Already faced with difficult issues, many shop owners are wondering what more will be asked of them by insurers and how they’ll continue to please increasingly critical customers. They question how other shop owners are running their businesses and dealing with day-to-day issues.
This year’s Operations Profile answers a lot of those questions, including "Are shop owners turning work away?", "Are they compromising their labor rates?" and "Is Elvis really dead?" (I just threw that one in to see if you’re paying attention.)
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What effect do alternative crash parts have on the following procedures relative to OE parts? |
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CAPA-certified |
A/M Salvage |
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Increase administrative time |
88.3% |
88.4% |
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Decrease administrative time |
11.7% |
11.6% |
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Increase installation time |
88% |
76.8% |
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Decrease installation time |
12% |
23.2% |
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Increase paint refinishing time |
91.5% |
84.5% |
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Decrease paint refinishing time |
8.5% |
15.5% |
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Increase total cycle time |
89.5% |
82.3% |
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Decrease total cycle time |
10.5% |
17.6% |
Which insurers refuse to pay? Respondents listed Allstate, State Farm, Progressive, Geico, Farmers, Natiowide, USAA and Liberty Mutual most often. Many respondents were less specific and simply said "all."
• 100 percent of respondents say vehicle owners have an unequivocal right to know when A/M crash parts are used to repair their vehicles.
• 78.3 percent of shop owners say it’s the body shop’s responsiblity to inform the owner when A/M or salvage parts are used.
• 95.1 percent say they educate customers regarding their rights.
• The average shop writes 24.8 estimates per week.
• 67 percent of written estimates are converted to jobs, which translates into about 16 jobs per week.
• 41 percent of respondents say insurers reduce times on estimates less than 25 percent of the time.
Things are looking good! Compared to last year, 52.2 percent of respondents say the average number of jobs performed per week has increased.
Though 55.2 percent of all shops polled are concerned about DV, only 47 percent of DRPs are concerned while 60.3 percent of non-DRPs are concerned.
Those who are concerned cited the following reasons:
• "I don’t like some non-DRP shop criticizing my body work for monetary gain."
• "Any time you have a rush job, it cuts quality."
• "This is another area where the insurance companies are using shop owners as scapegoats and not taking responsiblity."
• "Pre-accident condition doesn’t call for A/M parts."
Those who aren’t concerned cited these reasons:
• "I can’t say I know what the term means."
• "That’s between the vehicle owner and insurance company."
• "If a vehicle is repaired properly, there’s no loss of value."
Of those shops using …
• OE crash parts, 88.3 percent of their repair orders include them.
• A/M crash parts, 67.4 percent of the repair orders include them.
• non-CAPA-certified crash parts, 30.2 percent of their repair orders include them.
It’s not surprising then that shop owners say OE crash parts fit the best: 95.2 percent provide an acceptable fit. On the other hand, respondents reported that only 55.5 percent of CAPA-certified A/M crash parts provide an acceptable fit and 45.7 percent of non-CAPA-certified A/M crash parts provide an acceptable fit.
When CAPA-certified parts don’t fit well, 70 percent of respondents say insurance companies never pay for re-fitting the parts, while 10.3 percent say they pay half the time and 2.8 percent say they always pay.
Of those shop owners who responded yes, an average 2.5 jobs per week were turned away. Why are 62.5 percent of shop owners turning away work? Some of the reasons listed include:
• "Too busy."
• "Don’t have enough technicians to do the work."
• "Customers ask to save their deductibles."
• "Insurance payments are too low to perform the necessary repairs."
• "Jobs aren’t profitable."
• "Vehicle owners want less than an excellent repair."
• "Some repairs involve too much work."
• "Anticipate collection problems."
Of those shops polled, the average posted labor rate is $36.52. Those same shops report the average "prevailing" insurance rate in their area is $35.62.
Why are 47.1 percent of shops compromising that labor rate? Some respondents noted:
• "That’s all the insurance companies will pay for and changing that requires ‘going to war.’ "
• "Because of contract, DRP work."
• "To get the job we had to accept the insurance rate, which was $2 less."
• "A customer had no insurance coverage and we felt sorry for him."
• "We lowered the rate to compete with other shops’ estimates."
• "Business was slow."
• "The car was a near total, so we reduced the rate to save the job."
• "We needed the work; my employees have to feed their families."
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Will diminished value (DV) have a positive or negative effect on the industry? This year, 48.1 percent of respondents say DV will have a negative effect, which is almost identical to last year’s figure (48.6 percent). However, 18 percent of this year’s respondents say it will have a positive effect and 33.8 percent say it will have no effect. Last year, more than 27 percent said it would have a positive effect and 24.3 percent said it would have no effect. Why do shop owners feel the way they do? Positive: Negative: No effect: You May Also LikeBody Bangin’: The Golden Rule Doesn’t Work with Mark OlsonLive from the Southeast Collision Conference, Micki Woods interviews Mark Olson of Vehicle Collision Experts on keys to understanding people.   Micki Woods, master marketer for collision repair shops and owner of Micki Woods Marketing, is kicking off a series of daily podcasts from the Carolinas Collision Association's Southeast Collision Conference which took place April 18-19, 2023 in Doswell, Va. This series is sponsored by Lombard Equipment, which offers a premier line of automotive collision repair equipment for all your OEM certification needs. Body Bangin’: Stop Estimating and Start Repair PlanningLive from the Southeast Collision Conference, Micki Woods interviews Michael Bradshaw on creating a thorough repair process.  Body Bangin’: Recruiting Young People with Kurt LawranceLive from the Southeast Collision Conference, Micki Woods interviews Kurt Lawrance of KTL Restorations about a unique program he and his wife created to recruit young people to the automotive industry.  Body Bangin’: You’re Losing Money on Your Labor Rates!Live from the Southeast Collision Conference, Micki Woods interviews John Shoemaker, business development manager with BASF Automotive Refinishes, on the difference between labor rates and labor types.  Body Bangin’: New Mixing Technology with Amanda ValmonteLive from the Southeast Collision Conference, Micki Woods interviews Amanda Valmonte, business development manager with PPG, on the new Moonwalk automated mixing system.  Other PostsBody Bangin’: Pre- and Post-Measuring with Chad DellingerLive from the Southeast Collision Conference, Micki Woods interviews Chad Dellinger of Autototality/Car-O-Liner on pre- and post-measuring.  Body Bangin’: Write Your Strongest Sheet with Danny GredinbergLive from the Southeast Collision Conference, Micki Woods interviews DEG Administrator Danny Gredinberg on how shops can utilize the DEG to get paid for what they do.  Body Bangin’: EVs Love Glue Pulling with Chris WhiteLive from the Southeast Collision Conference, Micki Woods interviews KECO Body Repair Products Owner Chris White on the benefits of glue pull repair.  Body Bangin’: Set the Stage for the Repair with “Big Chris”Live from the Southeast Collision Conference, Micki Woods interviews Big Chris of Big Chris Collision in Aiken, S.C., on his key takeaways from the Southeast Collision Conference.  |
