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Letter to the Editor
This article originally appeared in the February 2005 Issue of INSIGHT
©2005 Collision Repair Industry INSIGHT All Rights Reserved
CIC Gold Pin Planning Meeting Report
Allstate in Favor of Two-Way Communication Outside DRP Networks
Volkswagen to Offer No-Charge Insurance to Vehicle Buyers in Test Markets
MQVP Statement Sharply Critical of CAPA's Tracker
ADESA and Credit Acceptance Corp Partner to Locate Used Vehicle Inventory for Dealers
Insurance Auto Auctions Opens New Facility in Tukwila WA
Write It Right Committee Reactivated by New Jersey AASP
Man Arrested in New York State Accused of Defrauding Auto Body Shops Throughout the U.S.
NABC Reports Continued Increases in WorldSkills Donations
Boyd Group Growing in Canada and U.S.
BASF and Honda Continue to Partner in Honda Body and Paint Program
INDUSTRY UPDATE
The three national collision repair association have formed a "groundbreaking" joint taskforce as an off-shoot of the Collision Industry Conference (CIC) to work on "macro issues related to the way the [estimating] database companies operate."
Although the Association of Automotive Service Profess-ionals (AASP), the Automotive Service Association (ASA), and the Society of Collision Repair Specialists (SCRS) pushed for formation of the task force, the three groups said it will be open to participants from other segments of the industry, including insurers.
In announcing the proposal, which was adopted at the annual CIC planning meeting held in San Antonio in January, SCRS chairman Lou DiLisio said the taskforce will not address concerns about a specific labor time, a task left to CIC's Estimating Committee. Rather, the taskforce will look at issues such as how large-scale changes are made to the estimating databases and introduced into the industry.
The creation of the taskforce comes in the wake of the ADP October CD situation in which paint labor times for about 150 vehicles were reduced. Such time reductions, whether made in error or not, are typically found by users only through trial and error after a CD is being used, DiLisio said. The new taskforce may work toward a disclosure system for such changes.
"The ADP issue caused problems across the industry for insurers, repairers and consumers," DiLisio said. "To try to stop that from happening again, we'd like to sit down with the information providers and figure out a better way to make sure there's full disclosure of any changes that come forward with any new CDs.
"This is one of the few times that we've worked collectively," DiLisio said of the three associations. "We feel we can offer a better solution to the industry if we work collectively on this than if we worked individually."
Dan Risley, executive director of the SCRS, reemphasized the importance of more than just repairers participating on the taskforce.
"We definitely want insurer participation," he said. "We want the information providers participation. I don't want anyone to walk away from here thinking just the three of us are going to go off on our own and decide what we want and tell the body what's going to happen. For these sorts of changes to take place, everybody has to adopt them."
Presiding over his first CIC as chairman, Rick Tuuri of I-CAR was among those who voiced support for the formation of the taskforce.
"I think it's a groundbreaking idea, and from my perspective a good one," Tuuri said.
The formation of the taskforce was just one element of the meeting, which attracted about 150 people - the most ever for a CIC planning meeting - to San Antonio. One primary goal of the meeting is to determine what industry issues - among dozens submitted - CIC will address in the coming year, and to establish committees focused on those issues.
Issues related to "electronic commerce" remain high on CIC's agenda, particularly the elimination of the "rekeying" of data necessary when shops receive insurer-prepared estimates.
At the meeting, CCC Information Services announced that a new release of its estimating system expected this summer will help address the issue by allowing a user (such as an insurer) to make a copy of an estimate that can be accessed by another user (such as a shop). In announcing the new feature, Charles Navarro admitted that while it eliminates shop rekeying of data, it doesn't necessarily allow the shop to then send the revised estimate back to the insurer.
"That is a totally different thing that involves a collaboration agreement of the rest of the parties in the chain, which is the insurance company," Navarro said. "That is subject to discussion. The request that was made was to make an electronic copy of the file, and that is what we're going to provide. That takes care of the double-entry. Beyond that, if you want then to send that back to an insurance company, at that point you need to be cognizant of the other issues that enter the equation. If we've allowed making complete copies of the estimate, which one of then becomes the original that will be accepted by the other? Those issues need to be worked out."
The issue is one that will continue to be worked on by CIC's "Electronic Commerce" committee.
The next CIC meeting will be held April 13-14 in Charlotte, North Carolina. More information about the meeting, including the topics of each committee's planned presentations, will be posted on the CIC website (www.CIClink.com).
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The Society of Collision Repair Specialists (SCRS) has reported that the Allstate Corporation, the nation’s largest publicly held personal lines insurer, made a statement at the Collision Industry Conference (CIC) meeting in November during a panel discussion devoted to two-way communication. The panel, compromised of several insurers and one representative from the collision repair industry, was moderated by the CIC Estimating Committee.
The statement was in support of the industry’s efforts to establish two-way communication between like estimating systems. This entails asking the industry information providers to allow for the ability of one or more service providers—regardless of whether they are in a DRP relationship—to electronically transmit and receive estimate-related information.
“The discussions that ensued at that panel were lively and fast-paced, and we thought the Allstate position may have received less attention than it deserved,” explained Tom Moreland, SCRS Vice Chairman. “It was a significant announcement by an industry partner and, therefore, should be noted.”
In order to ensure that the message is understood, Dan Risley, SCRS Executive Director, contacted Mike Condon, Senior Manager Property Casualty for Allstate Insurance Company. Condon made the following points:
- Allstate supports this capability subject to legal, privacy and security issues being resolved.
- This capability is a necessary, evolutionary step towards electronic communications with all trading partners, not just DRP partners.
- Allstate will likely require this capability in any future consideration of any estimating system.
In a statement, SCRS has commended Allstate for lending its’ voice to the advancement of non-exclusive, two-way communication, and expects that the company’s statement will help drive the development of fair, efficient solutions to meet this goal.
“Allstate’s statement clearly indicates how tremendously important the ability to transfer this data is to all industry segments,” said Moreland. “We’re pleased to see insurers and collision repairers uniting their efforts for the betterment of all, because ‘Working Together Is The Most Important Work We Do.’”
The American International Automobile Dealers Association (AIADA) has reported that a Long Island insurance think-tank has licensed Volkswagen of America, Inc. to offer the industry’s first no-charge insurance policy to customers who purchase or lease selected models during a three-month test in Illinois and Wisconsin.
Unlike traditional rebates or low-interest incentives offered by other automakers, the insurance process has patents pending, ensuring that it will remain exclusive to Volkswagen of America during the pilot. Volkswagen will pay the premiums based on a new insurance model.
Creative Innovators Associates, Bethpage, N.Y., devised the insurance plan that bases risk on the car model rather than a driver’s profile.
VW will offer the incentive from January 4 to March 31, 2005 on the new 2004 and 2005 Golf, New Beetle and New Beetle Convertible. To qualify, residents of the two states must be licensed in Illinois or Wisconsin and take delivery of a qualifying car from a VW dealer in those states.
The In The Car(TM) incentive changes today’s auto marketing focus, aiming the spotlight on customer benefits rather than rebates. The incentive will not diminish the car’s trade-in value the way that rebates do.
"Traditional customer cash incentives have the effect of accelerating depreciation; what a consumer gets in an upfront discount is taken away in part at trade-in time," observed Bob Kurilko, vice president for Edmunds.com. "VW’s shift to a true added-value strategy-paying for a year’s insurance costs -- gives the consumer more realized value without generating the downside of traditional incentive programs."
Unlike zero-percent financing programs, the incentive benefits every customer of the three models. Approximately 70 percent of new-car shoppers do not qualify for zero percent financing, according to Edmunds.com research.
The VW In the Car(TM) insurance policies are underwritten by Nationwide Mutual Fire Insurance Company (Illinois) and Nationwide Property Casualty Insurance Company (Wisconsin).
Creative Innovators, an insurance and financial-services think-tank, designed the insurance model and worked closely with Volkswagen of America and Nationwide to develop the program.
The system anticipates a higher-than-normal ratio of younger, higher-risk drivers, but will also aim to be attractive to a wide spectrum of customers.
"The VW In The Car(TM) insurance policies will be valuable to VW customers regardless of age, sex or any other rating measurement used in traditional insurance," said Robert M. Wallach, Creative Innova-tors managing partner. "The cost of insurance is the second-largest expense in owning a car."
The VW In the Car(TM) policy also contributes to an easy purchasing process. Dealers provide the customer’s name, address and driver’s license number, and within about five minutes the customer can drive away with an insurance policy. An insurance professional calls within three business days to explain the policy, confirm coverages and provide assistance.
In what appears to be an on-going debate between CAPA and MQVP, MQVP has released the following statement:
After an industry disappointing display of “hide and seek" by CAPA regarding the questionable so-called lighting study (See recent press releases.), MQVP's president William Hindelang, said, “If that wasn't inexcusable, then this recent announcement is. The 'Tracker' idea is tantamount to a triple slam on the very industry that has subsidized this so-called not-for-profit certifier.”
Ever since the Avery Case, which was ushered in under CAPA’s watch, the CAPA/ Entela scheme has stood by their antiquated “sample inspection methods” and have tried to sticker quality onto the parts with seals.
Hindelang stated further, “Not only is this new single point of tracking not ‘traceability’, but this CAPA/Entela scheme has ignored, for four years, this critical value-added feature of MQVP's supply-chain traceability. During this time they flooded the insurers vehicle repairs with parts stickered whose quality hasn’t been tracked. If it is important to finally establish traceability of CAPA’s parts going forward, then the innocent insurance companies should not bear the liability of the past, but rather the full recourse should rest on the shoulders of CAPA. The failed stickered quality scheme and lack of tracking has slammed the insurers and distributors between more than just a rock and a hard spot. It is potentially even worse and more like being between a mountain of trackless stickers and a wall of class-action lawyers.”
SLAM #1:
A recent product comparison test conducted by an OEM revealed that CAPA allows its seals to remain on decertified product and that product continues to exist in distributor inventories probably across the country.
Distributors and manufacturers who have supported CAPA admit that when CAPA parts are returned by shops, or decertified by CAPA, the parts go back into inventory and get sold later anyway. Does a shop really want to buy those suspect parts and then document it in the CAPA Tracker database?
“The fact that CAPA wants to force the industry into a design and testing requirement, i.e. 'The CAPA 301 Lighting Standard' for safety related products and put more trackless stickers on them, is a chilling thought,” claimed Hindelang.
Insurers not willing to be unfairly tagged with that product specification and testing liability should appropriately avoid the technical committees and board associations with CAPA and the development of the CAPA 301 Lighting Standard.
SLAM #2
The CAPA Tracker appears to have been created and focused on driving recalls. While an effective recall would be a capability of a real traceability system like MQVP's, the higher order goal and a purpose with merit would be to use traceability and root cause problem-solving systems to drive best methods for preventing defects and to design and produce quality parts to begin with.
Certifying product lots by sampling only, putting stickers on them and tracking them with the intent to issue a recall at a later date is detrimental to the industry image.
Distributors, who have been supporting CAPA and rebating or paying the manufacturers for the sticker fee, are now being advised by CAPA's announcement that the distributor should bear the cost of the recall.
“Distributors should be horrified by this suggestion as they watch the not-for-profit Entela/CAPA system enjoy fees from both the insurers and the sticker sales,” said Hindelang.
SLAM #3 is the grand slam of them all.
Collision repair professionals have put up with nearly 20 years of CAPA's solution to quality, which is in effect a revolving door of stickered quality that gets certified, decertified, re-certified, and decertified generating a VTF cash machine for the Entela/CAPA not-for-profit system.
Now they are being set up by CAPA to be accountable for saving the failed sticker scheme. CAPA expects body shops to spend their precious cycle time hours entering the seal number and vehicle number information into the web-based Tracker, which CAPA needs to generate the recalls. This is a preposterous idea and an abuse of the shops’ resources.
The MQVP traceability system was designed to minimize involvement of the shops' time and eliminate data redundancy.
“If CAPA had a traceability system like MQVP they would have most of that information already and not burden a shop to do CAPA's job,” said Hindelang.
The reality for the industry is that a full supply-chain traceability system is needed as apparently even CAPA and their supporting insurers now agree. Four years ago MQVP, Inc. completed the development of this system and along with the manufacturers and distributors in its program have successfully implemented traceability for the supply-chain.
The CAPA Tracker, unless used 100 percent of the time by all (45,000) collision repair shops, will be a failed attempt at traceability and a partial and fragmented recall tool at best. Again, instead of CAPA taking liability and responsibility for their failed sticker system they want insurers and shops to be recruited into owning this problem.
In addition to being in place and easy to use, the MQVP GOCERTS system has been enhanced in 2003 with an automation of data transfer between the participants (AutoCERTS). In 2004, we released both a Web Portal service for easier web uploading of the traceability data and an advanced interface which participants can access as peer-to-peer e-commerce using Microsoft's Web Services functionality.
Since CAPA has been unsuccessful in protecting the consumer and assuring safety, maybe its time the industry should consider the importance of a functional traceability system and consider the existing MQVP OEM-like model.
MQVP Inc. is the creator and administrator of the Manufacturer’s Qualification and Validation Program (MQVP) and is a provider of global supply-chain quality assurance systems. MQVP, Inc. is located in Rochester Hills, MI, and its GOCERTS System provides traceability and monitoring of over 7000 part numbers representing in excess of 30,000 collision repair applications.
INSIGHT will continue to follow the CAPA - MQVP debate. Stay tuned.
ADESA, Inc. is developing a custom-built business solution for Credit Acceptance Corporation that is expected to be deployed online in late January. Both companies anticipate that this tool will provide an optimal method of targeting specific used vehicle inventory for Credit Acceptance dealer-partners.
Through the website, ADESA is creating new ways for dealer-partners to locate used vehicle inventory.
“We are pleased to be able to develop this system for Credit Acceptance and think the partnership is a win-win for the dealers, Credit Acceptance and ADESA,” said ADESA, Corp. President Jim Hallett.
“This website will drive more dealers to purchase vehicles from ADESA, whether from our physical lanes or from ADESA LiveBlock(TM) in such a way that we are matching dealers’ demand to ADESA auctions’ supply,” said ADESA Director of eBusiness Roger Laurendeau. “... Bringing more of the right dealers based on matching current auction inventory with dealers’ used vehicle needs is an evolutionary step in ADESA’s business model.”
Laurendeau added, “Since LiveBlock allows dealers to participate remotely in our physical auctions across the country via live video and audio internet bidding, dealers can now easily access the right used vehicle inventory from ADESA online... .”
Headquartered in Carmel, Indiana, ADESA, Inc. operates 53 ADESA used vehicle auction sites, 28 Impact salvage vehicle auction sites, and 83 AFC loan production offices.
Insurance Auto Auctions, Inc. has announced the opening of a new, centrally-located, 25-acre facility in Tukwila, Washington. Located approximately ten miles southeast of downtown Seattle, the Tukwila facility is the result of a relocation of IAA's Woodinville, Washington auto salvage operation, forced to close when King County condemned the site to open a water treatment facility there.
"The relocation to this strategically located facility is further evidence of our commitment to provide exceptional salvage services to the insurance industry at both a regional and national level," said Tom O'Brien, CEO of IAA. "With our new location in Tukwila, IAA has the capacity to provide salvage services for losses occurring throughout the state of Washington and to leverage other existing operations in the northwestern corner of the country. In addition to identifying ways to expand into new geographic locations, as we have done throughout the past few years, we will continue to recognize opportunities such as this that cost effectively leverage our existing locations and enhance our overall service offering to customers."
Insurance Auto Auctions, Inc., founded in 1982, currently has 78 sites across the United States.
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The Alliance of Automotive Service Providers/New Jersey (AASP/NJ), in conjunction with several New Jersey insurance carriers, has recently reactivated the Write it Right Committee.
An initial meeting was held on December 15, with participation by several insurance and collision shop representatives.
The “Write it Right” concept was first developed by the national Collision Industry Conference (CIC) organization in the 1990s, with the purpose of bringing insurers and repairers together for responsible discussions involving estimating and claims handling procedures.
This New Jersey committee intends to meet periodically during the course of the year, and has the following goals:
- Enable open and candid discussions of industry issues affecting the collision and insurance industries.
- Improve professionalism in the relationship between these groups.
- Improve communication and make it more efficient between these groups.
- The development and implementation of “best practices” guidelines for estimating and processing auto physical damage claims.
- Identifying and implementing “win-win” strategies for insurers, repairers and the consumer.
“We feel that the reactivation of this committee is coming at a crucial time for our industry,” said AASP/NJ member Joe Lubrano of J & E Auto Body in Clark. “The communication lines have become a little blurred over the past few years and we are looking forward to working with the committee to help clear those lines once again. It’s definitely a start.”
Any additional insurance carriers seeking to participate in upcoming Write it Right meetings are asked to contact Joseph Belfiore, Parkway Insurance, by phone at 800.821.1818, x3816, or by e-mail at jbelfior@parkway.com.
AASP/NJ sponsors the annual NORTHEAST Trade Show, the largest regional automotive trade show and congress in the country. The NORTHEAST show is celebrating its 28th edition in 2005 with close to 10,000 automotive professionals expected to attend. NORTHEAST 2005 is held at the Rockland Community College Arena in Suffern, New York and will take place on April 1, 2, and 3 of 2005.
New York Nassau County District Attorney Denis Dillon has announced that Julius Lupowitz, 43, of Bethpage, NY, was arrested by the DA’s Criminal Frauds Bureau and charged with Grand Larceny in the Third Degree, a Class D Felony and Scheme to Defraud in the First Degree, a Class E Felony.
According to Dillon, Lupowitz, the Owner and President of Ocean Spray Technologies, Inc., in Hicksville, was engaged in the business of selling a spray on truck bed liner epoxy to auto body shops around the country. In order to induce the auto body shops to buy his product, the defendant, using as alias, would pose as a fictitious owner of a fleet of trucks that needed to be sprayed specifically with Ocean Spray’s product.
This fictitious company would enter into an agreement with the auto body shop and based on this agreement, the shop would then purchase Ocean Spray’s product. After receiving the product, the shop would never hear from the fictitious truck owner again. Ocean Spray would then refuse to refund the auto body shops.
"One of the complainants in this case based out of Illinois received a solicitation call from Billy Pertis, a.k.a. Julius Lupowitz, of Ocean Spray Technologies, Inc. in January of 2004," said Dillon. "Mr. Pertis informed the complainant that if his company purchased a spray-on truck bed liner product from Ocean Spray, he would also receive referrals in his area for trucking companies needing their trucks sprayed with the product.
"The complainant purchased a starter kit from Ocean Spray Technologies, Inc. on January 20, 2004 for $575. The complainant subsequently received a telephone call from an individual who identified himself as Brent Wicks of Wicks Custom Hauling in Canada. Mr. Wicks informed the complainant that he was referred by Ocean Spray and that he had 14 Ford F350 trucks that needed to be sprayed with a bed liner. Wicks also stated that he was contracted to do a big job in Mexico and needed the interior of his trucks sprayed specifically with the ‘Patriot’ brand bed liner (made only by Ocean Spray Technologies)."
Dillon continued, "As a result of this phone call, the complainant e-mailed the cost and date of the job to Wicks who, in turn, e-mailed a confirmation that the complainant would do the work. To that end, the complainant ordered and paid for $3,426.12 worth of ‘Patriot’ bed liner product from Ocean Spray Technologies in order to do Wicks job.
"After receiving the bed liner from Ocean Spray, the complainant tried to contact Wicks but the contact number was disconnected and tried to send e-mails, but they were not responded to. The complainant contacted the Canadian Police who informed him that they could not locate a Wicks Custom Hauling and that the address he had been given was the address of an amusement park. The complainant made numerous calls to Billy Pertis, a.k.a. Julius Lupowitz, of Ocean Spray trying to return the unopened bed liner product and obtain a refund of his money, which never happened. Lastly, through our investigation our office traced the e-mail address of Mr. Wicks back to Ocean Spray Technologies in Hicksville, New York."
Lupowitz was arraigned in District Court in Hempstead and bail was set at $4,000 bond over $2,000 cash. Lupowitz was scheduled to appear in court on December 20, 2004 and if convicted could face up to seven years in prison.
"I would like to thank the United Stated Postal Inspectors for their assistance in the investigation and the execution of the search warrant," Dillon concluded.
The district attorney's press release noted that the charges are merely accusations, and the defendant is presumed innocent until and unless proven guilty.
Contributions to the WorldSkills competition continue to come in according to the National Auto Body Council (NABC). The donations will fund two competitors, one collision, one refinish, along with two instructors. They will be participating in the bi-annual WorldSkills event, held in 2005 in Helsinki, Finland.
“Corporate donors continue to lead the way, “ said Teresa Bolton, project coordinator for the fundraising effort. “But we’ve also started to see an increase in individual and collision repair shop contributions. I am certain they will get more involved as we head into 2005.
“New donors at the corporate level include Snap-On, the Society of Collision Repair Specialists, GEICO and Equipment Services. A special thanks goes to CARSTAR and General Motors for their maximum-level contribution of $3,000.
“Individual and small business contributors include Raymond Fisher, Glen Funk, Jerry and Geralynn Kottschade, Laney's Collision, KerenOr Consultants, The Pups, Chuck Sulkala, J-DT Inc., Autobody by Caldwell, Faith Quality Auto Body, Lorene Lombardi, Cindy Matthews, Yumi Vaught, and Stacy Bartnik.
Doug Webb, outgoing NABC Chairman reiterrated a statement he made earlier when he said, “We can’t claim to be a player on the world stage if we don’t compete on a world stage. That’s what this competition is, and everyone involved in the Collision Industry has a vested interest in sending a United States team to WorldSkills.”
Tax deductible contributions should be made to the Collision Industry Foundation at P.O Box 4489, W. Richland, WA 99352. Donation pledges can be made at the NABC website: www.autobodycouncil.org.
The Boyd Group Income Fund has completed the acquisition of Automation Paint & Body in Calgary, Alberta and of Abbotsford Auto Body in Abbotsford, British Columbia. These two locations had combined annual sales of approximately $3.2 million in 2004 and are expected to make a positive contribution to the Fund's distributable cash going forward. The acquisitions will be funded primarily by way of Boyd Group's forgivable capital funding program and supplier loan facility.
The Fund also announced that since reporting its 2004 third quarter financial results on November 15, 2004, it has continued with its plan to develop new collision repair facilities in the Chicago area. During the third quarter of 2004, two of these new facilities were opened and during the fourth quarter of 2004 two additional facilities commenced operations.
The Fund anticipates that an additional Chicago area location that is under development will commence operations in the first quarter of 2005. These new facilities are expected to generate approximately $2.5 million in sales per store on an annual basis and are expected to contribute to the Fund's distributable cash in their first year of operation. Boyd Group is funding the development of these facilities primarily through a combination of forgivable capital funding and supplier loans.
The Boyd Group Inc. is the largest operator of collision repair facilities in Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade name Boyd Autobody & Glass and in six U.S. states principally under the trade name Gerber Collision & Glass.
Honda Motor Europe and Glasurit GmbH, a BASF Coatings company, have committed themselves to five more years of intensive cooperation.
The partners first signed the contract laying the foundation for the development of the Honda Body & Paint program in 1999. The program is now in place in 15 European countries. This not only applies to the Japanese automaker's service and repair shops, but also to its after-sales organization.
In other company news, BASF Aktiengesellschaft has agreed to provide Euro 1 million (circa $1.27 million) in immediate aid for the regions devastated by the recent tsunami. Employees throughout the BASF Group worldwide will also be given the chance to make a donation to help the victims of the catastrophe. BASF will match the amount donated by its employees through January 31, 2005.
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