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Letter to the Editor

August 2000 Publisher's Page
Up, Down, or Sideways?

That is what suppliers, consolidators and others are asking about the volume of collision repair work so far this year. Our research would indicate a three to four percent increase in paid claims coupled with a First Quarter increase in severity of perhaps five to six percent. In other words, it’s pretty flat with parts and materials price increases accounting for most of the sales increases.

In some markets shop owners have told us that they have been able to write a little "fuller sheet" without too much push back from insurers, but this may well disappear in August if claims fall off as they normally do in late summer and competition intensifies for a greater percentage of any one insurer’s DRP volume, especially in metropolitan markets. Of course, one of the lessons CARA learned the hard way was that you can’t give away too much in the drive for increased marketshare.

While repaired accident frequency as a percentage of policies in force continues to decline slightly here in the USA, collision repair facility owners may think "the grass is greener" over in the UK, where repaired accident frequency is three times higher. A closer look at the UK collision repair market, however, reveals its own set of ups and downs, including decidedly lower profitability numbers and a growing list of concessions and giveaways to insurers.

One result of a flat market has been the intensification of competition between refinish materials providers to lock in future volume with contracts both with individual shops and consolidators.

Some of these contracts may bite back, as exemplified by Sherwin-Williams losses tied to the CARA bankruptcy. I have to believe that all the paint makers learned a lesson from that and perhaps companies will move back to a combination of improved product coupled with expanded service and training, the combination of which would be better long term for the industry.

The aftermarket parts industry has had its share of ups and downs lately, sparked by last year’s State Farm trial decision, but, as Marc’s conversation with CAPA’s Jack Gillis demonstrates, in the long run what appeared to be a devastating blow to the aftermarket players may in fact be an opportunity for the industry to improve.

Complaining customers can be like the bad-tasting medicine your mother made you take - "It’s good for you," she always insisted. And she was right. A customer complaint is a golden opportunity for quality improvement in a body shop facility, both in repair quality and in customer service. This month’s feature article provides some practical, down-to-earth tips on turning a bad situation around. With competition intensifying, there is a need to be on the lookout for ways to get ahead.

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