Choosing Sides - BodyShop Business

Choosing Sides

t's official. The industry is equally divided: 50 percent of shops are on direct-repair programs and 50 percent aren't.

It looks like the battle lines have been drawn, and the sides have been chosen:

Non-DRPs versus DRPs.

Small shops versus big shops.

Good versus evil.

But the one thing I’ve learned from our annual BodyShop Business Industry Profile – a survey of thousands of shop owners across the country – is that generalizations aren’t smart and that nothing is as simple as we’d like it to be, especially when it comes to DRPs.

Which is why I’m devoting this page to dispelling some DRP myths:

Myth No. 1: Only big shops are on DRPs. False. It’s true that the higher the shop’s annual gross sales, the more likely it is to be on a DRP. But that doesn’t exclude smaller shops from participating. In fact, nearly 50% of shops grossing between $250,000 to $349,999 annually are on DRPs. And these are shops with an average of only four employees – not big shops by any means.

Myth No. 2: DRPs are evil. Also false. It’s how people administer them that creates problems.

Myth No. 3: All DRP shops love DRPs, suck up to insurers and do shoddy work. False, on all three counts. (And shame on you if you pass judgment about the quality of a shop’s work based solely on DRP affiliation.) The results of our survey show that many DRP shop owners view DRPs as a necessary evil. Says one DRP shop owner: “The insurer is going to steer the customer somewhere. Why not my shop?”

About 35% of DRP shop owners say that DRPs are bad for the industry as a whole. Says one such respondent: “Insurance companies are too interested in saving money rather than quality repairs. It’s a constant battle.”

On the other hand, despite the headaches that come with DRPs, 83% of DRP shop owners say their shop’s better off due to its DRP arrangements.

So what does this seemingly contradictory information tell us? That some DRP shop owners aren’t fans of DRPs but recognize the politics at play and how the insurance industry operates. They understand that while DRP shops benefit from insurer steering, other shops, in turn, become the victims of it. Many of these shop owners are cognizant that they’ve chosen self-preservation over industry preservation. Some are troubled by this. Others aren’t – saying it’ll help to weed out the undesirables.

Myth No. 4: DRP shops give away everything but their firstborn. False. Not all DRP shops even give concessions. Remember, these are case-by-case deals. And if you examine the past five years of BSB Industry Profiles, you’ll see that the percentage of DRP shops giving concessions is decreasing. In 1998, 59% gave concessions; 1999, 51%; 2000, 42%; 2001, 35%; 2002, 23%.

Myth No. 5: A shop can’t make money on DRPs. False. Again, remember that DRP deals are negotiated shop by shop. Some shop owners agree to really crummy deals. Other shop owners negotiate better deals. About 42.6% of DRP shop owners say their profits have increased since DRP affiliation, 4.9% say they’ve decreased and 52.5% say they’ve stayed the same.

Says one DRP shop owner: “If the deal you signed is so bad that you have to cut corners to make money, you weren’t knowledgeable enough about your own business. Don’t blame the insurer. Blame yourself.”

Yes, it’s true that the industry is equally divided into DRP and non-DRP shops. It’s also true that, in some cases, philosophical differences exist between them. Still, it’s a gross simplification and an injustice to stereotype shops based on DRP affiliation.

What the BSB Industry Profile teaches us is that no one has all the answers. And it’s that uncertainty and apprehension that unify an otherwise divided industry.

Georgina K. Carson, Editor

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