Roughly 100 Northeastern Ohio collision repairers showed up Sept. 18 at the Crowne Plaza Hotel in Independence for the first of two meetings the Automotive Service Association (ASA) held in the state to discuss the latest developments in State Farm’s rollout of the PartsTrader parts procurement program. Another meeting was held in the Cincinnati area on Sept. 19.
Comments from the Crowd
For the most part, the crowd displayed the same skepticism and pessimism about the parts bidding platform that other repairers have expressed across the U.S., although there was at least one shop owner who seemed undecided so far as to her feelings on PartsTrader.
“I have been taking everything I have heard from repairers [on PartsTrader] with a grain of salt, because State Farm has been very good to us and I trust George Avery,” she said. "That’s why I came to this meeting: to find out what this is all about.”
Another attendee who owns multiple shops expressed his dislike for the program but wasn’t ready to jump off Select Service. “It stinks,” he said. “But State Farm represents 24 percent of our business, so we have to figure out how to make this work.”
He also speculated that maybe State Farm is doing this to further scale back its number of Select Service shops, and “if 5,000 more shops drop off, they get what they want.”
Most of the repairers in the room, however, expressed some of the more popular sentiments heard ever since PartsTrader was first introduced to the industry.
“Most of us are here today because this might be the one issue that pushes everybody over the edge where we say, ‘Wait a minute – no, we’re taking back our business and running it the way we want to,’” said one repairer.
Terry Stanley, parts manager of Ganley Lincoln in Middleburg Heights, said, “I think the biggest issue here is control. You have to decide if you’re going to let State Farm run your business or if you are going to run your business. I think the answer is that if you let State Farm do it, then you have a problem because no one knows your business better than you do. If you’re on this program today and there are certain rules, tomorrow if State Farm doesn’t like those rules, they can change them.”
Points of Contention
Denise Caspersen recapped all of the information that ASA has been gathering on PartsTrader in its effort to determine whether it will support the application. She clarified a few things and addressed some points of contention:
• When a shop sets up its “preferences,” it can select its default OEM supplier from which it can direct order if it so chooses instead of getting quotes from other suppliers. The shop can then choose (or not choose) its preferred OEM suppliers, which would be its secondary suppliers. If the shop wanted to see what was going on competitively in the marketplace, it could send out a quote that would go to all the suppliers in the market (used, aftermarket, OEM).
“I get asked, ‘Am I going to get quotes from suppliers that are four states away?’” Caspersen said. “The answer is not unless the supplier stated that was their market area. When the supplier fills out its preferences, they state their market size. If they say their delivery is 50 miles from where they’re at or 200 miles, that’s what it is. But this program won’t make you buy from a supplier that is four states away.”
• Caspersen addressed repairers’ concern that their failure to get quotes from multiple suppliers will negatively impact their scorecards. She said the consequence for not using the quote process will be no different than what it would be the way repairers are ordering parts today.
“The scorecard is based on a bunch of things,” she said. “Does doing a direct order affect your scorecard? If it affects your scorecard today, it will affect your scorecard tomorrow. [PartsTrader] is just an application to facilitate the purchase – not to change how your scorecard affects you.”
Then there was a brief exchange on the scorecard between Caspersen and a repairer:
Repairer: “The scorecard is the underlying thing here. This is what is putting all of us competing against each other. So if we’re just using a specific vendor, and that price point is not what the other competitive shops are doing by shopping it, that affects the scorecard, which in turn will affect our position on their rating or who the shop of choice is in that area.”
Caspersen: “No doubt. And that’s what is happening today, right?”
Repairer: “No. Because if other shops are starting to use that program and you decide not to, you’re going to feel the effects of that.”
Caspersen: “If you decide not to use this program, and you’re on Select Service and they roll it out in your market, the reality is you’re no longer on the program.”
Repairer: “So the scorecard is what we’re all playing games with here.”
Caspersen: “The scorecard is what you’ve always been playing games with as a Select Service shop. That’s the reality. That’s the piece that affects Select Service shops and how they’re listed in the marketplace. This application does not directly feed to the scorecard; it is not connected. But the reality is that the outcome of the use of this application, just like your parts purchasing today, is connected to your scorecard.”
An alternative parts supplier in the group asked Caspersen if a shop’s scorecard would be affected if it chose him directly and his price was $100 higher than the market.
Caspersen: “Potentially, but it depends on other [factors relating to the scorecard]."
Supplier: “How do I know that?”
Caspersen: “You don’t because you don’t know what other people are quoting. You have to compete based on your own circumstances. If you have eight widgets in a box and they’re costing you ‘X’ amount of dollars and you want to move them, and it would be more cost effective to quote at a different price, then you quote that price.”
Supplier: “It sounds like it’s bad for suppliers because typically in our business, it’s not like we have a list price or we control that, so there will be a price war, and in order to get the sale, everyone is going to be beating everyone else down.”
Another comment was added by a recycler who said, “It makes it a bit tough because our inventory isn’t like new where somebody can just look at something and know it’s this. We’re losing our ability to describe to our customer what we actually have.”
Caspersen said she has been working with the Team PRP network of recyclers, and so far, those recyclers that have tested the pilot are quoting more parts, but they’re only having a 7 percent return on quotes versus their normal 16 percent.
“The other concern recyclers have is that the communication system they use is interchange, not VINs. Unfortunately, PartsTrader does not do interchange,” said Caspersen. “However, they’re working to do it and are adapting the program, but right now it’s just VIN numbers.”
Caspersen added that in the supplier section of the PartsTrader program, there is a “comments” box and photo box where suppliers can add photos of the parts.
• Another point of contention is margins. According to Caspersen, if a supplier decides to change the discounted MSRP, it then changes your margins – the same situation that exists today. But Caspersen confessed to not understand why a supplier would do that. “If you have the MSRP here, and the supplier is able to quote a price, why do they need to change the discounted MSRP?”
• There is a fax-only option for suppliers that don’t want to participate in this program. It is exercised through the PartsTrader application and goes directly to the supplier.
• Caspersen mentioned the recent modification of the PartsTrader program to allow a 30-minute quote time versus two hours.
A member of the audience asked, “Are you saying a walk-in customer will have to wait between 30 minutes and two hours to get an estimate back?"
Caspersen: “Because some people want to come in and walk out the door with an estimate, that’s when you would set your preference for no quoting, just a direct buy.”
Repairer: “Is this something where State Farm doesn’t want to give the customer an instant quote anymore? It feels that way to me.”
Another repairer said, “It sounds like we could use some education of our customers before they hit our door so they know what to expect.”
At the close of the meeting, a repairer commented on the size of the crowd that had gathered to hear about the major change in parts ordering going on in the industry.
“In observing what went on tonight, I think all of the insurance companies really depend on us and would be horrified that all of us are sitting in a room together discussing this because it’s the last thing they want,” he said. “They depend on us not talking to each other. They depend on us all being independent.”
More information:
PartsTrader Delivers New Version of Platform
State Farm to Expand Parts Pilot to Chicago
Auto Body Association of Connecticut Releases Position Statement on PartsTrader
