CARSTAR Executives Discuss Shrinking Industry, Aftermarket Parts, NACE Move - BodyShop Business

CARSTAR Executives Discuss Shrinking Industry, Aftermarket Parts, NACE Move

CARSTAR CEO Dick Cross encapsulated what’s going on in the collision repair industry aptly when asked recently how his organization is addressing insurance companies’ reduction of shops on their preferred programs: “What’s going on in the industry is going to be really good for some people and not so great for some other people.”

The response came during a media teleconference held March 18 to offer an industry outlook for 2010.

Cross said insurers are pushing the industry toward “performance rewards,” and shops will have to deliver those rewards and document them.

“I think there will be great opportunity for those stores that have the resources of scale to keep up with rapidly changing vehicle technology and increased administrative work associated with insurer relationships, and also have access to KPIs (Key Performance Indicators) and the right kinds of connections to communicate those KPIs with insurers,” said Cross. “For the stores that don’t have access to those things, it’s going to be a long day.

“Those who are waiting for the tide to lift all boats in the collision industry, it’s going to be a long time before that happens.”

Dan Bailey, president and COO of CARSTAR, admitted that its stores have not been immune to the tough economic conditions of the last two years, saying the corporation as a whole isn’t a lot bigger than it was two years ago. But he said that doesn’t mean it hasn’t achieved success in other areas.

“Our profits are more consistent than they were two years ago, our total CSI is higher than its ever been, and our ability to produce predictable outcomes for our consumers and insurance partners is the highest its ever been,” Bailey said.

His advice to other shops struggling to survive? Don’t solely focus on bringing more cars to the door, and intensely track your KPIs.

“Everyone always wants more work, but sometimes if you look at the numbers and measure them, you might not need another car to the door,” Bailey said. “What you might need to do is improve your image and your look and feel to consumers to increase your closing ratio. Increasing your closing ratio might increase revenue without bringing more cars to the door. Our stores and industry need to measure their KPIs closer than they ever have probably in the history of this industry, and also make operational decisions based on what those numbers tell them.”

Addressing NACE’s move away from SEMA, Bailey said CARSTAR has not made a decision yet as to which show to attend but guaranteed it won’t be going to both.

“I think with the economic conditions right now, to expect us to have to attend two events, I don’t like that,” he said. “I don’t disagree with NACE’s decision to change its date because I think it needs to be stand-alone and not confused with SEMA. And frankly, with the ladies with not many clothes on at SEMA, I think we’re going backwards as an industry.”

Bailey added that he would like to see NACE in different cities outside of Vegas to encourage more participation from repairers in the Midwest and East.

As far as the controversy over aftermarket bumper reinforcements and radiator core supports ignited at the Collision Industry Conference last January, Bailey said it has caused CARSTAR “headaches” and deep thinking on what the right thing to do is.

“Should there be certification by a third party? Absolutely,” Bailey said. “We need to know that these parts we’re ordering and purchasing are safe, and that needs to be done quickly.”

Bailey also said he thinks a recall should be done but admitted he wasn’t sure it could be accomplished and could be quite complex.

“There are four parties you could potentially blame: the shop, the insurer, the person in the U.S. that sold the part, or the manufacturer of the part,” Bailey said. “In the case of insured vehicles where the insurer requested that the part be used, I don’t think the repairer should be held accountable for the cost of doing that.”

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