Locating The Right Salvage Parts:
The Body Shop Headache
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.
Shop Cleanliness: It's Just Part Of The Job || Locating The Right Salvage Parts || The Air Bag Debate || ASA Sets Legislative Objectives For 105th Congress || Voting Line Open For 1997 National Elections || Don't Blow A Gasket || Purchasing Shop Insurance ||
Guest Editorial: Coordinate Your Efforts For Optimal Results
Tech To Tech || Tech Tips || News Briefs || Taking The Hill
Around ASA || Shop Profile || Net Worth || Chairman's Message
AutoInc. Magazine ®, Vol. XLV No. 1, January 1997