According to vehicle manufacturer records, in 2012 there were fewer than 350 body shops claiming OEM certifications in North America. Now, there are 10 times that many OEM-certified collision repair providers. In less than five years since mass-market OEM body shop certification was launched, more than 3,500 collision repair providers are now carrying the official certification of one or more auto manufacturers. More astounding is the fact that these OEM-certified repairers now account for over one-third of all of the collision repair work revenue performed in the country.
OEM certification is no longer viewed in the industry as an elitist pay-to-play program or as a perk for just a select few shops that have a special arrangement with their OEM dealership. In a relatively short time span, OEM certification of body shops has skyrocketed. The question is, why? How did this happen? And why now?
There are many trends driving OEM certification, the most obvious being the vehicle technology itself. Simply put, the vehicles manufactured today and in the future cannot be repaired the same way they were in the past. They cannot be properly and safely repaired following the old repair methods using the same tools and equipment if they are to meet OEM specifications.
Manufacturers must meet the consumer demands for advanced feature functionality and comply with the regulatory requirements for lightweighting vehicles (CAFE). Manufacturers use materials such as high-strength and ultra high-strength steel, aluminum and advanced composites, and have added advanced driver-assistance systems (ADAS) and accident-avoidance technology. These changes to the vehicle make repairing these next-generation vehicles beyond the technical capabilities of most shops in the market today. According to I-CAR, this “technical tsunami” will not stop.
The manufacturers know this, and so do the insurers and the various tool and equipment vendors. And now, more and more repairers are learning that if they want to properly and safely repair these next-generation vehicles, they must have the right tools, equipment and training.
But does the consumer know? How does the vehicle driver know which body shop can properly and safely repair their vehicle? How does anyone know the difference from the outside of the repair facility before it’s too late? The answer seems to be OEM certification. OEM certification is the official designation by the auto manufacturer that illustrates that the certified repair provider possesses the right tools, equipment, training and facility modifications to properly repair their vehicles to OEM specifications to ensure the fit, finish, durability, value and safety of the vehicle.
There are many other factors driving shops to get OEM certified, especially competition. As the market shrinks, securing new customers and protecting market share has become a high-stakes battle. Now, recruiting and retaining qualified employees has become the new war zone. In both cases, a certified repair provider represents an obvious and better choice.
“Certified” status gives the business a competitive edge at a time it’s most needed to survive and prosper. Surveys show that consumers choose “certified” over non-certified choices nearly three to one. The same was true in a 2016 survey of employees, in which nearly 75 percent said they would rather work for a certified business than one that does not carry the same credentials.
Even customer confidence is higher with a manufacturer’s certified repair provider than a shop they selected by themselves, and even one recommended to them by an insurer. According to CSI comparative statistics, customer satisfaction is several points higher for certified repair providers over the general market or DRP networks.
According to a J.D. Power presentation in April 2016, more and more consumers are making a buying choice based upon advanced technology and creature comforts that make their vehicle a “specialty vehicle” in their minds. Therefore, it’s easy to see why approximately 75 percent wanted a “specialist” (i.e. certified shop) to repair their vehicle to manufacturer’s specifications. Additionally, 62 percent of consumers reported they felt “more confident” of the repair and their anticipated experience when they learned that the repair business was “certified by the factory.” Perhaps OEM certification is the mechanism that best-in-class shops have needed to make a clear distinction between their business and all the rest.
Today, automakers are using a wide range of tools and communication options to educate the consumer and make sure they look to a certified repair provider should they need one. In July 2017 alone, over four million emails were sent to new vehicle owners by only two OEMs, Ford and Hyundai. Over the course of a year, well over 10 million consumers will receive one or more messages reinforcing the importance of selecting a certified repair provider to safely repair their branded vehicles.
Several of the major OEMs, whose combined vehicle market share exceeds 65 percent of the vehicles on the road, have online certified body shop locators, and most now have consumer-facing smart apps. These tools are used to direct consumers to a certified shop based upon the year, make and model of the vehicle. The online shop locators and apps even allow the consumer to set an appointment, much like the assignment function in insurer DRPs. The ease and convenience of these marketing and customer service tools makes selecting a certified shop that’s a specialist easy for consumers.
Online shop locators and smart apps are also assisting insurers in identifying which repair providers are certified to repair specific specialty vehicles. AdvancedRepairCapable.com, a website that was built specifically for the claims community, searches for a certified repairer based upon location and the VIN or year, make and model.
After several years of hesitation, a growing number of insurers are throwing their support behind the value of OEM certification, too. Several are now expecting their DRP network shops to become OEM certified. The resistance to certification seems to have vanished as insurers have discovered that the OEM certification programs are not about driving parts-purchasing habits or increasing their loss severity or loss adjustment expense (LAE). Statistics illustrate that “it does not cost more to have a vehicle repaired right by the right repairers.” More and more insurers now understand how important it is for all concerned that the new-generation vehicles are repaired correctly.
Many insurers see OEM certification as a complement to their DRP. They’re beginning to embrace the value and importance of OEM certification for the safety of their policyholders and to ensure they have a repair referral choice that can properly repair the next generation of vehicles. Internal announcements from several insurers have urged their DRP network shops to “get certified.” As a result, the insurer support has accelerated the adoption of certification for many shops, especially with MSO organizations.
For years, some large MSOs only toyed with OEM certification. Now, nearly all the large MSOs and franchisers have many of their shops officially certified.
There is a definite migration by the MSOs toward getting all their locations officially certified by multiple automakers. Caliber Collision Centers reported that, at the time of this article, they had more than 368 different OEM certifications across more than 270 of their shop locations, and are adding more of their shops daily. Service King reported in July that they were adding 50 of their shops to Honda’s ProFirst program, and they already have more than half of their shops on Assured Performance’s joint-effort certification program representing Nissan, Ford, Hyundai, Ford, FCA and others. And nearly all the other large MSOs and franchisers now have many of their shops officially certified.
How Did This Trend Start?
OEM certification in one form or another has been around for years. Toyota’s certification program is now over 20 years old but has only a few hundred dealer-owned body shops, while over 85 percent of their vehicles are repaired by independent repairers. Many of the European vehicle manufacturers like Audi, Mercedes, Porsche and Jaguar have had programs that are heavily dependent on specific equipment and manufacturer training, and most are restricted by dealer sponsorship or even dealer ownership. The result is that only a few hundred certified repairers (or less) participate in each of these OEM certification programs.
The avalanche in OEM certification occurred when several of the mass-market OEMs joined together to ensure that thousands of shops would have the right tools, equipment, training and facility requirements to properly and safely repair the massive wave of next-generation vehicles. In just five years, over 240 vehicle models from over 20 manufacturers underwent significant redesign. In spite of the fact that the new features are most often closely-held secrets, the redesigns are known well in advance by the manufacturer’s engineers and marketing people. They knew the collision repair industry was unprepared for the future.
In 2012, FCA was the first to leverage the mass-market turnkey approach, followed shortly by Nissan, Ford, and then Hyundai. They broke with the old OEM certification model and allowed independently-owned repair businesses to earn their official credentials. To manage their individual and collective network, they leveraged a common technological infrastructure, human support, on-site inspection and auditing process to provide proof of compliance for thousands of repair businesses. They also standardized nearly all their requirements to be based upon manufacturer specifications and not a single brand of tools or equipment. They even combined the overall costs and subsidized the expense to the shops to remove prices as an obstacle to participation.
“At Chrysler, we were planning ahead and knew we needed to improve the repair quality considering the advancements planned in the near future,” said Doug Craig, the certification program manager at the time for FCA. “Delivering a far better experience was also essential for our customer retention and brand integrity. That was not the norm at the time.”
All manufacturers that wanted to build a sustainable national network with complete demographic and geographic coverage would need a similar solution to ensure there were enough body shops that had the required tools, equipment, training and facility modifications to safely repair the next generation of vehicles they planned to release. The mass market OEM certification model is very different than that employed by manufacturers that only producet hundreds of thousands of vehiclevehicles or less annually.
The top seven automakers produce upwards of 15 million new vehicles annually. Ford alone sells over 72,000 F-series trucks monthly. When Ford planned to introduce the redesigned F-150 using aluminum alloy in 2015, it became a major initiative to ensure there would be adequate repairer coverage and enough certified repairers that could properly and safely repair the No. 1-selling vehicle in the world.
“Our breakthrough was getting several of the largest OEMs to adopt a common approach so we could reduce the cost and complexity for the shop,” said Scott Biggs, founder and CEO of Assured Performance. “Several of our joint-effort partners had followed other options before joining together with us, so we also had insight of what not to do.”
Today, the combined coverage of shops in the Assured Performance OEM Certified Network hasve achieved 100-percent coverage of all primary (metropolitan market areas) and secondary markets across the country. They have also achieved over 80 percent coverage of the rural and suburban markets.
But not all of the automakers followed the same approach nor use the same platform. Honda used a combination of their own in-house resources and vendors to transformed their ProFirst “recognition” program into their official certification program. They spent years developing their program to where they can now boast of significant market coverage as well. GM announced in July that they were planning to unveil a program in 2018.
What’s the Hold-Up?
Why haven’t some shops gotten certified? While approximately 10 to 15 percent of the industry is well on its way to becoming OEM certified (3,500 to 5,000 shops), the rest remain fixed on the past. Many shops claim they have a great reputation in their market and generate plenty of work without the cost of compliance and certification credentials. Many operate outside of the mainstream and don’t feel they’re part of the equation. A massive percentage of the market focuses on cosmetic repairs and/or low-cost, consumer-paid repairs and wrongly assume they don’t have to have the OEM-required tools, equipment and training to still be able to repair the next generation of vehicles.
The process for a body shop to get certified is relatively easy and affordable. Online registration points exist for all of the various programs. The combined cost today to obtain the certification credentials of seven of the top OEMs is still less than the average cost was in 2012. The purchase of the required equipment is easier than ever, too. Now, numerous tool equipment vendors know the OEM requirements and offer choices to meet these requirements.
Repair providers can expect a return on investment (ROI), but it comes in many forms.
A certified shop is considered by consumers and employees alike to be a preferred choice. It may also have an impact with whatever forms of marketing the shop may employ.
OEMs are introducing more and more resources and tools to help the certified repair provider promote themselves and the overall concept of OEM certification as the best option for vehicle owners. Several OEMs produce consumer-awareness videos and commercials promoting their certified body shop networks, some of which have gone viral.
According to Assured Performance, “New consumer education multimedia tools allow the shop to display electronic signs, OEM messages and waiting-room videos that deliver carefully crafted messages directly to 10 to 15 million consumers annually. These critical messages are delivered to the consumer at their moment of decision making as they’re standing in the certified shop’s lobby waiting to get an estimate.”
DRP vs. OEM Referrals
After 35 years of DRPs, many shops have become accustomed to using the number of referrals as a measurement of the program value or ROI. However, unlike a DRP, the repair referrals from the influence of an OEM come from different sources and are not as clearly definable. However, that will soon change, too.
First notice of loss may migrate from the insurer, as it does primarily today, to the vehicle itself through telematics. It’s not magic; it’s simply the ability of a vehicle to detect when it has been in an accident. From this trigger, a series of events can happen, including notifying the consumer of the certified repair providers in their area. GM OnStar is already functional with a basic referral service for the Cadillac CT6. Major announcements are expected soon from other automakers as they make advancements in this technology.
OE Repair Procedures
For several OEM certification programs, it’s a certification requirement that a certified repair provider must follow and document the use of OEM repair procedures. After years of resistance, insurers are slowly accepting that the industry must embrace standard operating repair procedures.
In November 2011, all of the leading associations and entities representing collision repairers made a joint statement to the industry establishing that OEM repair procedures are the industry repair standard. There was additional language about gaps and processes to fill those gaps, but the die was cast. Since that time, there have been significant efforts made on all sides of this issue. Recently, pre- and post-repair scanning has become a call to action and also a requirement for some OEM certification programs. Scanning and OEM repair procedure requirements are just the beginning of the overall massive transformation going on in the collision repair industry due to OEM certification.
Critical mass has been reached. Today, there are over 3,500 collision repair providers carrying the official certification of one or more auto manufacturers. Most astounding is that those 3,500 Certified Repair Providers repair over $12 billion of collision repair revenue. And, there are Certified Repair Provider choices in all of the major markets in North America. Each month, millions of consumers are learning about “certified” as a choice, and now insurers are figuring out how to benefit from the focus on quality.
OEM certification is not just a trend or fade that may pass. The technological advancements of today’s vehicles require it. With the avalanche of vehicle advancements planned in the years ahead, OEMs must ensure that consumers are able to select a collision repair provider that can properly repair their vehicle to ensure itsthe functionality and passenger safety.
The impact of OEM certification has already permanently altered the industry. This massive transformation is now being embraced by all of the various industry stakeholders including consumers, auto manufacturers, repairers and insurers. This broad acceptance hints that a new business operating model is evolving that may well replace the 35-year old DRP model, promoting improved repair quality, greater operational efficiency and higher customer service. The only question that remains is, how will it impact your body shop?