Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
Industry Stocks
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the June 2005 Issue of INSIGHT
©2005 Collision Repair Industry INSIGHT All Rights Reserved
Allstate Advertises Its New Your Choice Auto Insurance
Ford Says Clip Repair Procedure Not Recommended
Chief Automotive Systems and Carfax Form Strategic Partnership
CIECA and STAR Cooperate for Joint Standards Development
BASF Honored by GM as a Supplier of the Year for 2004
LKQ Corporation Q1 Net Income Up 49%
U.S. House Passes Vocational Education Bill
Scaled-Back Right to Repair Act Introduced
AMI Receives $10,000 Commitment from Illinois Shop Owners and $25,000 from Virginia Shop Owner
CCAR-GreenLink Launches 2005 User Survey
Ontario Government Invests $12.8 Million in Apprentice Programs
INDUSTRY UPDATE
With the help of some Desperate Housewives, an American Idol, the counterterrorism team from 24, and the music of the "King," Elvis Presley-- Allstate is starting to give Americans a preview of a new insurance product.
The new product, Allstate Your Choice Auto Insurance, offers consumers several choices, innovative features, and enhanced rewards for safe drivers.
Americans began hearing about the innovative offering from Allstate on May 22, during the season finale of ABC's Desperate Housewives.
Consumers will continue hearing about Allstate Your Choice Auto Insurance during the months of May and June on other network programming including FOX's American Idol, 24, and during upcoming motor sports events.
The new advertising, developed by Leo Burnett USA, features Elvis Presley's "I Can't Stop Loving You," Allstate spokesman and 24 star Dennis Haysbert, and vignettes of drivers loving their cars. Part of the Allstate "Our Stand" campaign, the ads offer consumers an early preview of Your Choice Auto product features such as Accident Forgiveness, Safe Driving Bonus, and Deductible Rewards. The ads ask consumers, "Can you love your car insurance as much as you love your car?" Print advertisements will also run in publications including USA Today, The New York Times, and the Chicago Tribune.
Allstate Your Choice Auto Insurance (patent pending) was designed, built, and tested based on consumer research and input from Allstate agencies. According to an Allstate press release, the aim of the product is to meet consumer desire for greater flexibility and more choice when it comes to auto insurance selection.
"This is more than just an enhancement to our standard auto product," said Thomas J. Wilson, president and chief operating officer, Allstate Insurance Company. "Allstate Your Choice Auto Insurance represents the innovation and leadership stance that Allstate is taking in order to help consumers feel better protected and prepared. If you glance at today's roads and auto dealer floors you'll see that Americans want choice in what they drive because of why and how they drive. And more choices should be presented in the insurance they buy."
In addition to Allstate's standard auto policy offering, with Allstate Your Choice Auto Insurance consumers can now choose from three new, optional packages: Platinum Protection package, Gold Protection package, and Allstate Value Plan.
Based on their individual needs, consumers can choose among new features like accident forgiveness, new safe driving rewards, or enhanced protection for new cars. Consumers can also opt for the Allstate Value Plan - Allstate's most affordable insurance plan.
The key features available with the Platinum Protection and Gold Protection packages include:
- Accident Forgiveness: Helps keep rates from going up because of an accident.
- Deductible Rewards: Gives an immediate $100 off collision coverage deductible and an additional $100 off for each year of accident free driving--up to $500 total.
- New Car Replacement: Can provide replacement value for a policyholder's new car if it is totaled in a covered loss - not just book value.
Additionally the Platinum Protection package includes:
Allstate Your Choice Auto Insurance is currently available in Oregon, Utah, Tennessee, Texas and Arizona. The product is scheduled to be available in a majority of states by the end of the year.
o
Editor's Note: The following is a press release from Ford Motor Company. The use of front or rear “clips” to repair major damage to a vehicle is a practice among collision repairers and insurance companies, which pay for the majority of collision repairs. The practice involves replacing an entire section of a vehicle with a similar section from a “donor” vehicle – most frequently one that has been declared a total loss.
The following Ford statement has been developed to answer frequent questions about “clipping” that Ford Motor Company receives from collision repairers.
Ford Motor Company does not approve the use of “clips” to repair collision damage to vehicles. The use of a “clip” to repair collision damage voids Ford’s New Vehicle Limited Warranty and any variety of Ford’s Extended Service Plan, as well as Ford’s new vehicle service part and corrosion warranties for each part in the “clip.” Use of a “clip” also voids any variety of Ford’s Extended Service Plan, new vehicle service part warranty, and corrosion warranty for any damage to individual components, assemblies, or systems on the original vehicle caused by individual components, assemblies or systems in the “clip.”
Ford strongly recommends that repairers and insurers considering the use of a “clip” carefully check state collision repair laws and regulations to determine whether the vehicle must be re-titled as “rebuilt” or “salvage” if the “clip” procedure is used.
Ford also strongly recommends that repairers advise and obtain the written repair authorization of the vehicle owner, in advance, if the “clip” procedure is to be used and re-titling is required. Ford has adopted this position because it cannot be confident “clip” repair procedures return vehicles to pre-accident condition.
Because every “clip” repair is unique, it is impossible to test whether the repair technique affects the safety, performance, or durability of the vehicle. Other factors weigh heavily in this position, including:
- Hidden damage to individual components, assemblies or systems in the “clip” that may not be readily apparent to the repairer.
- Improper removal techniques and exposure to weather that may degrade the performance characteristics of individual components, assemblies or systems in the “clip.”
- Mismatching of individual components, assemblies or systems.
Individual component, assembly, and system modifications occur throughout the production life of new-model vehicles. It is possible a “clip” component, assembly or system will not be compatible with the vehicle it is being used to repair. Ford recommends that only genuine Ford replacement parts be used for collision repair to protect all parties – vehicle owners, repairers and insurers – involved in the collision repair process.
Ford also is working diligently to control the cost of major collision repairs. After research and testing, it has developed several frame sectioning procedures – and unique frame sectioning repair parts – that have been proven not to affect the safety, performance, or durability of the repaired vehicle. Ford recommends repairers and insurers consider these procedures as a practical and cost-effective alternative to “clipping.”
Chief Automotive Systems has announced the formation of an exclusive strategic partnership with Carfax, the provider of vehicle history information.
The two companies have agreed to join forces to provide consumers with vital information on the importance of a properly aligned vehicle frame, and how the current condition of a vehicle frame can be verified before they buy.
“This newly forged partnership will create an immediate need for AutoScan(TM) frame inspection locations, lots of them,” said Chief Automotive President Randy Gard, “and body shops that now have – or are considering the purchase of - Chief measuring systems will soon find themselves in the perfect position to capitalize on this new and rapidly expanding revenue opportunity.”
Carfax customers will now be able to link directly to Chief’s vehicle frame inspection site (www.framefacts.com) to determine if the vehicle’s frame had been previously inspected using Chief’s AutoScan system. If so, they can download a copy of the inspection report. If not, they can enter their zip code and receive a complete listing of AutoScan Inspection Centers near them.
“A paramount concern for buyers of used cars is prior damage and repair information,” said Dick Raines, president, Carfax. “Our partnership with Chief allows us to provide additional information about a vehicle and will help to establish a standard for frame inspections and provide a solution for both consumers and dealers.”
Gard agreed. “Carfax and Chief have well established reputations in their respective markets,” he said. “Together we are developing innovative systems to bring information about a vehicle’s structural integrity to light to assist both dealers and consumers in making better, more informed, buying decisions.”
Millions of car-buyers visit the Carfax site annually and, if even just a small percentage choose to visit Chief’s framefacts site, that represents tens of thousands of potential AutoScan inspections.
Additionally, because AutoScan is the only system designed specifically for this purpose and its processes trademarked, those shops offering frame inspections will be able to reap the rewards that this new service is destined to provide.
In anticipation of increased demand, Chief has racheted-up production of AutoScan systems. Additionally, the company has developed a very unique and innovative way to enable its current customers to capitalize on this new revenue-generating opportunity.
“Our computerized measuring systems are configured in such a way that they are capable of running any of Chief’s proprietary software products,” Gard explained. “So in an effort to increase the availability of AutoScan Inspection Centers nationally, we are offering customers with existing Chief systems the opportunity to have AutoScan software downloaded directly onto their measuring units.”
This download will enable shops to immediately be eligible to become official AutoScan Inspection Centers, and to have their business information listed on the framefacts website where Carfax customers come looking for frame inspection locations.
“This is a tremendous opportunity for shops to gain incremental business and to develop relationships with new customers in their market,” Gard concluded, “while at the same time providing car buyers and their families with the peace of mind that comes from knowing as much as possible about the vehicle they are considering buying.”
Founded in 1986, Carfax pioneered the concept of the vehicle history report.
STAR (Standards for Technology in Automotive Retail), the IT standards body for the North American retail automotive industry, and CIECA (Collision Industry Electronic Commerce Association), the Electronic Commerce (EC) standards body for the Collision Repair Industry, have agreed to cooperate on joint standards development projects.
STAR and CIECA have signed a Memorandum of Understanding (MOU) that enables both organizations to exchange memberships, participate in standards development projects, and share technical documentation and specifications.
Through member committees, CIECA develops industry standards, assists in developing national standards, and provides implementation support/guidelines for electronic commerce for the Collision Repair industry.
“In 2004 CIECA began a Procurement Project to address all aspects of a Collision Repair Facility’s Procurement requirements. This project encompasses Original Equipment (OE), Aftermarket, and Recycled parts. We soon recognized that there were other standards setting organizations in each of these areas that were already addressing some aspects of the solution we are developing. CIECA’s collaboration with STAR and its members should assist in the development of a more seamless approach and set of standards for the Collision Repair Procurement Cycle,” said Paul Krauss, Craftsman Auto Body, Co-Chair of the Procurement Committee and Chairman of CIECA’s Board of Trustees.
“We are excited about working with CIECA members in developing standards that will benefit everyone by improving the effectiveness of products and services required for the day-to-day vehicle collision repair activities”, said Paul Elert, STAR Chair.
STAR’s initiatives provide the opportunity to improve daily business activities of dealers, retail systems providers, and manufacturers that lead to higher customer satisfaction, timely access to business information, and reduced operating costs.
Headquartered in McLean, Virginia, STAR is a not-for-profit volunteer organization and its members include Dealers, Manufacturers and Retail System Providers (RSPs).
In other news, CIECA has established a Repairers Advisory Panel to help meet two of six core strategic initiatives discussed at the last annual Strategic Planning Meeting in September. Two of the initiatives were to remain focused on core competencies and provide even more robust standards within the collision industry and to demonstrate CIECA’s value proposition to each market segment within the industry.
The first Panel will meet in July 2005 during CIC week. Date and time will be announced in the coming months.
Between now and the first Panel meeting, CIECA will work with ASA, NABC, and SCRS in developing the membership of this panel. It is anticipated that members will represent shops from the smallest to the largest in size and volume.
CIECA Board Chairman Paul Krauss of Craftsman Auto Body believes the Advisory Panel is a key step in meeting CIECA’s Strategic Initiatives. “I believe this panel will go a long way toward bridging the language gap between repairers and the standards developers, as well as provide direct input to our planning and standards projects,” he said.
For the second time since 2002, BASF has been named a General Motors Supplier of the Year for exceptional performance as a global supplier of automotive Original Equipment Manufacturer (OEM) coatings.
Jean-Pierre Monteny, Pres-ident and Chief Executive Officer of BASF’s Coatings AG, accepted the award on behalf of BASF during recognition ceremonies Saturday, April 23.
Monteny commented, “Receiving the Supplier of the Year award for the second time is particularly rewarding and reflects great credit on BASF’s employees worldwide who are committed to quality and to meeting the needs of our friends at GM.”
Rainer Blair, Group Vice President for BASF’s coatings businesses in North America and the Global Automotive Coatings Solutions business, added, “We are very pleased by this award because it recognizes BASF’s strengths — notably our innovative products and services, global supply and first-class launch management.”
“Our Supplier of the Year winners are the best of the best, and BASF is part of this elite group based on their outstanding performance in 2004,” said Bo Andersson, Vice President, GM Global Purchasing and Supply Chain. “Its balanced focus on performance and behavior support GM’s priorities, and make it a role model for suppliers worldwide.”
The GM Supplier of the Year award began as a global program in 1992. Winners are selected by a global team of executives from purchasing, engineering, manufacturing and logistics who base their decisions on supplier performance in quality, service, technology and price. This year, General Motors honored 78 suppliers for their excellence throughout 2004.
In other BASF news, the Big Three U.S. Automakers, DaimlerChrysler, Ford Motor Company, and General Motors Corporation, have renewed their approval of BASF’s refinish systems for warrantied repairs. The approvals follow a series of rigorous and comprehensive technical evaluations at BASF’s Southfield, Michigan site.
Joe Skurka, Manager, Original Equipment Manufacturer and Industry Relations, for BASF’s Automotive Refinish business in North America, commented, “Car owners expect the paint repairs on their cars to match the original factory finish, and they know that a quality repair helps maintain the car’s resale value. For that reason, major manufacturers have established stringent specifications for refinish paints to ensure that vehicles are restored as closely as possible to their original condition.
“BASF brings a special expertise to developing high-performance refinish paints,” said Skurka. “Because BASF is a leading supplier of coatings for new cars, our refinish business is able to stay abreast of evolving paint technologies worldwide. We apply that knowledge to develop refinish systems that match the appearance and performance of original factory finishes.”
LKQ Corporation has reported results for its first quarter ended March 31, 2005, with revenue of $133.8 million, net income of $8.4 million and diluted earnings per share of $0.37.
"Our company exceeded its previous revenue and earnings estimates for this quarter. We achieved a record quarter with impressive revenue growth of approximately 34 percent that included organic revenue growth of 11 percent. Our net income increased by 49 percent and our earnings per share increased by 48 percent. We were particularly pleased with the expansion of our EBITDA margin to 12.3 percent, which was largely attributable to gaining leverage from our distribution network, as well as our G&A costs. We acquired an Eastern seaboard based aftermarket company during the quarter, which performed in line with expectations, and acquired a South Carolina based automotive parts recycling company in April of 2005, as we continued our geographic expansion of these product lines," said Joe Holsten, President and Chief Executive Officer.
For the first quarter of 2005, revenue increased 33.7 percent to $133.8 million compared with $100.1 million for the first quarter of 2004. Approximately $22.6 million in revenue growth for the quarter was from businesses we acquired. For the quarter, net income increased 49.1 percent to $8.4 million compared with $5.6 million for the first quarter of 2004. Diluted earnings per share was $0.37 for the quarter compared with $0.25 for the first quarter of 2004.
LKQ's consolidated aftermarket collision replacement parts revenue for the quarter was $20.3 million.
In February the company acquired Bodymaster Auto Parts, Inc. and a related company that operate from two locations near Philadelphia and Washington, D.C. The revenue of this business in 2004 was approximately $19.5 million.
In April LKQ acquired A&R Auto Parts, Inc., in South Carolina. A&R's revenue for 2004 was approximately $11.0 million.
LKQ expects that full year 2005 revenue will be within a range of $536.0 million to $541.0 million and that organic revenue growth will be in the low double digits, with the balance of the growth being the full year impact of 2004 business acquisitions and the 2005 business acquisitions completed to date. The company expects net income to be within a range of $26.7 million to $27.7 million and diluted earnings per share to be between $1.16 and $1.20.
LKQ Corporation is the largest nationwide provider of recycled OEM automotive replacement parts and related services, with 47 sales and processing facilities, 9 self-service retail automotive parts facilities, and 12 redistribution centers that reach most major markets in the United States. In addition, LKQ operates recycled OEM facilities in Central America.
o
The U.S. House of Representatives has passed the Carl D. Perkins Vocational and Technical Education bill, H.R. 366, by a vote of 416-9. The measure will reauthorize the 1998 Carl D. Perkins Vocational and Technical Education Act through 2011. It will also provide federal grants to states for supplemental programs.
The House adopted by voice vote an amendment offered by Rep. Juanita Millender-McDonald, D-Calif., to include funds to be used to train automotive technicians on alternative fuel technologies, such as hybrid and hydrogen cars.
H.R. 366 was introduced by Rep. Michael Castle, R-Del., chairman of the House Education and Workforce Education Reform Subcommittee.
The administration's fiscal year 2006 budget proposal calls for eliminating $1.3 billion that provides for vocational education training to states.
The U.S. Senate has passed its version of the bill, S. 250, by unanimous vote.
"Continued funding for vocational and technical education is a top priority for the Automotive Service Association (ASA). We want to thank all those who contacted their congressmen on behalf of H.R. 366," said Bob Redding, ASA's Washington, D.C., representative. "We also are very appreciative to members of the House for their support of the McDonald amendment, which helps ensure a strong future for independent repairers."
U.S. Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, has introduced H.R. 2048, new legislation that is a scaled-back version of last year's Motor Vehicle Owner's Right to Repair Act, H.R. 2735.
The new measure, titled "Motor Vehicle Owner's Right to Repair Act 2005," drops several controversial provisions previously contained in H.R. 2735. Provisions eliminated include:
- Private Right of Action
- Parts Information
- Vague Federal Trade Commission Enforcement.
"ASA's service information agreement with the automakers is working, and the voluntary approach is much more effective than a process regulated by the federal government in Washington, D.C. Recognizing that some parts distributors favor government regulation, we believe Chair-man Barton has done a good job ensuring that this legislation is less contentious in that regard than previous bills," commented Ron Pyle, ASA president and chief staff executive.
In 2002, the Alliance of Automobile Manufacturers and the Association of International Automobile Manufacturers signed a voluntary agreement with ASA to provide the service information needed to repair vehicles to the independent repairer.
Pyle continued, "We will continue to work with the automakers to ensure that our training opportunities are equivalent to those provided to the franchised new car dealers as outlined in the ASA-Automaker Agreement."
The generosity of shop owners in Illinois and Virginia this past month show their deep commitment to the Collision Repair Industry.
Myron and Linda Hazen, Collision Repair Center, Inc., located in East Moline, Ill. have committed $10,000 to the Automotive Management Institute’s (AMI) resource development effort EXCEL. The commitment to AMI will be combined with other leadership contributions to continue AMI’s mission of providing and promoting practical business management education tailored to the automotive service industry.
Myron Hazen earned his Accredited Automotive Manager (AAM) designation in 2003. “My management skills are stronger and my business is more successful because of AMI courses. My financial commitment to AMI is a way of giving back to the Institute and helping to ensure its future,” said Hazen.
“When an AAM makes a financial commitment to AMI, it speaks volumes about the true benefits of the Institute. These people know firsthand the value of AMI education. We are very appreciative of the Hazens’ generous contribution to AMI,” said AMI Board of Trustees Chairman John Francis, AAM. AMI Executive Director Toni Slaton, AAM, added, “ It’s very gratifying to receive the Hazens’ financial commitment. It not only helps secure AMI’s future, it also tells us we’re doing a good job at meeting our customers’ needs.”
Mike Anderson, owner of Wagonwork Collision Centers, located in Alexandria, Virginia, has committed $25,000 to the Automotive Management Institute’s (AMI) resource development effort EXCEL. The commitment to AMI will be combined with other leadership contributions to continue AMI’s mission of providing and promoting practical business management education tailored to the automotive service industry.
Anderson is also an AMI-approved instructor. In addition to teaching, he is pursuing the Institute’s Accredited Automotive Manager (AAM) designation, which is awarded to students after completing 120 credits of management education.
“When I take an AMI course, I always leave with a new strategy or solution that I can immediately implement in the shop. AMI courses have made me more successful and I’m pleased to give my financial support to EXCEL,” said Anderson.
“Mike’s financial commitment to AMI is testimony to the value of the Institute and its courses. He has been in the classroom, both as a student and instructor, and knows firsthand the benefits of AMI education. We are very appreciative of his generous contribution to AMI,” said AMI Board of Trustees Chairman John Francis, AAM.
AMI Executive Director Toni Slaton, AAM, added, “As an instructor, Mike always takes the opportunity to tell others about the benefits of AMI. His tremendous support for AMI, including his most recent financial commitment, is very much appreciated.”
AMI was established to answer the demand for continuing education tailored specifically for the business needs of the automotive service industry. The Institute offers the Accredited Automotive Manager (AAM) designation, the first business management accreditation exclusively for the automotive service professional. To date, AMI programs have attracted more than 132,000 enrollments throughout North America.
The 2005 User Survey conducted by “CCAR-GreenLink(R),” the National Environmental Compliance Assistance Center for Auto Repair, runs through July 31, and participants may enter their names for a drawing that will award prizes provided by CARQUEST Auto Parts. The survey is available at www.ccar-greenlink.org through July 31.
CCAR-GreenLink, operated by the Coordinating Committee For Automotive Repair [CCAR] in cooperation with the U.S. Environmental Protection Agency, is recognized as a leading source of environmental compliance and pollution prevention information for the automotive industry.
In the course of a few minutes, the online survey allows users to rate CCAR-GreenLink’s current features and suggest ways to improve its effectiveness in providing compliance assistance and information to the auto repair sector.
Upon completion of the CCAR-GreenLink survey, participants have the option to register for a drawing that will award prizes provided by CARQUEST Auto Parts. The grand prize is a $250 CARQUEST gift certificate, and three runners-up will receive $100 certificates.
“Each year, we count on feedback and ideas from our users to help improve the Center,” said Robert G. Stewart, CCAR President. “We’ve also found that a little incentive goes a long way, and we want to thank CARQUEST for its generous offer to provide this year’s prizes.”
Prize winners from the 2004 survey are currently posted at the www.ccar-greenlink.org web site.
Established in 1994, the Coordinating Committee For Automotive Repair is a 501(c)(3) not-for-profit organization. CCAR’s mission is to work with the industry around the world, with career and technical schools, and with governments and other organizations to provide best practice information and training, and to measure improvements related to pollution prevention, safety, reduction of lost workdays due to accidents or job-related health issues, decreases in costs and liability exposure, and reduction in costs of training in these areas.
Saying that the government's plan is to build an economy based on high skills and high standards, Ontario's Minister of Training, Colleges and Universities, announced a major investment in apprenticeship system improvements including:
- $263,909 for a pre-apprenticship program for young people in autobody and collision repair in partnership with JobConnect at Algonquin College in Ottawa.
- $143,932 for a pre-apprenticeship autobody and collision repair course at Candore College in North Bay.
- The Minister also announced a further investment in college enhancement programs to renew and equip college facilities and remove barriers.
- $2,180,112 was allocated for the renovation and modernization of the autobody lab at Centennial College in Toronto. Replacing the outdated equipment and improving the efficiency of the lay-out will improve the quality of hands-on instruction. Other areas of updating include truck and coach technician areas and the motive power labs.
Partnering with Centennial College is PPG Canada and firm tech3. PPG Canada is donating paint mixing equipment including scales and an electronic paint identification equipment. The company is also leading the way to recruit other industry partners in ensuring the goal of a leading edge autobody, collision repair and auto refinish centre to continue to attract and retain young people.
Among other recipients, Mohawk College, Hamilton, received $2,037,427 for its motive power and truck and coach programs. Algonquin College in Ottawa also received a total of $1,343,377, in part for the auto service program. London Ontario's Fanshawe College was allocated for $1,536,305 motive power trades improvements.
Feedback
Have a comment about this article? Send Email to Editor, INSIGHT's Editor
©2005 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
INSIGHT Supports the NABC!
Do You?