The popular Collision Repair Executive Symposium was held last Friday at NACE | CARS in front of a packed house, shining a light on trends going on in the collision and insurance industries and addressing the challenges facing MSOs.
Randy Hanson of Allstate kicked things off by talking about market dynamics, specifically telematics and increasingly sophisticated vehicle technology, specifically engine sensors; hybrid fuel cell sensors; vehicle control; crash avoidance; passenger comfort; vehicle safety; and infotainment.
“Will there be a role for mechanical and electrical engineers in shops? Perhaps,” said Hanson.
Where are we going, Hanson asked. On the rise is: cost of repair; vehicle complexity; data captured; and demand for specialized techs. On the decline is: number of repairers suited for all repair types; accident frequency; and difficulty to diagnose complex problems.
Joseph Funk, vice president, global personal lines auto claims for AIG Property and Casualty, discussed trends going on in Asian countries. One is called a “scheme partner agreement,” which is a contract between a DRP shop and an insurer where the shop is also the sales agent for insurance policies. Some of the benefits include: commission revenue, after sales revenue, total service quality under one roof and customer ownership.
There is also something called a “key parts provider” (KPP) where suppliers provide strategic parts to KPPs and shops that repair cars for local insurers. In exchange, the insurer agrees to buy a high volume of parts, thus generating a win-win for the KPP and the supplier.
Susanna Gotsch, director, industry analyst at CCC Information Services Inc., took a deep dive into the statistics reflecting trends in the industry. Some included:
*Median age of U.S. vehicles = 11.4 years
*89 percent of new vehicles sold in 2013 contained at least one lightweight part
*57 percent of appraisals had at least one lightweight part in the construction of the vehicle – but only 26 percent of those lightweight parts had to be repaired or replaced
*By 2040, 78 percent of cars will still be gasoline- powered, which means fuel savings will come from lightweighting.
Maximizing Capacity Utilization
A panel discussion on maximizing capacity utilization was the second morning session. The moderator was Erick Bickett, CEO of Fix Auto USA. Panelists included:
*Paul Krauss, president and CEO, Craftsman Auto Body
*Don Mikrut, vice president, CarCare Collision Centers
*Joe Amodei, founder and CEO, The Collision Centers of New York
*Rick Wood, co-CEO, Cooks Collision Centers
*Mark Sanders, president and chief operating officer, Caliber Collision Center
*David Braun, principal, Nexysis Collision Inc.
Notable quotes included:
*“You will see OE certification specific to high-line vehicles or aluminum and specialty shops with one DRP.” Sanders
*“When we carved out heavy hits and segmented it to specialized groups, we saw we could fix more drivable cars in other stores.” – Krauss
*“This specialization is not new. When it comes to aluminum, all shops will not be able to afford training and equipment. Does it come to different costs to insurers and repairers?” – Mikrut
*“Specialization will be a game changer.” Amodei
*“When it comes to first notice of loss, how will insurers pull out those special vehicles and get them to the right shops?” – Sanders
*“The Ford F-150 will generate enough volume for us to start making decisions on aluminum repair.” Strauss
*“We had to go through a culture change, starting with 100 percent teardowns and working with teams and eliminating bottlenecks.” Amodei
*“As far as load leveling goes, you have to do it.” Strauss
*“We leaned out in 2004 and learned we had been doing it the wrong way. We expanded our capacity, and are still in a five-day model, so we have not had to expand our hours.” – Strauss
*“We expand and contract based on our volume. We had several stores running multiple shifts. Parts is part of it. And management and oversight and quality. You still need management in place.”
*“For load leveling, we bought one truck 10 years ago and now own three. It’s a full-time job for someone to manage.” Strauss
*“As far as call centers go, you must get the right vehicle in the right facility. To do that, training needs to be done at the call center.” Sanders
*“Automated parts procurement is taking a long time. There are still some complicated roadblocks to get through. We need it. Ordering by phone isn’t the easiest way. What we see today is the beta version.” – Strauss
*“Whether it’s in the shop or front office, it’s about creating career paths. There’s a true career path in a billion dollar company. Larger groups are starting to build their own team programs. We can’t afford to make a mistake on a car from the safety or insurance perspective. It may just take longer to fix a car right when training people.” Mikrut
*“We have to stick to together and promote our industry before high school. We have to make kids understand it’s not a dirty business.” Amodei
*“We have to grow our culture as the best way to leverage HR – a culture that will embrace change and get better at growing leaders in all departments. Strauss
*“People don’t quit Caliber – they quit the leadership team at a certain Caliber store.” – Sanders
*“In five years, the flat-rate pay system will probably be gone.” – Braun
*“You can’t have piecemeal pay in a lean environment.” – Strauss
*“Capitation? We’re not afraid of it. But no insurer has approached us yet.” Strauss
*“Interference reduces efficiency in the shop. Get out of my way and let me fix vehicles how I want to.” – Mikrut