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Letter to the Editor
This article originally appeared in the March 2001 Issue of INSIGHT
©2001 Collision Repair Industry INSIGHT All Rights Reserved
OEConnection from Bell & Howell, DaimlerChrysler, Ford, and GM
DaimlerChrysler Approves PPG as Preferred Refinish Supplier
Insurance Fraud Prevention Authority in Pennsylvania Releases Statistics for 2000
BASF Recognized by Toyota as Customer Satisfaction Partner
Mitchell Announces New Functionality at eMitchell.com
ChoiceParts Takes over CarStation CommerceSystem and CarStation.com from OnStation
2001 CIC Survey Highlights Key Industry Issues
INDUSTRY UPDATE
The company created by Bell and Howell, DaimlerChrysler, Ford, and GM has a name: OEConnection. The following series of FAQs were "located" by INSIGHT at the company's website:
- What is OEConnection about?
- This online portal will allow auto dealers and their wholesale parts customers (i.e. repair shops, collision shops) to identify, locate and move repair parts more efficiently. It will provide buyers a single source for all of their OEM parts and service needs through the OEM dealer channel. We expect this new portal to provide benefits to dealers and to their wholesale customers through speed and increased efficiency. By working together, DaimlerChrysler, Ford Motor Company and General Motors also bring scale that should greatly expand the usefulness of the portal to its participants. For example, a parts locator is a great tool in a dealer's parts department, but its effectiveness is directly linked to the number of other dealers also using it.
- Who is involved in OEConnection?
- The portal is founded by the Mopar Division of DaimlerChrysler Corporation; Ford Automotive Consumer Services Group; General Motors Service Parts Operations; and Bell & Howell. The new venture will be an independent limited liability company (LLC) with ownership split equally among General Motors, Ford Motor Company, DCX.NET GmbH (DaimlerChrysler) and Bell & Howell.
- This project was initiated jointly by the three automakers based on a clear need to provide customers with a one-stop shop for their OEM parts needs. (There are numerous multi-brand dealers who now only need one parts cataloging and locator system.)
- There appears to be no concern about proprietary information. There will be security firewalls built into the portal to protect confidential and/or proprietary information. In addition, since repair parts are generally not interchangeable between the three automakers, the new venture will not affect the competitiveness of the three companies.
- The parties involved are not disclosing the capitalization of the new company.
- This project was initiated jointly by the three automakers based on a clear need to provide customers with a one-stop shop for their OEM parts needs. (There are numerous multi-brand dealers who now only need one parts cataloging and locator system.)
- What is the role of Bell & Howell?
- Bell & Howell is the technology provider. Bell & Howell's expertise in electronic cataloging and CollisionLink technology will serve as the foundation for this new portal. It is possible that additional technology companies will be involved in the venture, either as vendors, or even possibly as equity partners. But Bell & Howell will always be the venture's lead technology provider and integrator.
- Where is OEConnection and who will run it?
- The new venture will be initially located in Richfield, Ohio, near Cleveland, in separate facilities at Bell & Howell headquarters.
- Chuck Rotuno, formerly senior vice president and general manager, Global Automotive Publishing, at Bell & Howell, is the venture's newly appointed president and CEO. Two representatives from each of the four companies make up the board.
- Why isn't this a branch of the Covisint project?
- Covisint's core business is to offer procurement, supply chain management and product development services related to the manufacture of new vehicles and is an online channel between an OEM and its multi-tiered suppliers.
- This new parts portal is a communication platform among an OEM, its dealers and each dealer's OEM parts customers (i.e. repair shops and collision shops).
- Will aftermarket parts be handled here?
- No. The new portal is intended to service the genuine OEM parts dealer and not the general non-OEM aftermarket.
- Will this require FTC approval?
- No, we will not need regulatory clearance to begin operations.
- Is there a concern about anti-trust laws?
- We believe that the efficiencies that this portal creates and the benefits to all involved -- consumers, wholesale parts customers, dealers and each OEM -- are clear, and thus, we are confident that the venture complies with the antitrust laws.
- Is the portal operational?
- We expect the new portal to begin transactions in 2001. Because the initial functions will be based on existing portal technology (CollisionLink), the new portal will get up and running very quickly.
- Who will staff the portal?
- The new parts portal will be primarily staffed by Bell & Howell personnel, with several representatives each on loan from Ford, GM and DaimlerChrysler. The portal will eventually have a full-time staff independent of the four companies. Initially, there are less than 50 employees.
- Who will use the portal?
- We believe that most of the nation's 25,000 dealers and tens of thousands of repair and collision shops will participate in the new portal.
- Do you anticipate resistance from dealers?
- DaimlerChrysler, GM and Ford will initiate enrollment campaigns with their respective dealers to educate them on the benefits of participating in this portal. The portal will bring new customers to dealers and increase the volume of parts sales.
- What will generate revenue? Who will pay?
- The portal will derive revenue from those who use it, primarily dealers, through transaction fees and/or subscription fees. Efficiencies created by the portal will actually cost dealers less than they currently spend on parts sales and distribution. We believe that there are significant business opportunities for this portal, but we are not going to speculate at this time about revenues and profits.
- Will collision repair shops have to pay to use the portal?
- As this portal is a way to link customers (collision shops) with sellers (dealers), the current revenue model does not have customers paying to use the portal.
- Are there plans to offer an IPO?
- At this time, there is no plan to offer an IPO.
- Will other automotive brands become involved?
- We believe that these affiliated brands will also participate in the new venture, but initially, the new portal will launch with the OEMs' U.S.-based brands. This venture is initially intended to serve customers in the U.S. and Canada, although we will definitely consider expanding to additional areas. It would be possible for other automakers to join the venture and receive an equity position. We are very interested in enrolling additional OEMs, as the venture's purpose is to provide a convenient portal for all auto dealers and their customers.
- How will insurers be involved?
- The response to the question concerning insurer involvement is vague: The efficiencies created by the portal should have the effect of making the sale of OEM parts more cost effective.
Meanwhile, ChoiceParts has sued the Big Three and Bell & Howell on the basis of anti-trust laws, and the Big Three are all re-evaluating their parts information licensing agreements, and ADP plans to encrypt estimate information, and Mitchell just introduced an open system for claims processing... Stay tuned...
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DaimlerChrysler AG has approved PPG Industries as a preferred supplier of refinish products and services to DaimlerChrysler repairers worldwide for warranty and aftermarket collision repair. The approval begins with the calendar year 2001 and continues in perpetuity as long as PPG meets the product requirements of DaimlerChrysler.
During 2000, PPG successfully completed a DaimlerChrysler audit which detailed strict requirements in the areas of training, services, research and development, and product systems. PPG is one of only two suppliers to meet the stringent requirements imposed by DaimlerChrysler.
PPG's product systems were also put through rigorous testing which mirrored DaimlerChrysler's requirements for original equipment finishes. Tests included chip resistance, corrosion, adhesion, ultraviolet degradation and color matching.
Michael Gimpl, DaimlerChrysler passenger car service manager, said "PPG has put forward a package of products and services that will meet our needs and the neseds of our repairers globally for years to come."
DaimlerChrysler will be utilizing PPG's Global, Envirobase and Delfleet product ranges. These systems meet all specifications for European rules, the U.S. National rule and the stringent 1151 rule for Southern California. The approval covers both passenger cars and commercial fleet vehicles in all countries in which DC and PPG operate and includes all brands owned by DaimlerChrysler AG.
Wolfgang Rentschler, DaimlerChrysler commercial vehicles service manager, stated, "PPG offers a broad range of services, high quality products and global distribution. In addition to this, the company clearly demonstrated a commitment to understanding the needs of the DC brands during the approval process."
Chris Pannent, PPG director of refinish /OEM, said, "Having the two quality brands working together will improve the ability for repairers to meet these needs in the aftermarket." PPG will work with individual country units of DC to utilize the approved systems. Pittsburgh-based PPG is a leading global supplier of coatings, fiber glass, fabricated glass and chemicals with about 120 production locations. Its 2000 sales were US$8.4 billion.
The Pennsylvania Insurance Fraud Prevention Authority (IFPA) released its annual statistics, and the numbers tell a story of hard-nosed enforcement of a crime that is estimated to cost each American family as much as $5,000 a year.
The IFPA funds 13 law enforcement units throughout the commonwealth using assessments on insurance companies. Without spending one cent of taxpayer money, the IFPA has had an undeniable impact on fraud in the state. For the year 2000, the IFPA's funded units:
- Made 285 arrests
- Prosecuted cases resulting in $693,000 in court-ordered restitution
- Helped save $7 million in potential victim loss, the amount insurers would have paid out in bogus claims
Since 1996, IFPA-funded units have made 1,440 arrests, been responsible for court-ordered restitution of $5.1 million, and helped save $33.9 million in potential victim loss.
"Pennsylvania has always been an innovator and a leader in the fight against insurance fraud," said Roy Miller, executive director of the IFPA. "These latest statistics show that the IFPA model works. But more importantly, the numbers send a clear message: If you're going to commit insurance fraud, you'd better not do it in Pennsylvania."
Miller said that aggressive prosecution, high-profile fraud cases and the IFPA's ongoing media campaign have all helped raise public awareness of insurance fraud in 2000. But Miller also said that, because insurance fraud continues to place a financial burden on consumers, the anti-fraud push must continue.
The Pennsylvania Insurance Fraud Prevention Authority was created by the Pennsylvania State Legislature when it passed the Insurance Fraud Prevention Act in 1994. The IFPA arms law enforcement and prosecutors with the resources necessary to fight insurance fraud. It also operates an aggressive, ongoing public awareness campaign. The IFPA funds its efforts through assessments of insurance company that write policies in the state. It uses no taxpayer dollars.
BASF has been recognized by Toyota as a partner in the Toyota Certified Collision Center program. In presenting a plaque to Joe Skurka of BASF, Roger Foss, National Dealer Development Manager for Toyota Motor Sales, USA, Inc., acknowledged BASF's participation and contributions to the program.
Accepting the award, Skurka, BASF Manager of OEM Relations, praised the Toyota program as innovative and an outstanding example of the automotive industry's commitment to customer satisfaction. "On behalf of BASF, I would like to thank Roger and the people of Toyota for giving us the opportunity to participate in the Certified Collision Center program," said Skurka. "Both Toyota and BASF recognize the importance of meeting the needs and expectations of our customers. We are proud that BASF's products and services have contributed to the success of Toyota's program."
The Toyota Certified Collision Center program is designed to help Toyota dealerships maximize sales and profitability, deliver quality repairs, and increase customer satisfaction. Toyota accepts BASF paint training as part of its requirement for technician certification.
Mitchell International has announced new functionality at eMitchell.com that enables "end to end" on-line processing of collision repair claims from first notice of loss through repair and payment. eMitchell.com is Mitchell's open and interactive Internet workspace and marketplace for the insurance and collision repair industries. Its purpose is to gain greater user efficiencies, reduce cycle times and achieve significant cost savings. Mitchell is currently setting up pilots of the new claims processing functionality.
"This important milestone in functionality further underscores that Mitchell is providing the premier e-Business site for the insurance and collision repair industries," said Jim Lindner, Mitchell's president and Chief Executive Officer. "Rather than simply talking about providing comprehensive e-commerce solutions, Mitchell is moving forward rapidly and delivering real, value-adding functionality and a suite of applications that are available now."
"In the development of eMitchell.com, Mitchell has gone to great lengths to maintain integration with existing legacy systems," said Steve Yin, Mitchell's vice president of e-Business. "This means insurers can adopt claims processing at eMitchell.com today since all data exchange can occur through existing channels."
Yin added that easy integration provides greater flexibility. "Insurers can implement our entire claims processing solution or just the components that address their immediate business needs. This 'stair-step' approach enables our customers to choose the solution that's best for them or to take a phased approach to on-line claims processing," he said.
The claims processing functionality is another significant step in Mitchell's e-Business strategy, kicked off with the launch of eMitchell.com last fall. The site provides access to a growing number of online products and services that enable the various parties in the collision repair supply chain -- from body shops to parts vendors to insurers -- to conduct more and more business online. Its open infrastructure will allow any authorized user to access information with only a Web browser -- no special hardware or software is required.
Editor's Note: How will this development be impacted by:
ChoiceParts, LLC, the auto parts network founded through a partnership among CCC information Services Inc., the Dealer Services and Claims Solutions Groups of Automatic Data Processing, Inc., and the Reynolds and Reynolds Company, will be the sole marketer and distributor of the yet to be commercialized CarStation CommerceSystem (CCS) developed by OnStation Corporation (formerly CarStation).
As part of the agreement, ChoiceParts also will acquire the CarStation.com e-commerce hub and its customer base of automotive parts dealers, recyclers and collision repair shops. The transaction is expected to be complete within two months.
ChoiceParts’s aim is to provide automotive retailers and repair specialists an integrated, online parts solution. OnStation, formerly CarStation, on the other hand, plans to focus its operations on developing and deploying enterprise software solutions.
Chan Galbato, chief executive officer, ChoiceParts, LLC said, "The ability to offer a comprehensive collision shop interface, combined with the ChoiceParts dealer product, delivers to our customers what they need – an integrated way to reduce cycle time, increase customer service and reduce parts delivery time."
DriveCam Video Systems has announced that the company's DriveCam video event recorder has been proven to reduce the administrative and investigative costs in processing insurance claims for fleet operators.
A component of the company's complete driver safety program, DriveCam is a palm-sized video recorder mounted behind a vehicle's rearview mirror that captures everything a driver sees and hears in the 20 seconds before, during and after an unsafe driving event. Events are stored in the unit's digital memory along with the level of G-forces on the vehicle.
DriveCam's digital recording allows police and insurance investigators to easily view an event on a TV, VCR or personal computer. Seeing and hearing an event just as the driver did provides them with information critical to determining fault. DriveCam's event recordings are being used to dramatically reduce the time required to process insurance claims, thus lowering costs for insurance companies and the fleets they insure.
Cloud 9 Shuttle of San Diego has used the DriveCam event recordings to settle insurance claims, including a multiple vehicle accident. In several cases, the Cloud 9 van was first accused of causing the accident. However, the DriveCam video clearly showed that another vehicle was at fault. Cloud 9's insurance claims representative used the video and amended police reports to quickly negotiate the claim.
"Settling these claims without the DriveCam recording would have taken months and would have resulted in our insurance carrier making payments for the other vehicles," said Mike Forbush, vice president of operations for Cloud 9 Shuttle. "With just one driver's word against another, the insurance carrier usually pays at least 50 percent of the damage. In a multiple vehicle collision, that can include every vehicle that was damaged and any bodily injury. With the DriveCam recording, our carrier was able to settle these claim in days, without making a payment."
In addition to lowering claims processing costs, San Diego based DriveCam has the potential to significantly lower the amount of fraudulent claims. According to an Insurance Information Institute report, property/casualty insurance fraud totaled an estimated $24 billion in 1999, or about 10 percent of claims. The report states that fraud is more prevalent in auto insurance, where the large number of relatively small claims that must be processed by insurance companies within a short period of time provide opportunities for fabricating medical and auto repair bills or auto theft reports.
"One of the problems in reducing fraud is that it is difficult to determine who is at fault," said Ed Andrew, president of DriveCam Video. "Our DriveCam video event recording system captures the human experience and provides an objective view of what occurred that is indisputable."
DriveCam is used by fleets as a part of a complete Driving Feedback System that provides drivers and their managers with accurate, unbiased feedback on their driving performance. The program includes a manager's guide, driver guide, videotape and Event Manager software for logging and tracking vehicle events. Fleets using this program have experienced a reduction in accidents due to increased driver awareness and training.
The survey of industry issues developed during the Collision Industry Conference (CIC) planning session in January continues to generate useful feedback from all segments of our Collision Repair Industry The work done at the planning session identified key issues and determined which committees or action groups (ad hoc) needed to be established to address specific issues.
The survey form is available for download at the CIC website, http://www.ciclink.com, and those of us who have not yet done so need to complete and return the surveys ASAP. Lou DiLisio, 2001 chairman of CIC, is currently contacting potential committee members.
"I am very excited about the feedback I have received to date and look forward to the coming year. I am committed to making CIC the best it can be," commented DiLisio. "The committees will be responsible for addressing the issues and developing actions toward resolution in the manner in which you, the industry, have prioritized them. This will be especially helpful to the committee participants so that they know exactly what needs to be done and they will be held accountable to the CIC body and the industry at large for addressing them. A big thanks goes to Charlie Baker and Collision Repair Industry INSIGHT for developing the survey form and tabulating and analyzing the results. "
Based on the responses received, the chart below highlights the key issues for each committee. The hottest issues, designated most important by respondents from every market segment are: repair cycle time, ownership of computer data, and acceptance of a recognized estimating system.
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©2000 Collision Repair Industry INSIGHT
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