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Consultant Says Dealer Health Biggest Issue for OEMs

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The OEMs have plenty of parts available due to low sales of new vehicles, but the big issue is the survivability of dealerships. That was the gist of a report on the OEM supply chain offered by consultant John Bosin at a recent Collision Industry Conference in Hartford, Conn.

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Bosin, president of EDM Davis LLC – a consulting, counseling and conflict resolution company primarily focused on the paint, body and equipment industry – said that new vehicle sales are expected to be below $10 million in 2009 after hitting $16.1 million in ’07 and $13.2 million in ’08. Because of paltry sales, parts availability is greater than it has ever been.

“OEMs are averaging a 95- to 96-percent initial fill rate and a 98- to 99-percent final fill rate, and they have the fewest back orders ever,” Bosin said.

OEMs, Bosin said, are closely monitoring the viability of parts suppliers and have contingency plans to ensure that availability continues. On another positive note, he said $5 billion in federal funds is earmarked for parts suppliers.

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Dealerships are the main concern, he said. At the end of 2007, there were 21,200 of them, and 881 closed in ’08. He said that 1,200 to 1,500 more are expected to close in 2009.

The reason it’s taking longer for collision repair facilities to get parts, Bosin said, is that 5 to 10 percent of dealers are on COD (cash on delivery).

“Delays have been hard to explain to insurers as they’re costing them more in rental days,” said Jeanne Silver, owner of CARSTAR Mundelein in Mundelein, Ill. “We’re fixing new parts because we can’t wait.”

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To read about how the Detroit Three’s troubles are impacting collision repairers, click HERE.

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