This article originally appeared in the May 2005 Issue of INSIGHT
©2005 Collision Repair Industry INSIGHT All Rights Reserved
M2 Collision Care Centers, in California, locked down on Monday, April 18. Some locations never opened on Monday. At other shops, all employees were escorted out and the doors were locked, with a freeze on all tools and vehicles owned by employees and customers.
According to an industry source, the word is that at least two creditors put M2 into liquidation. Apparently the recently announced acquisition agreement M2 made with Caliber Collision was eroding and the purchase offer was less and less.
Nevertheless, on April 15, the acquisition looked like a done deal. On Saturday, April 16, the capital company that put money into M2's operation to keep things going pulled out and took back its money. As of Sunday, April 17, there were guards at the doors of each M2 location.
The next step in the process is for the courts to decide how best to liquidate. A group of former shop owners may work to get their buildings back and the shops, too.
What happened to this regional consolidator? INSIGHT will update this story as information comes out of California.o
More than one hundred cars and trucks owned by Allstate Insurance Company customers and claimants are being held inside the M2 chain of troubled California collision repair centers.
Seeking immediate release of the vehicles, Allstate has filed suit in California against Credit Managers Association of California (CMA) – the liquidator that has taken control of the former M2 Collision Care Centers.
“Our concern is for our customers and claimants,” said Terry Lewkoski, Allstate Claim Field Director for California. “Allstate cannot tolerate our customers and claimants being treated this way – their vehicles are being held hostage as a result of circumstances far outside their control.”
The one hundred plus vehicles belonging to Allstate customers and claimants are among hundreds of other cars and trucks locked inside shuttered M2 facilities. The vehicles are currently in various stages of repair and are not being released to their owners or insurers.
The suit was filed on April 22 in California Superior Court in Los Angeles after CMA refused five days of demands by Allstate to give up the vehicles being held in at least 13 of the 27 collision centers formerly run by M2 in California.
Allstate says it is acting on its customers’ behalf to do everything possible to resolve this situation.
“We have contacted impacted customers and claimants to advise them of the situation and to assure them their vehicles will ultimately be repaired to our high standards. We are letting them know Allstate is making sure their needs are taken care of while we fight for the release of their cars,” Lewkoski said. “While we work on resolving this issue, Allstate customers and claimants needing rental cars are being offered rentals at no additional charge.”
“We have been forced to seek legal recourse demanding, among other things, immediate release of the vehicles so these repairs can be completed in as timely a fashion as possible so consumers can get their cars back in their own garages. It is possible that there may be Allstate customers who have their vehicles inside these shops on their own – independent from Allstate,” Lewkoski said. “We have the means and the skills to act in their defense. This is about supporting valued relationships with our customers.”
Allstate is asking these customers to call their claim adjuster or local claim office. Once the cars are released, Allstate will transport vehicles belonging to its customers and claimants to the local body shop of their choice at no charge so that repairs can be completed.
Industry leaders Lou DiLisio, Rick Tuuri, and Chuck Sulkala were invited by the China Automotive Maintenance and Repair Trade Association (CAMRTA) and Motor China Magazine to make a presentation at the first ever Collision Repair Seminar, held in China in early March. The panel presentation was moderated by Tom Stryker, Director, New Business Development, Motor Information Systems.
Based on the overwhelming growth expected in China’s automotive industry over the next five years, CAMRTA, along with significant support from Motor China Magazine brought this group together to discuss how China might be able to avoid some of the challenges experienced by the US collision repair industry during its rapid evolution over the past twenty years.
The level of importance attributed to this seminar and its topic by the Chinese hosts was evident, in part, by the representation of top government officials participating in the opening session. Introductory remarks were given by the Chief Commissioner of CAMTRA, as well as other top officials.
The panelists were asked to provide an overview of the U.S. experience in areas where China expects key growth in the near future: development of trade associations, industry forums, regulations, and legislation, as well as the overall evolution of the collision repair/claims industry, insurer/repairer relations, and technical training. Presentations at this seminar are a first step toward developing productive communication between Chinese collision industry professionals and their American counterparts.
The delegation consisted of Lou DiLisio, Automotive Industry Consultants; Chuck Sulkala, The Sulkala Group; and Karen Fierst, KerenOr Consultants, all representing Superior Consultants; and Rick Tuuri, Director, New Business Development of I-CAR.
The group visited independent and consolidator collision repair shops, a technical school, and presented at the seminar, which was attended by approximately 275 people.
Superior Consultants is a consortium of professionals that provides international automotive industry consulting.
The first test of an incentive in which an automaker paid the insurance on every new car in the pilot concluded March 31 with a 23 percent rise in year-to-year sales. Two-thirds of buyers said the insurance package was influential in their purchase decision.
The results were announced by Creative Innovators Associates, LLC, a Long Island consulting and marketing firm that invented and is patenting the In The Car (ITC)(TM) incentive program, with information provided by Volkswagen of America Inc., which piloted the unique incentive.
Volkswagen provided one year of insurance underwritten by Nationwide Mutual Insurance Company and its affiliated companies for every new Golf, New Beetle and New Beetle Convertible purchased or leased in Illinois and Wisconsin from January 4 through March 31, 2005. Proof of residency and a valid driver's license in either state were the only requirements.
Volkswagen reported that year-to-year sales of the three models rose 23 percent in Wisconsin and Illinois during the three-month pilot, compared to a decline of 15 percent on those models nationally.
Creative Innovators' agency call center, which handled the initial customer and dealer contact, polled the drivers of the covered VWs and found:
"We designed the In The Car(TM) incentive to move the focus away from rebates, which diminish a car's resale value, and to put the spotlight on something the customer truly needs and values: insurance," said Bob Wallach, managing member of Creative Innovators and inventor of the program. "Our statistics show insurance is the second most expensive element in new-car ownership."
The pilot also showed that the ITC(TM) incentive was effective in targeting specific models on a state-by-state basis, Wallach said. Creative Innovators strategically focuses on segmented incentive programs, which deliver cost-effective sales.
"The ITC(TM) pilot showed us that consumers recognized the value of insurance-added incentive," Wallach said. "Rebates ultimately hurt the resale value of their cars and only a fraction of buyers qualify for zero percent financing offers. In The Car(TM) insurance includes virtually all buyers of the targeted models."
"Nationwide is now conducting a more thorough analysis of the program, which we anticipate will take some time to complete," said Bonny Parker, Vice President of Standard Auto Product Management for Nationwide. "However, we are quite pleased with the initial results of the In The Car pilot."
Creative Innovators Associates, LLC, is an intellectual-property company based in Bethpage, New York.
In the Car is a trademark of Creative Innovators Associates, LLC. In The Car(TM) insurance products and services are patent-pending programs offered by Volkswagen under a license from Creative Innovators Associates, LLC.
Ford Motor Company has launched a program to assist auto insurers and the National Insurance Crime Bureau (NICB) in reducing the growing trends of airbag theft and inappropriate repairs to vehicle airbag systems.
Airbags have surpassed stereo equipment as the most frequent target of thieves, which has created a black market being tapped by unscrupulous repairers, according to law enforcement authorities.
Compounding the problem is a growing number of inappropriate repairs in which legitimate airbag modules are not used. At least two people have died in auto accidents as a result of this practice, according to the Automotive Occupant Restraint Council (AORC). Carfax.com, the internet vehicle inspection firm, estimates that one in every 25 repairs requiring airbag module replacement ends up with installation of a bogus airbag, or no airbag at all.
To address these troubling trends, Ford has created an internet website that includes a database of serial numbers for all replacement airbag modules purchased by Ford and sold to its authorized dealers in the U.S. and Canada since Feb. 1, 2002. Authorized Ford, Lincoln and Mercury parts wholesaling dealers subsequently sell the replacement modules to collision shops.
Participants in the pilot program obtain from the collision repairer the serial number of the module specified for the repair, access the website to verify the legitimacy of the module, and check off the serial number so that its disposition is noted the database. Serial numbers for modules installed in new production vehicles will not be in the database, thereby alerting investigators to the potential of stolen modules. Repairers unable to provide module serial numbers also will come under scrutiny.
“Insurers pay the bill for about 85 percent of collision repairs and damages resulting from theft,” said Steve Nantau, Collision Repairs Supervisor for Ford Customer Service Division’s Aftermarket Engineering and Remanufacturing Operations. “They have a vested interest in reducing these problems but, up until now, have had very few tools to help them. We believe the website will be a valuable resource insurers can access at will to strengthen existing post-repair auditing processes.”
Robert M. Bryant, President and CEO for the NICB, believes information contained in the database will be extremely useful to NICB Special Agents and insurance investigators. The NICB represents the interests of more than 1,000 U.S. auto insurers – who write more than 90 percent of all auto insurance policies in the U.S. – and serves as the intermediary between the insurers and law enforcement agencies.
“The information in the database will provide those involved in insurance investigations with another resource to validate the adequacy of completed repairs and to better determine the need for potential investigations,” Bryant said. “We applaud Ford for addressing this growing problem and see this initiative helping to improve the overall quality of collision repair and policyholder satisfaction.”
Mid-State Aftermarket Body Parts, Inc. has issued the following statement:
On Wednesday, March 16, 2005, United States District Court Judge J. Leon Holmes, in Bryant, Arkansas, entered Judgment in favor of Mid-State Aftermarket Body Parts, Inc. on all counts in its long-running litigation with MQVP, Inc., formerly known as Global Validators, Inc. Judge Holmes granted summary judgment in favor of Mid-State on both its Complaint and all counterclaims filed by Global.
The court’s Judgment fully determines that Mid-State did not infringe Global’s MQVP service mark when Mid-State told its customers that it had MQVP parts available. The Court’s Memorandum Opinion can be viewed at Mid-State’s website: www.midstateparts.com.
As everyone knows, Mid-State has always fought for the belief that no one should be prevented from buying a quality aftermarket part just because someone puts a different label or packaging on that part. The Court’s Judgment is a total validation of Mid-State’s position that it has never made any unauthorized use of the MQVP trademark.
Tom Knoedl, President of Mid-State, commented, “The Court’s decision benefits the entire aftermarket parts industry – it’s a win for all of us.”o
New Jersey Assemblyman Reed Gusciora (D-Mercer) is taking the right to repair fight to a local level. Gusciora is sponsoring the "Motor Vehicle Owner’s Right to Repair Act," which would require all motor vehicle manufacturers to provide vehicle owners, repair facilities and the Division of Consumer Affairs with all information relating to servicing the vehicle.
"It’s a shame that vehicle owners are put in a position like this," Gusciora said. "It should be the responsibility of the manufacturer to give this information to the consumer immediately so they can repair their car where and how they like."
The Alliance of Automotive Service Providers of New Jersey (AASP/NJ), the state’s largest association of collision and mechanical repairers, is thrilled with the Assembly-man’s actions according to President Bob Everett, who has been working for over two years on the national Right-To-Repair bill.
"This is a great thing not only for the automotive repair professionals in the state but more importantly for the consumers," Everett said. "AASP/NJ supports Assemblyman Gusciora one hundred percent and we hope the other legislators in the state will do the same."
Gusciora acted on the bill after a recent meeting with AASP/NJ. After researching the topic, he saw the need for action.
"We aren’t asking manufacturers to reveal trade secrets or compromise their business," said Gusciora, "but they should be required to make this information available to the consumer. Not only is it inconvenient for the consumer to be restricted to repairing their car at a new car dealership but it is also their right to know."
"It’s rewarding to see our efforts lead to results," Everett concluded. "This is a bill that will benefit everyone involved in the automotive repair process. We look forward to seeing other legislators join Assemblyman Gusciora in this effort to keep the repair process fair for everyone."
Copart, Inc. has formally announced the replacement of its temporary facility previously located in Newnan, Georgia with a greenfield facility located in Loganville, Georgia, approximately 30 miles east of Atlanta. The new location, which is owned by Copart, is approximately 55 acres, an increase of approximately 40 acres over the facility it replaces.
"The Loganville location provides the space we need to accommodate the growth we have experienced in Atlanta and the surrounding areas," said Willis J. Johnson, Copart's Chief Executive Officer. "We continue to respond to our insurance customers' needs whether it's service, technology or, in this case, strategically located facilities."
Copart has also acquired a 25-acre salvage facility in Lexington, Kentucky. The addition of the Kentucky facility will complement Copart's existing presence in the state of Kentucky, which is currently serviced by its Lawrenceburg facility.
"This facility will enable us to accommodate the growth we are experiencing in this region," stated Johnson. "Copart will continue to drive growth both organically and through acquisitions."
Copart, founded in 1982, provides vehicle suppliers, primarily insurance companies, with a full range of services to process and sell salvage vehicles, principally to licensed dismantlers, rebuilders and used vehicle dealers, through Internet auctions utilizing its proprietary VB2 technology. The company operates 113 facilities in the United States and Canada.
Mentor, Ohio-based DCR Systems has reached an agreement to design and operate a full-service collision repair facility in concert with the Metro Toyota auto dealership in Brookpark, Ohio.
The deal marks a first for DCR Systems as the newly founded company executes an aggressive program to supply similar turnkey facilities to dealerships nationwide, and follows its recent opening of a model collision repair facility in Mentor, Ohio.
According to the agreement, Metro Toyota will construct a 12,000 square-foot collision repair facility and outsource the dealer-based function to DCR Systems, which will be responsible for supplying equipment, tooling, staffing, technician training and certification, management, and day-to-day operations.
Design plans for the collision center have been completed and the City of Brookpark recently granted final approval for construction, which will begin immediately. When completed the Metro Toyota Accident Repair Center will have the capacity for 200 cars per month.
"From our perspective, having DCR Systems manage this operation will enable us to enhance our overall customer offerings," Metro Toyota co-owner and general manager, Ken Schneider, commented. "DCR's knowledge of collision repair is far superior to anything we've seen. We found that the advantages of outsourcing to an organization with such expertise far outweighed the risks involved in building our own operation and relying on unproven and untested hires we bring in to manage the function."
DCR Systems president, Michael Giarrizzo, Jr., said his company's recently launched program to design and operate the patent-pending, turnkey collision repair facilities has caught the attention of auto dealers, fleet managers, and insurers.
The DCR process utilizes "lean manufacturing" principles in its approach to collision repair that employ task-specific, highly trained technicians working with cutting-edge equipment and tooling. The model is designed to streamline workflow and enable the repair operation to become dependable and offer consistency in guaranteed quality and vehicle delivery.
"The DCR model can be summed up in two words: Quicker and better," commented Schneider. "The process takes the individuality out of the work and relies more on a team approach to get the work done."
"Our system is all about putting consistent quality control back into the process and enabling the dealership to fully meet the needs and expectations of existing and potential customers," said Giarrizzo.
DCR Systems was started in 2003 by the Giarrizzo family, founders of Cleveland-based JSI Collision Centers, which they established in 1946. JSI was twice recognized by the industry as "Collision Business of the Year" for its customer service and standardized operating procedures. The business was acquired in 1999 by Sterling Autobody Centers and four years later grew to 39 locations.
In 2001 Allstate acquired Sterling, and Michael Giarrizzo Jr. took the position of Chief Operating Officer for the Sterling division. While he led operations, the company grew aggressively by establishing an additional 21 greenfield stores in two years.
The multi-association task force created to address repairer concerns about how the estimating database companies operate reported on its early progress in April and defended its decision to include insurers in the process.
"We're confident we're off to a very good start," Darrell Amberson, a task force member representing the Automotive Service Association (ASA), said at the Collision Industry Conference (CIC) held in Charlotte, N.C., in mid-April. "We do want to assert our influence and get certain changes made, and some of those match up with insurers. In cooperation with them, we can have that much more influence to [push for] the changes that we're looking for. Obviously our primary focus is going to be protecting our members, the repairers, but there are, in many cases, good reasons for a cooperative effort with insurers."
The task force also includes representatives of the Society of Collision Repair Specialists (SCRS) and the Alliance of Automotive Service Professionals (AASP). It was created to address such issues as how large-scale changes are made to the estimating databases and introduced into the industry.
Representatives of the three associations held three meetings in April, one with each of the three estimating database providers: ADP, Mitchell International and Motor Information Systems (whose database is used in the CCC Information Services estimating program).
"During the meetings, one thing that became clear was that other than me, no one else [on the task force] had ever seen the information providers give information at CIC meetings or elsewhere on how their labor databases are developed and what's in an hour," Lou DiLisio, a task force member representing the SCRS, said. "The database providers left the room understanding that they need to get out in the world and start to communicate this all over again."
The companies were also asked to document how database users can submit concerns or "requests for review" about a labor time or other aspect of the estimating system, and what process is followed once that request is made. DiLisio said one of the changes the task force suggested was making it very easy to submit such a request even from within the estimating program.
"We discussed the concern the three associations and the industry in general have over 'database ethics,'" DiLisio said. "We want to make sure that their sales and market share don't dictate how the databases are developed. Ensuring the integrity of the data is a very critical and important step from our perspective."
Sheila Loftus, publisher of an industry trade publication as well as executive director of the Washington Metropolitan Auto Body Association, questioned why the associations would allow insurers to get involved with their efforts.
DiLisio and Amberson said they believe the associations are working together to press for what repairers want; that's why, they said, the initial meetings included only the associations and database providers. But they also see that some of the repairers' needs overlap with those of insurers.
"We have some common issues, DiLisio said. "Disclosure happens to be one of those issues. The insurers are just as much looking for disclosure [of changes made to the databases] as the repair industry is. They've got people on their staff that do nothing but look through the databases to find out what was changed.
"You haven't known us to lay down yet," DiLisio told Loftus, "We're not about to now."
In other news and discussion at CIC in Charlotte: