February 1, 2016 by Angela Stelmakowich, Editor
Original equipment manufacturers (OEMs) are looking to position themselves to take the lead following vehicle collisions – so-called virtual steering – which could have an impact on what follows, including perhaps the choice of repair shop, it was suggested at Friday’s Canadian Collision Industry Forum (CCIF) in Toronto.
“Why do OEMs want to get involved in the industry?” Mike Anderson of Collision Advice asked. “To protect their brand,” he told forum attendees.
Anderson outlined a scenario – one up and running in Europe and likely not far away in North America – in which OEMs are taking the lead after collisions. Adopting what he likens to an “OnStar on steroids” approach, an OEM will be able to use the car system to speak to the driver following a crash, ask if he or she is okay, ask if he or she needs police or emergency services, provide information on diagnostics to determine if a vehicle is drivable, ask if he or she has a tow company in mind (if not, a list can be provided), ask if he or she has a body shop in mind (if not, a list and reviews can be sent to the person’s phone) and inform him or her that a rental car will be waiting at the repair shop.
“In the collision repair industry of the future, the OEM is going to be taking that FNOL (first notice of loss),” Anderson argued. In the United States, for example, his understanding is that some insurers are already in dialogue with OEMs about becoming their preferred carriers, he said.
For a collision repair shop to thrive in the future – not simply survive – it must focus on sales and marketing, production, and finance and human resources, Anderson told CCIF attendees. “They need to pay equal attention to each part of the business.”
Rather than be either/or, he pointed out, shops will need to be a blend of both direct repair program and OEM-certified. “You need to be retaining a 65% to 70% gross profit, unloaded without benefits,” Anderson argued. “A shop in the future is not going to be able to invest in equipment and training for certifications if they cannot retain more gross profit,” he emphasized.
“The days of the same technician working on the same vehicle from start to finish, those days are gone. You’ve got to have more hands on car; you’ve got to turn those cars quicker,” Anderson advised attendees.
“You have to look at more repair versus replacement,” he suggested.
“We’re becoming an industry of parts replacers,” Anderson said, and it is necessary to adopt more of a repairer attitude and aptitude, especially on front and rear bumpers and headlights. “You sell equipment, you sell paint; you’ve got to become a conduit of information for your customers,” he added. “You’ve got to handle their blind spot; you got to be their wingman.”
In light of the cost of certification programs, though, shops will need to make intelligent decisions about which to pursue to remain current, improve closing ratio and cycle time, and meet customer expectations, Anderson said.
One way to avoid disappointing customers is by delivering vehicles on time. “The number one reason why we don’t deliver vehicles on time as promised is because we get inaccurate information the day they drop off their vehicle,” he told forum attendees. That is often because a repairer has not completed auto disassembly, researched parts availability and obtained 100% insurance authorization before promising a delivery date, he said.
Accurate information is essential to avoiding things being missed and a customer returning his or her vehicle to the shop. If that happens, the customer will give a bad rating and could report that the vehicle was not properly repaired.
“That hurts everyone’s brand: OEMs, insurers and shops,” Anderson said.
For everyone from repairers to insurers to be successful, “it’s going to mean, in some cases, some labour increases (for insurers). Why? Because it’s the only way they’re (shops) going to afford some of the equipment that’s going to be required to fix these vehicles,” which are growing more and more complicated, Anderson pointed out.
It also means shops must analyze their strengths, weaknesses, opportunities and threats. In the U.S., Anderson said, “we have never seen less of an emphasis on severity than we do today. It is not that insurers do not care about severity, but rather, there is less of an emphasis.
“It’s about three things: service, speed and accuracy,” Anderson argued. “A year ago, I would have told you that you need to be fixing cars two days faster,” he said. Today, “you’ve got to be fixing cars four days faster than what the other shops are in your market area.”
For those who argue that will simply mean hacking out cars, opening shops up to returns, Anderson vehemently disagrees. “The bottom line is if you’re working a team system, you understand repair and you understand scheduling and pull production,” he said, “you will kill it when it comes to cycle time.”
More coverage of the CCIF 2016 meeting