Canadian Underwriter

The Collision Repair Industry —

September 30, 2010   by Doug Kirk

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The UK collision industry can best be described as “conflicting, but getting better”, with many years of tit-for-tat actions between:

• repairers;

• insurers;

• manufacturers;

• accident management companies;

• suppliers of non-original equipment manufacturer (OEM) parts; and

• distributors.

This period of conflict and mistrust was mainly driven because of differing views as to who should own the customer.

History in the making

To gain an understanding of how this situation developed, one needs to go back to a time fore direct repair programs (DRP). In the late 1970s and 1980s the 20,000 mainly small shops (one to four employees) worked in relative harmony with all member of the value chain. However, there was low levels of technology, poor customer focus and almost no accountability. This situation clearly could not continue.

Insurance companies needed to have a repair process with predictable and dependable results and controlled costs. They sought out select repairs that would be willing to work for a lesser dollar value per hour, but have the ability to handle an increased volume of work.

The DRP was born.

This situation worked in the beginning, but with an increase in the number of companies providing insurance — which was viewed largely as a commodity by the public — differential had to be the name of the game. Repairers within the DRP were asked for more and more in the way of added value packages with little or no increase in the rate of compensation. This meant courtesy cars, free cleaning of the vehicle and collection and delivery of the customer became the norm again. This left the repairer feeling they were paying the bill, forcing them to come up with better ways to beat the system.

The Petri dish was now ready for the bacteria to grow. And how it grew.

A new day

Today there are 3,500 shops left — large, well-run and set up on a national basis. They are a strong opponent and the cycle could be set to re-run with the repairer in control,. However, the market is mature; we all understand we have a part to play, we must all improve. We can only do that if we stop thinking in silos and start thinking about the connected value stream and stakeholders.

By aligning our collective actions and focusing on what is best for all those involved, then we can have a sustainable future and create the customer for life

But how can we accomplish this?

The UK collision repair industry endured years of conflict because it thought in silos and wanted to own the customer. The Canadian industry does not have to go down that road. Although it has taken the first step on the freeway, there are many exits it can take. Engage the value stream, talk to each other and understand what part each area of the industry plays in the process. Make sure that the process is being optimized. Do not minimize your part and maximize that of another, as this is all that could be needed to slow down the entire process and provide poor customer experience.

This article is based on notes compiled from a presentation given at the 2010 Canadian Collision Industry Forum conference in Toronto.

Doug Kirk is the strategic sales and service manager for Akzo Nobel Car Refinishes.