industry within the last eight years and credits much of it to the state's former insurance commissioner, David Jones.
"We finally got someone that really seemed to care about our industry and wasn't just straddling the fence like his predecessors," he said. "Jones helped us with things such as steering and labor rate surveys and addressed the dance between aftermarket vs. factory parts."
Steering is still prevalent and will always be a hot topic, he said.
"Yes, steering is indeed still alive and well, even though it's illegal in California,” he said. “It's a two-sided sword because if we get the job, we call it a referral. But if we lose it to another shop for whatever reason, we call it steering. I admit that we play both sides of this, but my ideology is that it should be a free market and that customers should be able to take their vehicle to the shop of their choosing."
Mello, who is treasurer for CAA at the state level, has seen his local chapter go dormant due to apathy.
"There are several reasons for it," he said. "The big MSOs feel that they don't really need associations like CAA. They're big enough to create their own environment, and as independent shops, we can't compete with that unless we stick together. I've been involved with CAA for 26 years now. I joined my local chapter's board (Santa Clara chapter) in 1992, and I've been on the board ever since then. I served as president in 1997, and then in 2007, I became CAA state president, which means I served for six years on the executive committee. I have also been the treasurer for our chapter probably for the last 15 years. So, I've seen firsthand how the CAA can make a difference, as long as shops are willing to step up to make it happen."
With no concrete plans to retire, Mello admits that he's a collision lifer and proud of it.
"What would I do if I retired? I do own a Harley Fat Boy and enjoy being a support person every other year for the Cannonball Run that covers almost 3,000 miles,” he said. “In addition, I still want to serve my community for my local Rotary Club (Santa Cruz Sunrise chapter), but at this point, I still like this industry and want to stick around for at least a little longer.”