By John Yoswick
In a new year when many Americans are anticipating great change, it’s good to take a few moments to reflect back on the year that just ended. Here’s our annual review of the past 12 months as reflected in some of the most important, interesting or entertaining quotes heard within the collision industry.
* * *
“The technician of yesterday doesn’t recognize that he shouldn’t go to work on just any car, based only on his experience. The technician of tomorrow, based on his experience, recognizes not to work on a car until he has the proper training.”
—Mark Allen of Audi of America, on the need for shops to do more to prepare themselves for repairing complex vehicles
* * *
“I suspect maybe we’ll see maybe a fifth consolidator somewhere in the next 12-18 months that could come into this market and really mix it up. It could be an international entity, or it could be another aggressive [U.S.] entity funded by private equity or some other financial channel.”
—Industry consultant Vince Romans of The Romans Group, predicting last summer that another large player could begin competing with the “Big 4” MSOs (ABRA, Caliber, Service King and Boyd Group/Gerber)
* * *
“I support the effort to try to update our definition, which is currently being used extensively in the marketplace and…should be something that a consumer or an insurer choosing a collision repair facility can use to make an intelligent choice.”
—Randy Stabler, a California shop owner and chairman of the Collision Industry Conference (CIC), speaking early in 2016 in favor of CIC’s effort to update its long-standing definition of a “Class A” collision repair facility
* * *
“By creating a ‘Class A’ designation for ‘advanced structural repair and materials,’ you are creating an equivalency for people who didn’t choose to invest in OEM certification, which is what really distinguishes the capability at that top level. It’s going to be used in ways that challenge those repairers who have made those investments and who price their services differently because they have to recover on those investments. Why you are trying to do that is beyond me. It doesn’t help the market. It doesn’t help the repairers. It doesn’t help the consumer get a better repair more often.”
—Aaron Schulenburg of the Society of Collision Repair Specialists (SCRS), arguing there is no longer a need for the CIC “Class A” definition, given OEM shop certification programs and other qualification and quality inspection programs that didn’t exist when the definition was first developed
* * *
“We missed an opportunity to come together…on that sooner because we’re now being confronted with a lot of other entities that are going to try to answer this question and come up with a minimum standard for us, and the industry may or may not like it, and we may end up with multiple standards.”
—Stabler, noting in August that while the debate over the CIC “Class A” definition continued, more organizations launched shop certification programs
* * *
“Based on a review of the pleadings in this and the other 20-odd cases — the vast majority of which share the same shortcomings — the Court finds that giving the [shops] another opportunity to state a claim would be an exercise in futility.”
—U.S. District Court Judge Gregory Presnell in dismissing with prejudice – meaning the suit could not be amended and re-filed – the lawsuit by Mississippi shops accusing State Farm and other insurers of conspiring to manipulate shop labor rates and compensation; very similar suits brought on behalf of shops in a couple dozen other states have faced largely the same fate this past year, although appeals still continue in some of the suits.
* * *
“The necessary implication of this language [in Tennessee law] is that insurers can legally require that their insured patronize a preferred repair shop.”
—Judge Presnell, in dismissing a similar suit brought by Tennessee shops, noting that their steering claims cannot be valid given that Tennessee’s Unfair Claims Act sets parameters that must be met if an insurer “requires a repairer to be used,” so it stands to reason that the law allows them to require that
* * *
“We saw surveys used by insurers that only surveyed a few shops in each geographic area. We also found cases where the shops weren’t being randomly selected. It appeared there was some deliberate cherry-picking of certain shops in order to input their labor costs and leaving out certain other shops.”
—California Insurance Commissioner Dave Jones explaining the need for his proposed new requirements for insurer surveys of collision repair labor rates; those requirements would prohibit insurers from using shop labor rate information that is more than 16 months old or that has been derived from estimates (rather than actual survey responses)
* * *
“It signals a race to the bottom as market players seek the cheapest and least onerous standard. Consumer groups need to see legitimate and effective effort at consumer protection. Quite frankly, they believe most insurers care more about bottom-line profits than overall quality. They see [parts] distribution channels supporting multiple standards as a mechanism to increase sales at the expense of safety and quality. And they see the industry rapidly lowering standards.”
—Jack Gillis of the Certified Automotive Parts Association (CAPA) on the impact he sees of the non-OEM parts industry having multiple certification programs for non-OEM parts
* * *
“That sort of opened my eyes up, and I said: Does that mean we have shops out there ordering certified parts, and we have insurers out there who think they are getting certified parts on these vehicles, when in fact, 70 percent of them are non-certified parts?”
—NSF International’s Bob Frayer on what led his organization to begin certifying distributors of non-OEM parts as well as the parts themselves; Frayer said NSF ordered 10 certified parts from vendors as a test, and found that only three that were delivered were actually NSF-certified.
* * *
“There are aftermarket and used-parts providers purchasing brand-new OEM parts from the dealer, then delivering those brand-new parts to the body shops as ‘alt-OE’ or in some cases as used parts. They are brand new in a box from the dealer. I think that is a worthy item to have as a discussion point. I know I get confused when an aftermarket part supplier delivers a brand new OEM part in an OEM box to our shop.”
—CIC’s Stabler, on the need for more information about parts being designated as “alt-OE” or “opt-OE”
* * *
“The database times are predicated on a new, undamaged panel, a part that out of the box can be scuffed and painted and put on the car. I’ve yet to get [an opt-OE part] that meets that qualification. The insurance company may win price-wise; we lose on our end. And it disrupts the workflow and increases cycle time.”
—Bill Eveland of Eveland Bros. Collision Repair Center in Kansas, agreeing on the need for the industry to address the topic of “alt-OE” or “opt-OE” parts
* * *
“This is quite shocking to me. This is a procedure that technicians have to do quite a lot. If I need to open a door that’s jammed in, I may have to cut a hole in the door to access the latch to release it. That’s a pretty common occurrence, so I was quite surprised that many shops aren’t getting paid to do it. Published labor times are for new, undamaged parts on new, undamaged vehicles. We’re working on damaged vehicles, so technicians often have to do things in order to get access.”
—Mike Anderson of Collision Advice on the finding in his “Who Pays for What?” surveys that although 50 percent of shops said they are paid “always,” or “most of the time” for the additional labor it sometimes takes just to “gain access” through a damaged door or hood, nearly 1-in-4 shops surveyed said they never have included a charge for this on an invoice
* * *
“I think the model we’ve deployed in our industry for the past umpteen years, where literally everything is sent to a shop and sorted out there, is nonsensical and isn’t practical. I really think we need to start looking at segmentation; things as simple as drivable versus non-drivable cars would be a place to start, segmenting those vehicles either to different [repair] centers or different kinds of work environments. By doing that, we can establish workflow and production processes in our shops that will allow us to repair vehicles more efficiently, and satisfy customers more effectively.”
—Paul Gange, president and chief operating officer of the Fix Auto USA shop network
* * *
“Yesterday I watched a pizza delivery guy jump out of his car to deliver a pizza, and the car proceeded to roll about 100 yards downhill into the front end of a car with crash avoidance technology all over it. So at the end of the day, we can’t fix stupid.”
—Barry Hadlock of Collision Works, which operates seven shops in Oklahoma, on why he isn’t overly concerned about the near-term impact of ‘crash-resistant’ vehicles
* * *
“I don’t think it’s necessarily correct to say every repair needs to be scanned before or after, and it’s certainly not correct to say that only 1-in-10 cars needs to be scanned. It’s definitely somewhere in between there.”
—Jack Rozint, chairman of a CIC committee on new technologies, on the industry’s need for more information on which collision-damaged vehicles actually should undergo pre- or post-repair scanning, following the release last summer by several automaker statements calling for scans on virtually all of their vehicles
* * *
“We looked into establishing a first year and a last year for this, but…we actually started triggering codes without [dash] lights back in 1996. That’s 20 years ago now. Realistically, just about any car you’re going to do a repair on is going to need a scan. Some are going to need more depending on the complexity. Newer cars are much more complex. We decided to just say all cars.”
—Chris Tobie of American Honda, when asked why his company wasn’t more specific on which of its vehicles do and do not require such scans
* * *
“You as a shop owner need to take a step back and tell the consumer, ‘Your insurance company is not paying for this. The manufacturer is saying we have to do it. In order to do it right, I need to do that. How would you like for me to proceed?’ They can pay for it. Or you can document on the invoice that you requested to do it, the insurance did not want to pay for it, and the consumer doesn’t want to pay for it either. Then if there’s any trouble codes in there, it’s going to be all on the consumer or the insurance company.”
—Jaime Ramos of the California Bureau of Automotive Repair, when asked about insurers refusing to pay for pre- or post-repair scans that some automakers have called necessary
* * *
“I don’t really have a great way to sugar-coat it, but you may not be able to serve both parties in that.”
—Allstate’s Clint Marlow on the potential challenges for OEM-certified collision repairers on direct repair programs who face insurer requirements for alternative parts usage along with OEM-warranty-requirements that mandate the use of OEM parts only
* * *
“If your child got hurt at the playground, and you went to the hospital and they x-rayed your child’s leg and found it was okay, does the health insurance still cover the x-ray? The answer is yes, because it’s the only way to make sure nothing is wrong.”
—Anderson, in response to the argument by some insurers that if no trouble or fault codes are identified in a vehicle scan, the insurer shouldn’t have to pay for it
* * *
“If I tell you that our vehicles are manufactured in this way and I’m recommending that you perform this repair, how can you say that you’re going to refuse and go against the recommendation of the manufacturer or the printed document in the repair manual? I would like to hear the people that are saying that sit up here on a panel and explain why, because I don’t understand the justification.”
—Eric Mendoza, assistant manager of collision repair and refinish training for Toyota Motor Sales USA, in regard to the long-standing debate as to whether OEM repair procedures are “recommended” or “required” •
John Yoswick, a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network bulletin (www.CrashNetwork.com). He can be contacted by email at john@CrashNetwork.com.
