I believe we can all agree on two things: OEM parts are superior to remanufactured and aftermarket parts, and insurance companies are going to continue to use remanufactured and aftermarket parts as long as they can reap significant cost savings. Knowing these two things, I choose not to expend my energy fighting big insurers head on about their parts usage guidelines. Instead, I channel my energy into extracting profits from insurers’ use of aftermarket parts and try to indirectly instill change while maintaining profitability and repair quality.
Saving Totals
I believe if you looked at OEM part and aftermarket part use objectively, you would realize that they both impact your bottom line in a positive way. For instance, how many times this year did using aftermarket parts save a vehicle from being a total loss? As people keep vehicles longer, those vehicles’ values diminish, making them less and less repairable with each passing year. If aftermarket parts weren’t available, older cars involved in minor fender benders would be totaled. Unfortunately, OEM parts don’t seem to fall in value as quickly (if at all) as the cars they belong to. It’s important that we have access to alternative parts, but it’s equally important for vendors to supply us with quality parts.
I have absolutely no problem using aftermarket parts if (and it’s a big if) their performance is equal to their OEM counterparts and they don’t compromise the integrity or safety of the vehicle. It’s important that the aftermarket part is made of material that’s equal to the OEM product. I recently purchased a metal tester that allows me to, in mere seconds, determine if the aftermarket and OEM part are both made of the same type of metal. If there’s a discrepancy (e.g. a mild steel bumper reinforcement vs. a high-strength steel OEM part), I’m able to provide the insurance company with an indisputable document identifying the tensile strength of both materials.
On the plus side, I’ve never had an insurance company tell me that I had to settle for using a part that directly contributed to a substandard repair. If the alternative parts work, there’s nothing to complain about. If they don’t, you need to know how to extract profit from a bad situation and turn it into a good one.
Getting Paid
When I submit an estimate to an insurer for review, I write all replacement parts as OEM parts. If the insurer chooses to switch out the OEM parts for alternative parts, then the fit, finish and quality falls on its shoulders.
When I receive a revised estimate, I ask the adjuster or desk review representative if he or she is willing to add repair time to test-fit all non-OEM parts. If they agree, you just added time and helped to ensure the quality of the repair. If they refuse, you just wrote yourself an insurance policy in case the aftermarket parts don’t fit. I strongly suggest corresponding via e-mail so you can verify all transmittals and leave nothing open to “he said, she said.” Is this situation perfect? No. However, it does ensure at a minimum that you’ll be reimbursed for your incurred cost and the quality of your repairs won’t suffer.
In the event you have to re-work a vehicle because there’s an issue related to the use of substandard parts, it’s important that you get paid for all costs involved. When was the last time you billed the insurance company for administrative costs (something they really hate)? If you think about it, you have to take photos, write a supplement(s), and e-mail and/or fax the information to the insurer. Why should the shop be burdened with covering the overhead to file the paperwork required to get reimbursed? Have you included storage charges for vehicles that had to sit in your shop while waiting for parts needed to complete the repair correctly? These are just a couple of examples of thinking outside the box to begin building profits.
At this point, I’m sure you’re all saying that these methods will affect your cycle time. That may be true, but I’ve never had a customer who was more concerned about getting his or her car back quickly than getting it back correctly. I explain the parts usage to the customer prior to beginning repairs. If customers voice a concern about the insurers’ parts usage guidelines, I reassure them by telling them that the insurers may be able to make me use aftermarket parts, but they can’t make me use parts that contribute to a substandard repair. I’ve found that if the customer is more informed prior to the repair, he or she will better understand why additional procedures may need to be performed or when there’s a problem with the parts.
Face Reality
As a small shop of only 6,000 square feet, I understand the importance of getting vehicles to leave on or before their intended delivery dates and that fighting insurers directly affects this. But the reality is that aftermarket and used parts vendors are here to stay, and their presence in our shops is only going to become more prevalent as insurance companies look for ways to cut repair costs.
I believe that competition and choice are good for our industry. If we hold insurance companies, as well as aftermarket parts vendors, to a higher standard by choosing to replace their ill-fitting parts with higher quality parts rather than performing trickery to make them fit, the quality of these parts should become better. If more shops do this, I believe it will eventually make a difference. The only way you’re going to make big insurers stand up and realize the error of their ways is to hit them in the pocketbook.
When what insurers dictate for the repair starts increasing the average repair cost, they’ll definitely reconsider their parts usage guidelines. I believe that certain aftermarket parts that continually cause problems will eventually be removed from estimating systems and either disappear or come back to the market as a better product after the manufacturer fixes the problem. If these companies continue to sell substandard parts and we continue to use them, we can only hold ourselves accountable because that will mean we’re just idly standing by and not trying to instill change in the industry.
I would like to see aftermarket manufacturers produce parts that are equal to that of their OEM counterparts, instilling a sense of competition and free market enterprise, unlike today’s marketplace where you pay less and get less or pay more to get more. Ultimately, seeing multiple vendors producing quality parts and competing on price point and customer service is what our industry needs – not the exclusive use of OEM parts.
Kyle Steinburg owns Wenatchee Auto Body and Fender in Wenatchee, Wash. He can be reached at (509) 662-8508 or [email protected].
The views expressed in this guest editorial do not necessarily reflect those of BodyShop Business magazine.
