By Ben McNamara
One of the more sensitive issues in auto body shops today
is the use of used and remanufactured parts, which insurance companies
have promoted and many shop owners are reluctant to support.
Currently, the total collision repair market is estimated to be
$21.1 billion per year, of which $10 billion is attributed to
parts, according to the Aftermarket Body Parts Association (ABPA).
Eighty-five percent of the $10 billion is spent on new original
equipment manufacturer (OEM) parts, 10 percent is spent on non-OEM
and remanufactured parts, and 5 percent goes toward salvage parts.
In a 1996 AutoInc. survey, 94 percent of collision shops responding
indicated that they use salvage parts. But not all shop owners
support the use of used parts.
"Used parts are replacing our bottom line," wrote Ben
Steinman, of Ben's Auto Body, Mexico, Mo., in a report he prepared
for the Automotive Service Association (ASA). Steinman believes
in recycling parts, but he contends that it is almost impossible
to receive used parts with no damage to clean up, and there is
definitely no way to receive sheet metal from a salvage yard without
damage.
Information providers need to recognize how many steps are really
necessary in working with recyclable parts, reports Steinman.
"So as insurance companies encourage us to use more recyclable
parts, we must encourage them to acknowledge clean-up time per
panel, not to mention additional time necessary to cut, fit and
trim panels, as well as recognize that R & I time for accessories,
trim and mouldings in many cases should be doubled," he wrote.
Steinman also contends that R & R times in the estimating
systems are reduced for recycled parts when sometimes they require
more time, especially since many used parts have undetected old
repairs, corrosion and paint problems.
If the insurance companies were more realistic about used parts,
the industry would turn around immediately, according to Ron Sturgeon,
owner and president of AAA Small Car World, an automotive recycling
operation that includes six facilities in Texas and 110 employees.
His sentiments are echoed by Joe Sanders, owner of Colleyville
Classic Paint & Body in Colleyville, Texas, and Fort Worth
Classic Paint & Body in Fort Worth, Texas, who believes that
used parts use would double overnight if they were easier to find
and not as costly for the repair operation.
The locator systems used by the insurance companies that provide
lists of salvage yards that supposedly possess the necessary parts
are often inaccurate; therefore, locating the right part can be
time consuming since the yards often don't have the parts listed,
says Sanders. "It ought to be recognized that it takes a
great deal of administrative time to locate, receive and pay for
used parts." The insurance companies do not account for this
time, so it costs shops more to use used parts than new ones,
he adds.
Sanders says that even though it saves time to use OE parts, his
shops believe in recycling parts and will use them when it's economically
feasible.
Many shop owners become frustrated with the practices of some
salvage yards, and the fact that insurance companies want them
to use salvage yards that they have never done business with before.
Many parts come C.O.D. in UPS boxes and shops are expected to
pay before they even see the part, says Sanders. If the salvage
yard is not local, and especially if you don't use them often,
it's burdensome because you have to pay to have the part sent
back, you spend more time finding another part, which you are
not paid for, and the job does not get done on time as promised,
says Sanders.
The system used by insurance companies to locate used parts is
horrid, says Eric Showalter, president of Mirror Image, Topeka,
Kan. They don't care if the salvage yard is in your area, or who
you've been doing business with for years, he says. Local shops
and salvage yards build relationships; if you are forced to use
a salvage yard in another state, with which you have no trusting
relationship, they are going to expect you to pay C.O.D., and
the part is usually not the right one, says Showalter.
However, the used parts sector of the industry has clearly improved
from five years ago when there were no computerized systems or
databases for the market that there are today, according to Sturgeon.
His recycling operation uses a computer inventory software system
that is networked between all six facilities and currently contains
170,000 parts. He describes his clientele as about 30 percent
body shops, 40 percent mechanical repair shops, 20 percent other
salvage yards and 10 percent retail.
The Automotive Recyclers Association (ARA), for example, now recognizes
certain recycled parts suppliers as Gold Seal quality companies.
These participating companies form a partnership with a dedicated
goal "to provide cost effective responsible repair of damaged
vehicles with the cooperation of the professional repair industry."
These Gold Seal companies agree to adhere to the Gold Seal Code
of Ethics that promotes high professional standards and practices
for automotive recycling facilities.
Shop owners need to approach the used-parts issue in a professional
manner to promote their interests, according to Bob Anderson,
owner of Anderson's Automotive Service, Sheffield Village, Ohio.
To change the system, it is essential to work with the system,
he says. For some shop owners, the decision to use OE parts is
an economic one. "Used parts require more work," says
Anderson.
Less than 5 percent of Anderson's total parts sales is attributed
to used parts. "I work with their [insurance companies']
system," says Anderson. They want used parts, so it is their
job to do all the work to find them, he contends. And if the vendors
they select provide parts that are not equal to or better than
what was on the car before, simply refuse to use the parts, says
Anderson. The parts must be of the same or newer year, and from
a vehicle that had less mileage on it than the car being repaired,
he says.
The issue of what type of part to use on a repair job depends
on the car and the part, says Showalter. His first choice is to
use OE parts, which he says account for about 90 percent of his
business. His second choice is to use local salvage vendors, and
in rare cases, he uses aftermarket parts. If he has to locate
a used part that none of his local salvage yards currently have,
he works through these local vendors who use various parts locators
of their own or function as locators themselves.
In a May 1996 Automotive Service Association (ASA) news release,
ASA Washington Representative Bob Redding said, "For some
repairs, it may be appropriate for the consumer to elect alternative
replacement parts, particularly if there is a significant savings
to be made and provided that the consumer is absolutely clear
about what he or she is getting. The vital aftermarket parts market
is, itself, powerful evidence of many consumers' concern to keep
the costs down."
Showalter thinks that sometimes it's better to use used parts.
He says, "I would rather have a used assembly than multiple
new parts."
"The insurance companies drive the body repair business,"
says Sturgeon, who added that they force the body shops and recyclers
to do what they want them to do. He uses the analogy that insurance
companies live by the motto: "There's quality, there's service
and there's price. Which two do you want?" He contends that
salvage yards have been pitted against the body shops by the insurance
companies. And, just like the body shop sector of the industry,
there are good recyclers and there are bad ones, and the industry
perception is formed around the lowest common denominator, according
to Sturgeon.
Some shop owners feel as though they are in a "no win"
situation. The insurers inform shops that there are plenty of
good parts out there, while salvage vendors are insisting that
shops should expect salvage parts to have some damage, according
to Steinman. "Insurance companies want to force body shops
to use used parts," Sturgeon said, "and body shops are
not opposed, but only if they can get markups and quality parts."
Somehow body shops and recyclers need to recognize what body shops
need and what recyclers can deliver, and in the middle of it all
are the insurance companies, says Sturgeon.
There are three components to a solution for the current inadequacies
of the used parts industry, says Sturgeon. One is to solve the
database problems --- properly locating the right
parts and getting accurate pricing. The locating databases used
by insurance companies do not properly document parts that have
been sold or removed from inventory, he says. The second component
is for insurance companies to allow a reasonable markup for body
shops. Finally, insurance companies need to be more reasonable
about clean-up time and trim-down time.
Sturgeon defends insurers on one note: insurance companies locate
parts from suppliers they consider to be reliable, and write an
estimate based on the price of the part they located for the shop
to use. Then some body shops unscrupulously shop around for the
same parts for lower prices and pocket the difference, he says.
Anderson agrees that insurance companies are not completely to
blame in this industry ñ shops can blame themselves for
not being more proactive. The insurance companies have managed
to control the amount of time on repairs and suppress labor rates,
which "pits one shop against another." And because of
"lazy management," shops haven't been contesting the
practices of the insurance companies, he says.
The ASA takes a position on the issue of alternative replacement
crash parts that supports disclosure of the repair techniques
employed and type of replacement parts used, and the consumer's
freedom of choice.
ASA supports requirements that all replacement parts be equivalent
to or exceed the OEM's part for "fit, finish, structural
integrity, corrosion resistance and optimum crash performance."
ASA supports testing and certification of aftermarket crash parts
by independent certifying bodies, and that all estimates written
by insurance companies and collision repair shops identify to
vehicle owners any parts listed that are not new OEM parts.
When searching for used parts, the ideal situation for body shops
would be to make one phone call to a vendor of choice, who will
find a part, give a delivery date and deliver the goods as promised,
says Sanders. Until then, your best bet is to find a couple of
big, quality salvage yards that help you locate parts even if
they don't have them, he says.
Copyright (c) 1996-2008. Automotive Service Association. All rights reserved.
