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Letter to the Editor
This article originally appeared in the January 2001 Issue of INSIGHT
January 2001 Investment Update
The good news today is that the year is almost over and hopefully the blood will stop flowing as it relates to the value of collision repair stocks.
Technology stocks continue to get hammered most, with CCC continuing its drop, closing today the 15th at $6.75, a long way down from the $30 or so it saw earlier this year.
CCC rolled out at NACE the first offering of its totally owned subsidiary DriveLogic. The new product offering is Collision Repair solution which, in a nutshell, is a service offered to collision repairers to provide them with first a website, second, e-mail communications, a job tracking system for vehicle owners and on the Internet news about the industry.
As planned, the system has no insurer interface, nor will it provide for parts ordering, materials purchasing, etc., etc., as many of the other dot-com companies are promising.
Time will tell if this new program is more successful than the "Red Tool Box" program or Collision Industry Connection, etc. - programs which, if not gone, appear dormant.
On the subject of dot-com companies, many exhibited at NACE, for example ChoiceParts.com, a company put together by ADP, CCC, and Reynolds & Reynolds to compete with CarStation.com for parts ordering from dealers, salvage yards, and the aftermarket, had a large (but almost empty at the times I went by) display.
It would appear that yet another new company, founded by Ford, GM, DaimlerChrysler, and Bell & Howell, may take the lead in the parts ordering race. As mentioned before in this column, Bell & Howell has the best database of parts tied to individual VINs, allowing the dealers a hassle-free parts order entry system which, according to Bell & Howell, will have at least a couple advantages over competition. First, the identification of parts which their history shows may be needed in addition to the ordered parts, and secondly a software package allowing the dealer to adjust his pricing to compete with aftermarket and/or salvage while hitting a predetermined overall GPM or dollars of gross profit per order.
Competition among the paint companies is heating up in a way that we believe will, in the longterm, be far more beneficial than upfront money for buying contracts or deeper discounts on the materials.
PPG, for example, rolled out their new Certified First Program for shops, and I would have to say that, from customer comments I heard around PPG’s booth at NACE, it looks like a winner. (Editor’s note: See the September 2000 INSIGHT for the initial launch of PPG’s program.)
At the BASF display area the buzz was about their new Internet interactive business support program, which allows customers to not only compare their operations against benchmarks, and gives them a real-time bonus - the ability to play "What if?" with many of their numbers.
Sherwin-Williams has also expanded their Internet site to provide both expanded technical assistance and business systems support.
It would appear that suppliers are getting the message that support programs aimed at both building volume and improving profits are most effective in expanding and protecting their customer base.
Keystone sources report that, looking at November and the first week or so of December, aftermarket parts sales have started to recover from the State Farm settlement time, with same store sales higher than 1999. Part of this is undoubtedly tied to Nationwide’s and Farmers’ reintroduction of aftermarket parts, albeit not on a national basis. Looking into 2001, it is my opinion that Keystone will turn the corner in terms of sales and profit recovery.
You will probably be reading this as the New Year begins, and I wish all our readers, including those I have picked on in 2000, the best of the New Year.
-Charles Baker-
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