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VOL. 3 ISSUE 11 AUGUST 2014

Allstate Argues for Multidistrict Consolidation in Antitrust and RICO Cases Filed in Five States, Supports Illinois or Florida Venues, Opposes Mississippi or Louisiana Venues Over several months, auto body repair shops in five states (Florida, Mississippi, Indiana, Utah and Tennessee) have filed antitrust actions against a multitude of auto insurers, alleging that the insurers’ direct repair programs violate the antitrust laws. In each case, the plaintiffs alleged that the manner in which the insurers set reimbursement rates for covered repairs artificially depressed the compensation plaintiffs received for their services, and that the insurers also steered insureds away from plaintiffs’ businesses to those shops that are participants in the insurers’ direct repair programs.

The five Antitrust Actions were all filed in the first four months of 2014 and include the following:

1) Capitol Body Shop, Inc., et al. v. State Farm Mut. Auto. Ins. Co., et al., No. 3:14CV12, United States District Court for the Southern District of Mississippi, Northern Division-Jackson (pending before the Honorable Carlton Reeves; complaint filed in January, 2014 and amended complaint filed on March 4, 2014) (“Mississippi Action”); 2) A&E Auto Body, Inc., et al. v.

21 Century Centennial Ins. Co., et al., No. 6:14-CV-00310, United States District Court for the Middle District of Florida, Orlando Division (pending before Judge Presnell; complaint filed on February 24, 2014) (“Florida Action”); 3) Indiana Auto Body Ass’n, Inc., et al. v. State Farm Mut. Automobile

Honda Releases Video Showing Slower Response on Airbag Deployment with Aftermarket Bumpers

air bag was triggered four milliseconds later on the passenger side with nonOEM parts installed.

“Our intent in producing the video is to help consumers make an informed decision when they are getting their car repaired,” said Leigh Guarnieri, wholesale collision parts marketing manager.

To view the video go to: https://www.youtube.com/watch?v=p 961-w6_I_I

Change Service Requested

P.O. BOX 1516, CARLSBAD, CA 92018

Honda has released a video highlighting results of independent crash tests conducted for the manufacturer that compare the crash performance of OEM and non-OEM bumper parts and how they impact safety systems.

In a dynamic crash test, the driver side air bag was triggered seven milliseconds later on the vehicle with the non-OEM aftermarket part bumper parts installed than the vehicle with Honda parts installed. The passenger

Ins. Co., et al., No.1:14-CV-507, United States District Court for the Southern District of Indiana, Indianapolis Division (pending before the Honorable Tanya W. Pratt; complaint filed on April 2, 2014) (“Indiana Action”); 4) Alpine Straightening Systems, Inc., d/b/a Alpine Body Shop, et al. v.

State Farm Mut. Auto.Ins. Co., et al., No. 2:14-CV-261, United States District Court for the District of Utah, Central Division (pending before the Honorable David Nuffer; complaint filed on April 10, 2014) (“Utah Action”); and 5) Brewer Body Shop, LLC, et al. v. State Farm Mut. Auto. Ins. Co., et al., No. 2:14-CV-02286, United States District Court for the District of Tennessee, Western District (pending be-

fore the Honorable Sheryl H. Lipman; complaint filed on April 22, 2014) (“Tennessee Action”).

The plaintiffs have since filed a motion to consolidate the five Federal lawsuits filed by multi-state repair facilities against insurance companies domiciled in other states. The request to the Judicial Panel on Multidistrict Litigation (JPML) asks to have the five suits moved to the U.S. District Court for the Southern District of Mississippi for consolidated pretrial proceedings.

A sixth suit, the RICO class action filed by Crawford’s Auto Center, Inc. has been proposed for consolidation but Crawford’s opposes that (see related story page 8 this issue.)

by Stephen Moore, Plastics Today

subsidiary of Magna International (Aurora, ON)—to illustrate long-term potential light-weighting solutions. Sabic contributed PC glazing materials, advanced coatings technology and engineering design expertise to support the

See MDL Action, Page 8

Ford Lightweight Concept Vehicle Employs Polycarbonate Rear Window, 35% Lighter than Glass Version

With the automotive industry focused on hitting future fuel economy and emission targets, the Ford Motor Company has revealed a drivable multimaterial lightweight vehicle (MMLV) with polycarbonate (PC) glazing from Sabic’s Innovative Plastics business.

This solution reportedly realizes a 35% weight reduction compared to the same window on a 2013 model year Ford Fusion production vehicle. The weight savings total 7.4 pounds, even though the rear window is over one mil- Ford lightweight concept vehicle employs polycarbonate limeter thicker than the pro- rear window which is thicker but lighter than glass duction glass window it replaces, rear window’s development and prowhose density is double that of PC. duction.

The lightweight concept vehicle The solution used in the conwas developed with the U.S. Departcept’s rear window combines Lexan ment of Energy’s Vehicle Technologies resin, a PC material said to be characProgram, together with Cosma Interterized by its light weight, high optical national (Sindelfingen, Germany)—a See PC Window, Page 7

Presorted Standard US Postage PAID San Bernardino, CA Permit #2244

2 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

REGIONAL

ABRA Acquires 12 True Quality Collision

Centers . . . . . . . . . . . . . . . . . . . . . . . . . 8

NATIONAL

ABAT Hosts Inaugural Meeting with

More than 80 in Attendance . . . . . . . . . 39

Allstate Argues for Multidistrict Consolidation

ABRA Opens New MN Center. . . . . . . . . . . 7

States, Supports Illinois or Florida Venues,

Brooks on Short Pays . . . . . . . . . . . . . 12

Opposes Mississippi or Louisiana

Venues . . . . . . . . . . . . . . . . . . . . . . . . . 1

Attanasio - AASP-MO Hosts 33rd Annual EXCEL Trade Show and Training

Conference, Sept. 5-7 . . . . . . . . . . . . . 14

Church Brothers Hosts Own Collision

Repair Car Show in Indianapolis. . . . . . 26

Kentucky Auto Industry Association Appoints Dave Tatman Executive

Director . . . . . . . . . . . . . . . . . . . . . . . . 11

Shop Filing RICO Case Against Insurers

Wants to be Excluded from Multidistrict

Antitrust Litigation . . . . . . . . . . . . . . . . . 8

Sisk - AASP-MN’s 20th Annual Golf Outing . 10

Sisk - Plans Underway for 7th Annual

Pro Paint Trade Show. . . . . . . . . . . . . . 35

COLUMNISTS

Attanasio - Is Your Shop Afflicted by

An Interview with Georgia Attorney Gene ASA Leadership Takes MFN Clause to

Capitol Hill . . . . . . . . . . . . . . . . . . . . . . . 3

Attanasio - How UABA President

Cory Stanger Sees the Industry . . . . . . 22

Caliber Collision Food Drive Nets Over

One Million Meals . . . . . . . . . . . . . . . . 37

CAPA Joins IIHS on Bumpers . . . . . . . . . . 6

Consumer Groups Seek CarMax Probe

Over ‘Deceptive’ Ads . . . . . . . . . . . . . . 39

Ford Lightweight Concept Vehicle Employs Polycarbonate Rear

Window, 35% Lighter than Glass

Version . . . . . . . . . . . . . . . . . . . . . . . . . 1

Honda Releases Video Showing Slower

Response on Airbag Deployment with

Aftermarket Bumpers. . . . . . . . . . . . . . . 1

Hyundai Motor America Launches Go

Genuine Collision Conquest Program

for Dealers. . . . . . . . . . . . . . . . . . . . . . . 4

Phonitis? Call the Telephone Doctor! . . 26

LKQ Has Donated $114K in Parts to

First-Ever Extradition on an Antitrust

Louisiana Legislature Enacts Bill to Curb

Driscoll-Chippendale - What Does the Charge Mean for the Auto Parts

Investigation? . . . . . . . . . . . . . . . . . . . 29

Foundation Schools . . . . . . . . . . . . . . . 11

Air Bag Fraud, Fines and Imprisonment

Both Authorized . . . . . . . . . . . . . . . . . . 18

Franklin - Using Emotional Intelligence

Mitchell’s New Dispatch Tools for

Luehr - The Wrong Bonus Plan Can Be

Pro-Spray Launches New AmTech®

to Close Sales . . . . . . . . . . . . . . . . . . . 28

Much Worse than None at All . . . . . . . . 32

Sisk - ARA Holds ‘Hill Days’ to Discuss

Industry Concerns with Congress . . . . 36

Sisk - How to Write an Authorization to Repair and Repair Contract—

Documentation Part 1 . . . . . . . . . . . . . 24

Yoswick - How Average Labor Rates Have Kept Up With Inflation Varies

by Market. . . . . . . . . . . . . . . . . . . . . . . 30

Yoswick - Slippery Labor Rates, Cost Shifting, Benchmarks, Sterling

Autobody. . . . . . . . . . . . . . . . . . . . . . . 18

Workcenter™. . . . . . . . . . . . . . . . . . . . . 6 Coatings Lineup, “Performance &

Profitability Boost” . . . . . . . . . . . . . . . . . 4

RDA Adds Central Paint as New Member . . 6

Sisk - HABA’s Focus: Re-imaging Collision

Repair in Texas . . . . . . . . . . . . . . . . . . 16

Takata Airbag Recall Widens . . . . . . . . . . . 3

U.S. Senate Commerce Chair Proposes Auto Safety Bill, Increases Highway

Safety Authority . . . . . . . . . . . . . . . . . . 38

WV Supreme Court Rules on Aftermarket

v Recycled Parts . . . . . . . . . . . . . . . . . . 6

ASA Leadership Takes MFN Clause to Capitol Hill

On June 18, 2014, Automotive Service Association (ASA) collision leaders traveled to Capitol Hill to meet with key members of Congress and their staff to discuss the negative effects of the Most Favored Nation (MFN) clause. ASA noted the problems that MFN clauses can create for shops, consumers and insurers. The benefits of the MFN Clause may include cost savings for buyers that can be passed down to other buyers and customers. Negative implications may include discouraging price cutting or even encouraging monopolies. Dan Risley, ASA president and executive director, said: “We were encouraged by the interest in Washington, D.C., and look forward to continued conversations with our representatives.

Most Favored Nation clauses are harmful to consumers, shops and some insurers. Michigan has recognized the damage these clauses can do in a marketplace and acted accordingly with regard to health insurance.

This same reasoning should apply to vehicle repair, and property and casualty insurance. This is the single most important issue we have in the collision repair industry today.”

Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Contributing Writers: Tom Franklin, John Yoswick, Janet Chaney, Toby Chess, David Brown, Rich Evans, Ed Attanasio, Chasidy Sisk, David Luehr Advertising Sales: Joe Momber, Sean Hartman, Bill Doyle, David Petro (800) 699-8251 Sales Assistant: Louise Tedesco Art Director: Rodolfo Garcia

Indexof Advertisers

in Antitrust and RICO Cases Filed in Five

The recall storm embroiling Takata Corp.’s airbags widened today with Honda Motor Co., Nissan Motor Corp. and Mazda Motor Corp. calling back nearly 3 million vehicles to fix possibly defective inflator propellant made in North America. Honda recalled 2.03 million vehicles worldwide, including 1.02 million in North America, 153,943 in Europe and 668,582 in Japan. The vehicles were manufactured between April 2000 and October 2002. In North America, they cover the Civic, CR-V, Odyssey and Element. In Europe, affected models are the Civic, Stream, Fit/Jazz and CR-V. Mazda called back 159,807 vehicles worldwide, including 14,794 in North America, 90,259 in Europe and 11,832. That recall covers the RX-8 and first-generation Mazda 6. Nissan’s recall affects 755,000 units worldwide. The total includes 228,000 vehicles in North America, including the Infiniti FX35, Pathfinder and Cube, and 128,000 nameplates in Japan, including the X-Trail and Teanna. Nissan did not provide a European breakout.

Separately, Honda, Toyota, Nissan, Mazda, Ford, Chrysler and BMW said they are conducting regional recalls in the United States.

Midwest

Contents

Takata Airbag Recall Widens

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Audi Wholesale Parts Dealers . . . . 35 Automotive International . . . . . . . . . 11 BMW Wholesale Parts Dealers . . . . 31 Certified Automotive Parts Association (CAPA). . . . . . . . . . . 17 Charles Gabus Ford . . . . . . . . . . . . 23 Classifieds. . . . . . . . . . . . . . . . . . . . 38 Dent Magic Tools . . . . . . . . . . . . . . . 4 Dent Tools Direct USA . . . . . . . . . . 12 DJS Fabrications, Inc.. . . . . . . . . . . 40 Equalizer Industries, Inc. . . . . . . . . 18 Erhard BMW of Bloomfield Hills . . . 14 Erhard BMW of Farmington Hills . . 14 Ganley Auto Group, Inc. . . . . . . . . . 29 GM Wholesale Parts Dealers . . . . . 28 Graham Auto Mall . . . . . . . . . . . . . . 27 Hank Graff Chevrolet . . . . . . . . . . . . 7 Honda-Acura Wholesale Parts Dealers. . . . . . . . . . . . . . . . . . 20-21 Hyundai Motor America . . . . . . . . . . 5 Hyundai Wholesale Parts Dealers . 30 Induction Innovations, Inc. . . . . . . . 19 Jake Sweeney Chevrolet . . . . . . . . 22 Kia of Des Moines . . . . . . . . . . . . . . 23 Kia Wholesale Parts Dealers. . . . . . 39

Laurel Auto Group of Westmont . . . 13 Lexus Wholesale Parts Dealers . . . 34 Loaner & Rental Insurance

by Northland . . . . . . . . . . . . . . . . 16 Malco. . . . . . . . . . . . . . . . . . . . . . . . 15 Mazda Wholesale Parts Dealers . . . 37 Mercedes-Benz . . . . . . . . . . . . . . . . . 9 MINI Wholesale Parts Dealers . . . . 31 Minute Man Wheel Lifts. . . . . . . . . . . 8 Mitsubishi Wholesale Parts Dealers. . . . . . . . . . . . . . . . . . . . . 36 MOPAR Wholesale Parts Dealers . . 25 Morrison’s Auto Parts . . . . . . . . . . . 15 Rare Parts, Inc. . . . . . . . . . . . . . . . . 26 Subaru Wholesale Parts Dealers . . 33 The Sharpe Collection of Automobiles . . . . . . . . . . . . . . . . . 6 Toyota of Des Moines . . . . . . . . . . . 23 Toyota of Grand Rapids . . . . . . . . . 24 Toyota Wholesale Parts Dealers . . . 32 Valspar Automotive . . . . . . . . . . . . . . 2 Volkswagen Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . 35 West Bend Mutual Insurance . . . . . 10

www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 3

Hyundai Motor America Launches Go Genuine Collision Conquest Program for Dealers ● Hyundai Motor America is launching the Hyundai Go Genuine Collision Conquest program to encourage repair facilities to buy more Hyundai Genuine Parts. ● Hyundai Genuine Parts are manufactured to exacting engineering specifications for a precise fit without modifications, ensuring quick and proper installation. ● Hyundai Genuine Parts are installed on Hyundai vehicles when they are tested to ensure they meet the U.S. government’s collision safety and crash protection standards. ● Aftermarket parts may not meet required specifications increasing installation time. ● Hyundai Motor America encourages the use of OEM (Original Equipment Manufacturer) parts on all Hyundai vehicle repairs. ● Use of imitation, aftermarket, alternative or other non-original equipment Hyundai parts for the repair of any collision damaged vehicle may negatively affect vehicle crashworthiness and occupant safety during a collision and is not recommended by Hyundai Motor America.

Hyundai Motor America launched its Hyundai Go Genuine Collision Conquest program. The Hyundai program provides reimbursement to Hyundai dealers, allowing them to competi-

tively price their Hyundai Genuine Parts against alternative, non-Hyundai parts. Competitive prices help collision repair facilities purchase more Hyundai Genuine Parts as opposed to alternative, non-Hyundai parts. Using Hyundai Genuine replacement parts during the collision repair process provides confidence that the parts will perform as designed and engineered by Hyundai. The program is launching with five commonly required collision parts including hoods, fenders, bumper covers, head lamps and tail lamps.

These parts and the reimbursement associated with them are available for all Hyundai vehicles, regardless of age, for all participating dealers. Additional parts may be added to the program at a later date. The program is open to all Hyundai dealers.

“A program that encourages dealer-owned and independent repair shops to purchase Hyundai Genuine Parts from their local Hyundai dealer has so many benefits,” said Frank Ferrara, executive vice president, customer satisfaction, Hyundai Motor America. “Hyundai owners benefit through the assurance that approved factory parts can be used in their repairs, shop owners know they are getting quality parts at a great price, while dealers benefit through increased parts sales.”

Pro-Spray Launches New AmTech® Coatings Lineup, “Performance & Profitability Boost”

Pro-Spray Automotive Finishes is pleased to announce the introduction of a variety of new products to the AmTech® Line. AmTech offers outstanding value for the collision repair shop seeking high performance at an economical price.

AmTech will now be offering two new primers – AM-1550™ 2K Primer – Gray and AM-1551™ 2K Sealer - Gray, three new clearcoats – AM-300™ 2.1 VOC Clearcoat, AM2200™ 2.1 VOC Euroclear, and AM-4400™ Euroclear 4.4 VOC and two new reducers – AM-1801™ and AM-1802™. These products will help to round out the AmTech system by providing viable alternatives when competing in the low cost paint market.

AM-1550 2K Primer is fast building with outstanding leveling and sanding properties while the AM-1551 2K Sealer provides excellent flow and leveling and is designed for “wet on wet” applications.

Both products have an easy to use 4:1 mix ratio and can be used on a variety of properly prepared substrates.

AM-300 2.1 VOC Clearcoat is an all-purpose 2.1 VOC compliant

clearcoat that offers good performance and appearance at an economical price. This product is ideal for spot, panel, multi-panel, and overall refinishing. AM-2200 2.1 VOC Euroclear and AM-4400 4.4 VOC Euroclear clearcoats are made from advanced European technology and designed to maximize performance and turnaround. Both products provide excellent flow and leveling, high-build coverage, and fast dry times.

AM-1801 and AM1802 AmTech Reducers are premium grade and are specially formulated to reduce basecoats that may be used in other competitive systems.

According to Tom Gardner, Director of Business Development Branded Paints & Coatings, “This complete line by AmTech is economically priced and has repeatable results. These products will provide shops with the winning edge they need to leave the competition in the dust.”

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Hyundai has teamed up with Overall Parts Solutions (OPS), a Texas based company, to allow dealers and repair facilities to work together using the OPSTRAX and VALUTRAX tools in a unique, streamlined interface.

Using the OPSTRAX and VALUTRAX tools, dealers and repair facilities are able to see all the parts on a collision repair estimate including the conquest pricing for program parts.

Using the program and tools, dealerships and body shops can act immediately on these opportunities.

“OPS is excited about the opportunity to team up with Hyundai Motor America,” said Nick Bossinakis, founder and chief executive officer, OPS. “OPS’ vision has always been to provide collision shops and parts suppliers alike with tools that would positively impact their businesses as well as create innovation and ease of use within our industry.”

OPS has been involved with parts procurement and supply chain management in the industry for nearly two decades. Currently, OPS technologies are utilized throughout North America with the top Multi-Shop Operators (MSO), independent repair facilities, and dealer groups. OPS was the first in the industry committed to providing a single platform for all parts types. OPS prides itself in producing robust and

meaningful solutions for the collision repair industry.

Hyundai Motor America, headquartered in Fountain Valley, Calif., is a subsidiary of Hyundai Motor Co. of Korea. Hyundai vehicles are distributed throughout the United States by Hyundai Motor America and are sold and serviced through more than 820 dealerships nationwide. All Hyundai vehicles sold in the U.S. are covered by the Hyundai Assurance program, which includes the 5-year/60,000-mile fully transferable new vehicle limited warranty, Hyundai’s 10-year/100,000mile powertrain limited warranty and five years of complimentary Roadside Assistance. Hyundai Blue Link Connected Care provides owners of Hyundai models equipped with the Blue Link telematics system with proactive safety and car care services complimentary for one year with enrollment. These services include Automatic Collision Notification, Enhanced Roadside Assistance, Vehicle Diagnostic Alert, Monthly Vehicle Health Report and in-vehicle service scheduling.

For more details on Hyundai Assurance, please visit www.HyundaiAssurance.com.

Visit Hyundai’s media website at www.hyundainews.com and blog at www.hyundailikesunday.com.

www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 5

CAPA Joins IIHS on Bumpers

The Certified Automotive Parts Association (CAPA) has partnered with the Insurance Institute for Highway Safety (IIHS) to develop its 501 Bumper Standard. This criterion allows the market to identify parts that are comparable to more expensive OE parts, according to the organization.

The development of the CAPA 501 Bumper Standard included extensive examination of various bumper parts, comparative testing, consultation with industry experts and input from CAPA’s technical committee. In addition, IIHS conducted a series of lowand high-speed demonstration tests in order to evaluate both the crashworthiness and damageability of a vehicle equipped with CAPA standard parts.

According to IIHS Chief Administrative Officer Joe Nolan, test vehicles that used non-OE, CAPA-certified parts received similar damage protection to those equipped with OE parts.

“Competition in the parts area helps keep insurance costs down. But substandard or poor quality structural parts that don’t match original equipment can undermine the cost savings and affect vehicle safety,” he said.

“We commend CAPA for pursuing a certification standard for aftermarket bumpers.”

WV Supreme Court Rules on Aftermarket v Recycled Parts

The Automotive Recyclers Association (ARA) has said it applauds the recent West Virginia Supreme Court of Appeals ruling that the state’s Automotive Crash Parts Act does not apply to the use of salvage/recycled OEM parts and as such, affirms the use of salvage/recycled OEM crash parts in vehicle repairs when such repairs are negotiated by insurers within the year of the vehicle’s manufacture, or in the two succeeding years.

The Court ruled that the Crash Parts Act clearly intended to require disclosure and written consent for only some, not all, replacement crash parts, and found that aftermarket crash parts and salvage/recycled OEM crash parts are “diametrically different” products and not interchangeable in the context of the statute.

Thus, the use of salvaged/recycled OEM parts by Liberty Mutual Insurance Company and the collision repair shop did not violate the Crash Parts Act. The Court’s ruling brings several years of litigation and misrepresentation about recycled, OEM parts to conclusion, according to the ARA.

Mitchell’s New Dispatch Tools for Workcenter™

Mitchell has announced the latest updates to the Dispatch module of the WorkCenter™ claims management solution. The Dispatch assignment automation tool has been shown to schedule 500 or more assignments in 30 seconds or less on average. The new Dispatch features include customer appointment booking for more accurate scheduling and non-appraisal work assignments to improve field appraiser productivity. “Time is one of the most critical components of the claims process, for both the appraiser and the auto owner,” said Marcos Rivera, Senior Director for Mitchell. “The latest features within the Dispatch module aim to increase efficiency and overall productivity by providing improved task management and scheduling tools to users.

Insurance clients already leveraging automated scheduling through the WorkCenter solution increased productivity by over 27 percent annually.” Appointment booking through the Dispatch module eliminates the uncertainty of appointment times and dates. By adding the ability to guarantee an appointment slot at first notice of loss, Mitchell significantly reduces wait time.

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The Refinish Distributors Alliance (RDA) has added Central Paint as a new member. The company has been in business for 64 years and is a BASF single line distributor with headquarters in Trenton New Jersey. With this addition, RDA grows their membership to cover 29 states.

“We are excited to have Central Paint as part of the RDA/IMPACT organization. Central Paint exemplifies what our group is all about, Premier PBE Distributor’s providing exclusive networking, products and services.” said Robert McKenzie Jr., Executive Director of RDA. Tom Smetanka, General Manager and George Hyman, President and Owner of Central Paint are looking forward to being a part of the RDA/IMPACT organization. They are eager to share and learn with the members of the group. General Manager Tom Smetanka said, “they are always looking for ways to differentiate themselves and the IMPACT Performance Products and Marketing Programs will be an immediate benefit. RDA/IMPACT is the largest national group of refinish jobbers dedicated to providing services and products to shops.

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Continued from Cover

PC Window

clarity and impact resistance, with Exatec E900 plasma coating for glasslike scratch and UV resistance. The E900 coating is designed to deliver a high level of weatherability and abrasion resistance over the life of the vehicle and enable automakers to meet homologation requirements for driver visibility—including U.S. standards such as the Federal Motor Vehicle Safety Standard (FMVSS) 205 regulations, as governed by the NHTSA AS2 specification, and the American National Standards Institute Z26.1, which covers the visibility, strength and abrasion resistance of glazing materials.

“Sabic is committed to spread the adoption of PC glazing technology, which offers styling and weight saving benefits to help increase fuel efficiency and lower emissions,” said Scott Fallon, general manager, Automotive, Sabic’s Innovative Plastics business. “To date, several OEMs have validated the technology for use on rear quarter windows and roofs on production vehicles. At the same time,

real-world demonstration programs like Ford’s drivable multi-material lightweight vehicle concept are valuable to further highlight the performance gains that can come from an advanced approach like PC glazing and to ultimately help validate and speed up its wide-scale adoption.”

Besides weight reduction, PC also allows automakers to improve energy efficiency via improved thermal insulation of the passenger cabin, a consequence of PC’s five-fold lower thermal conductivity relative to glass.

Sabic’s advanced computer analyses have quantified PC’s potential to reduce the load on HVAC (heating, ventilating and air conditioning) systems: emissions can be cut by as much as three grams of carbon dioxide per kilometer, and the range of electric and hybrid vehicles can be extended by two to three percent.

Design flexibility The rear window of Ford’s MMLV is identical in geometry to the part used in the Fusion production vehicle. This design approach allows Ford to test the two parts and compare the performance differences between them based strictly on the change in materials.

The material’s ability to be injection-molded means windows can be designed to reduce even more weight, increase aerodynamic performance and enhance styling. Designs can go beyond the shape and complexity limitations of glass to glazing with geometric effects that can make possible relatively thin PC surfaces, potentially adding to the weight-out total. Also, 3D styling possibilities and aerodynamic features enabled by PC glazing can minimize drag and contribute to fuel efficiency.

Integration opportunities, enabled

by PC glazing, can also contribute to enhanced efficiency - and cost savings - by reducing the number of parts and materials associated with joining otherwise discrete components.

Another consideration for automotive OEMs and suppliers is the maturity of PC glazing technology and its suitability for mass production according to Sabic IP. In collaboration with Japan’s ULVAC (Chigasaki), Sabic has helped develop an advanced vacuum equipment technology for the automotive industry to develop lightweight, plasma-coated PC glazing components cost-effectively and efficiently on a broad scale.

ABRA Opens New MN Center

ABRA Auto Body & Glass has opened a new franchise center in Princeton, MN. The new ABRA repair center is located at 32018 125th Street and is about 50 minutes north of downtown Minneapolis. It is currently the third ABRA franchise owned and operated by Kedrick Johnson and family.

“Opening the Princeton repair center is about meeting the demand of our customers in the community,” says Johnson. “We are delighted the market is thriving and look forward to offering top-quality collision repair services in the Princeton area now and for years to come.”

“We are dedicated to increasing our presence in the markets we serve. Opening the Princeton repair center is an opportunity to better serve our customers and insurance partners in Minnesota,” says Mark Wahlin, vice president of franchise development/relations for ABRA.

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Continued from Cover

MDL Action

On June 12, attorneys for Allstate (the Allstate Defendants) requested that the Panel centralize for coordinated pretrial proceedings the six Pending Actions to the Northern District of Illinois (Eastern Division) to be managed by the Honorable Robert M. Dow, Jr., or, in the alternative, to the Middle District of Florida (Orlando Division) to be managed by the Honorable Gregory A. Presnell.

Allstate’s arguments include the availability of regular and frequent airline connections, the location of

their attorneys, and the comparably lack of connections into Mississippi and Louisiana.

They also cite the convenience for plaintiff’s attorney (who represents all the plaintiffs) John Eaves, Jr. who is based in Jackson, MS, as not being a valid reason to transfer the actions there.

The Allstate Defendants have each been sued in some or all of six actions alleging that they wrongfully refused to compensate plaintiff auto body shops in full for collision repair work performed on insured automobiles, and engaged in various conspiracies to artificially suppress the cost of collision repair services and attendant

Shop Filing RICO Case Against Insurers Wants to be Excluded from Multidistrict Antitrust Litigation

In an Interested Party Response filed Monday, July 14, Crawford’s Auto Center, Inc. is opposing consolidation of Crawford’s Auto Center, Inc., v. State Farm Mutual Automobile Insurance, Co, et al., a “RICO class action” with several antitrust lawsuits seeking multidistrict litigation (MDL) consolidation.

The RICO Class Action plaintiff, Crawford’s Auto Center, is a Pennsylvania-based automobile collision repair facility who alleges that the defendants conspired amongst themselves and/or others to “suppress compensation to repair facilities for automotive collision repairs covered by insurance.”

The RICO Class Action Complaint asserts that Defendants set certain “prevailing rates” for collision repair work; that those rates are “comprised of flawed and rigged data,” and that Plaintiff and the classes were “defrauded” into accepting those rates for automobile repair services.

Now the plaintiffs have filed a motion to consolidate five Federal lawsuits filed by repair facilities against insurance companies. The request to the Judicial Panel on Multidistrict Litigation (JPML) asks to have the five, essentially identical suits to the U.S. District Court for the Southern District of Mississippi for consolidated pretrial proceedings.

Allstate identified the RICO lawsuit filed by Crawford’s as a potential “tag along” suit. In their response to the motion filed by the Plaintiff’s for consolidation of the five suite, Allstate’s filing stated, “The RICO Class Action alleges essentially the same conduct as the Antitrust Actions, but seeks relief for a number of nationwide classes

under RICO.” Explaining their opposition to the motion, Crawford’s response states, “Like the majority of defendants who have filed responses to the proposed MDL, however, Crawford’s opposes consolidation of the RICO Class Action with the Antitrust Actions.” If the panel were to conclude that the litigation should be consolidated with the antitrust suits, Crawford’s would prefer they were located in the Northern District of Illinois, Easter Division, “given that the RICO Class Action is the case that seeks the broadest relief on behalf of the largest number of potential claimants and the Northern District of Illinois is the most convenient forum, on balance, for the parties and witnesses.”

Crawford’s filed the RICO Class Action in the Northern District of Illinois on April 30. The lawsuit names State Farm, Allstate, GEICO, Progressive, Farmers, Liberty Mutual and Nationwide and defendant insurers alleging they illegally conspire to control the collision repair process and the cost of repairs. The suit also names USAA, Travelers and American Family as conspirator insurers, though not as defendants.

According to Crawford’s interested party filing, at an initial status conference held on its suit July 10, the Judge assigned to the case ordered that if the suit is “not selected for MDL treatment or if an MDL is created in this district, the Court will set this matter of status promptly after JPML issues its ruling.” The plaintiffs and defendants in the cases will have the opportunity to present their opinions at a hearing of the Judicial Panel on Multidistrict Litigation on Thursday, July 31, 2014, in Kansas City, Kansas.

8 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

labor rates and materials costs. Five of the six cases (collectively, the “Antitrust Actions”) were filed by the (Movant) Plaintiffs’ counsel and allege violations of federal antitrust laws, as well as a potpourri of state law business tort claims, all on behalf of individual body shop plaintiffs, and are the subject of the Motion.

The Allstate defendants also support the inclusion of the RICO case as a “tag-along” complaint, saying “That forum should be before Judge Dow in the Northern District of Illinois, where the RICO Class Action is pending.

Unlike the Antitrust Actions, the RICO Class Action asserts claims on behalf of putative nationwide classes,

and seeks the broadest relief on behalf of the largest number of potential claimants.”

In this respect they agree with the RICO plaintiffs.

On June 10, 2014, the Allstate Defendants notified this Panel of a potential tag-along action, Crawford’s Auto Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., et al. (the “RICO Class Action”), filed by other counsel and not mentioned in the Motion. The RICO Class Action alleges essentially the same conduct as the Antitrust Actions, but seeks relief for a number of nationwide classes under RICO. For more on the RICO action see related story this page.

ABRA Acquires 12 True Quality Collision Centers

ABRA Auto Body & Glass announced June 27 the purchase of all 12 True Quality Collision Centers in Cincinnati and Dayton, Ohio, and Bloomington, Indiana. Terms of the deal were not disclosed. ABRA is one of the largest and fastest growing multi shop repair operators in the country. Today’s transaction introduces the company to the state of Ohio and is another step in expanding its national footprint. ABRA’s repair center portfolio now stands at 229 in 18 states. Duane Rouse, ABRA’s President

and Chief Executive Officer said, “Our growth strategy is on target and progressing as planned. We are delighted to enter the Ohio market while expanding our presence in Indiana. We look forward to serving our customers and business partners in this region of the country.”

True Quality co-owner Jerry Fry said, “ABRA has had an excellent reputation for more than 30 years. I have no doubt our employees will be in exceptional hands moving forward.”

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Midwest Associations with Chasidy Rae Sisk

Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.

AASP-MN’s 20th Annual Golf Outing On Tuesday, June 17th, AASP-MN hosted its 20th Annual Golf Outing at the Tartan Park Golf Course in Lake Elmo, MN. The event was quite successful with 132 golfers attending to enjoy a beautiful day of golfing fun and networking opportunities. The association was pleased with the amount of participation from members which

contributed to the event’s success, plus they are also grateful to the 25 companies that sponsored the golf outing.

The team that won the tournament consisted of Joe Hernandez of LKQ/Keystone, Jesse Jacobson of Heppener’s Auto Body, Jim Dow of LKQ/Keystone, and Joe Fleischhacker of 3M. Their victory was achieved with a score of 60, 12 shots below par. Making the outing even more exciting, Holes-in-One were scored by two attendees: Dave Williams of Hopkins Auto Body and Darren Heairet of Walser Automotive.

During the golf outing, AASP-MN also held a raffle to raise funds for the association’s Political Action Committee (PAC) fund. The raffle generated over $1300 towards supDave Williams of Hopkins Auto Body and Darren Heairet of Walser Automotive both scored Holes-in-One! porting their PAC, $350 of

10 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

The winning team consisted of Joe Hernandez of LKQKeystone, Jesse Jacobson of Heppener’s Auto Body, Jim Dow of LKQKeystone, and Joe Fleischhacker of 3M

which was re-contributed from the winnings of Bruce Tschida of Lake Marion Collision after he won the raffle drawing.

“All in all, this was a great event,” said Judell Anderson, AASP-MN Executive Director. “A good time was had by all, and we raised money for an im-

portant cause. And – no small feat this year – the weather cooperated!”

AASP-MN 1970 Oakcrest Ave, Suite 102 Roseville, MN 55113 612-623-1110 www.aaspmn.org

Kentucky Auto Industry Association Appoints Dave Tatman Executive Director A Kentucky resident with extensive automotive manufacturing experience has been tasked with elevating the state’s position as a global leader in the automotive industry.

The Kentucky Auto Industry Association announced Dave Tatman, former general manager of the General Motors Corvette Assembly Plant in Bowling Green, will serve as the inaugural executive director of the organization.

“I am delighted and humbled to serve as the first executive director for the Kentucky Automotive Industry Association,” said Tatman. “I am very excited to draw on my 34 years of automotive experience to work across the Commonwealth for the common good of the industry. We have long needed a united voice on matters of mutual concern, and the association gives us the platform for that voice.”

Tatman was appointed executive director by the association’s 12 member board of directors, which is chaired by Kentucky Cabinet for Economic Development Secretary Larry Hayes.

“Dave is the best person for the job,” said Hayes. “His experience in the industry and his strong relationships with manufacturers and suppliers throughout the state will be invaluable assets as we further strengthen our position as a leader in the global automotive marketplace.”

Tatman joined GM as a college graduate in training in 1980 and progressed through several locations and leadership positions in the U.S., Dave Tatman Canada and South America. Tatman became general manager of the Corvette Assembly Plant in Bowling Green in 2010 and retired earlier this year.

The Kentucky Automotive Industry Association, which was announced by Governor Steve Beshear earlier this year, will create a unified voice for an industry sector that is profoundly important to the state’s economic health and growth. For the first time, auto manufacturers, sup-

pliers and supporting entities will work together to share best practices and encourage meaningful dialogue and action. The association will take a leading role in developing collaborative partnerships that will advance the auto industry now and in the future.

With more than 1.2 million vehicles produced in 2013, Kentucky ranks third overall in light vehicle production and first per capita. Kentucky’s 460 motor vehicle-related establishments employ nearly 82,000 people.

In the past five years, nearly 300 motor vehicle-related projects have been announced statewide, representing more than 17,600 new jobs and $4 billion in new investment. Kentucky’s motor vehicle exports reached a record $5.5 billion last year.

The Kentucky Cabinet for Economic Development is providing support to the Kentucky Auto Industry Association as the organization establishes its structure and framework. To learn more about the Kentucky Automotive Industry Association, visit kyautoindustry.com

LKQ Has Donated $114K in Parts to Foundation Schools

LKQ Corporation has donated $114,000 in parts this year to collision training schools through the Collision Repair Education Foundation. The parts donated by LKQ will allow students the opportunity to practice collision repair on current model vehicle parts. As collision schools are facing reduced budgets, these types of donations are vital to the student’s technical education. “LKQ continues to show their corporate stewardship by donating vehicles, parts—both new and reconditioned—to SkillsUSA for competition, parts to help rebuild Recycled Rides vehicles for needy families and to schools,” said Clark Plucinski, executive director of the Foundation. “They continue to find ways to help the schools achieve their goals of producing quality, job-ready entrants. We can’t thank Mr. Fortner and Mr. Wagman enough for their benevolence.” Added Terry Fortner, vice president of industry relations and market development for LKQ Corporation, “LKQ Corporation realizes the importance of training current and future collision repair technicians. We are honored to be an active member of the Collision Repair Education Foundation.”

www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 11

An Interview with Georgia Attorney Gene Brooks on Short Pays

by Chasidy Rae Sisk

Short pay lawsuits are an increasingly prevalent trend in the collision repair industry throughout the country. After learning of a recent $40,508 victory against State Farm by a customer of GA’s Hernandez Collision Center, (see autobodynews.com), I decided to interview Gene Brooks, the attorney who won the case, to get a better understanding of the issues.

How often do you work on short pay lawsuits?

The National Board I have been workof Trial Advocacy ing on these cases (NBTA) has recogfor about a couple nized Savannah of years now. We attorney Eugene C. Brooks, IV, for 20 are set to try our years of certificafifth case next week tion in civil trial and have others set advocacy on trial calendars for the rest of this year and going into next year.

Why was this lawsuit necessary?

State Farm rejected Ms. Roberts’ presuit demand for settlement of her claim. State Farm had refused to pay over $4,000 in repair costs due, paying only about 60% of the repair costs.

Did the Hernandez Collision Center educate you or the customer on consumer rights?

The issue of consumer rights is a matter of Georgia law, so that was learned from Georgia law and insurance regulations. Hernandez Collision Center has educated me on the responsibilities of the repair shops to return a damaged car back to its pre-accident condition and on the process of repairing a car. Learning the particularities of vehicle repair has been a challenge.

What role did Hernandez Collision Center play in Japonica Roberts’ case against State Farm?

Hernandez Collision Center was the repair shop that repaired Ms. Robert’s vandalized car. As the repair shop, Hernandez Collision Center personnel provided testimony on the scope of the necessary repairs and testified on industry standards, both in estimating and repair procedures. Also, Hernandez did a wonderful job documenting

the file. They took close to a hundred photographs, and some were very helpful. You just never know which photo is going to be the most important, but every repair shop that is hoping to help their customers should take lots of photos, particularly of any cost items or repairs that the shop knows the carrier will object to or may question.

What did you learn from that case?

These cases have a long learning curve, and I am glad to have begun to understand some of the many legal, evidentiary and procedural issues that these cases present.

Do you think more consumers would get involved in short pay lawsuits if they were better educated about their rights?

I don’t know. Some may, and others may think it is too much trouble. It is a time-consuming process.

Do you feel it’s important for shops and/or consumers to pursue short pay litigation?

That decision is up to the policy holder and/or the third party damaged party. It’s great that some car owners are willing to test the insurance company’s decision on what it will and won’t pay. Without this ‘push back,’ insurance companies have little or no incentive to be reasonable. State Farm, in particular, appears to have a take-it-or-sue-me attitude, and so I am glad to assist consumers with the backbone to file suit.

What measures should be taken to prevent the necessity/prevalence of short pay cases in the future?

The repair shops need to be willing to assist the customer by appearing to testify without requiring any sort of witness fee, and policyholders need to be familiar with their policy language.

I expect that the best way to blunt the insurance industry’s incentive to short pay is for jurors to require full payment in trial verdicts. At least in Georgia, that is the only realistic avenue for making a difference. The Insurance Commissioner isn’t going to get involved. In helping the consumer, the shop should be aware that the consumer will have the burden of proof.

So, the shop should document, document, document. Take lots of photos.

Save invoices. Get as much in writing

12 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

as possible. Memories fade, and the carrier’s estimator will often have a different recollection of events than the shop estimator. This ‘he said/she said’ dilemma can often be resolved favorably for the consumer with sufficient documentation and photos.

What advice would you give shops/ consumers interested in pursuing short pay litigation?

Be ready for protracted litigation. And as stated above, the shop has to document. The consumer should stay involved and make the calls to the carrier. Keep notes. Keep records.

Then there is the issue of cost. Fortunately, in Georgia, attorney fees are recoverable by a policy holder; however, Georgia’s laws should be updated to allow for recovery of litigation expenses. Without this provision, the litigation playing field is tilted in favor of the insurance company because of the cost of depositions and discovery.

Some carriers, such as State Farm, do not have appraisal clauses in their policies and so the policy holder has no choice but to sue in Court. The damaged wreck car owner has no choice

but to sue the at-fault driver. The third party claims are difficult because the trial is a two-step process and the verdict must first be obtained against the at-fault driver. Then, there is the discovery process and the depositions.

The insurance company doesn’t mind spending the money on the depositions, but this is an expensive litigation burden for the party bringing the lawsuit. The insurance company does not willingly turn over its documents and so motions are required. The insurance companies know this, and they have lobbied the legislature for years to have statutes written that favor their position in these bad faith cases. It would be helpful if the shops got involved in lobbying and leveled some of these playing fields, but that takes organization and the shops don’t appear organized at this point.

Tell me about the second case you recently filed. Is it the same issue(s)?

Are you optimistic about another victory?

I am representing about a dozen policy holders against State Farm. The See Gene Brooks Interview, Page 31

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Midwest Associations

Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.

AASP-MO Hosts 33rd Annual EXCEL Trade Show and Training Conference, Sept. 5-7 with Ed Attanasio

With three jammed-packed days consisting of helpful classes, informational programs and with many of the world’s leading automotive companies on-hand, the Alliance of Automotive Service Providers of Missouri (AASP-MO) is hosting its 33rd Annual EXCEL Trade Show and Training Conference, Sept. 5-7 at St. Charles Convention Center in St. Louis, MO. It plans to be an exciting and educational experience for both collision and mechanical repairers from all over Missouri. “We’re bringing in some of the automotive repair industry’s top trainers for this year’s technical, collision and management courses,” AASP-MO’s Executive Director Ron Reiling said. “We want to help our members to excel in their businesses, so that’s why we’re calling it our EXCEL Show. We will have the industry’s best suppliers and vendors exhibiting in the trade show as well,

featuring the latest and greatest products and services out there. We expect a big turnout this year and we have lots of room to accommodate everyone, so don’t hesitate to register for the 33rd Annual EXCEL Trade Show and Training Conference.”

For the very first time, shop owners can get an early look at the trade show floor from 4:00-6:00 pm on Friday Sept. 5, just prior to the show officially opening at 6:00 pm. In this Rick White will be special two-hour the weekend’s block, exhibitors keynote speaker at will be featuring the AASPMissouri’s 33rd specials and prizes Annual EXCEL Trade that are only availShow and Training able for shop ownConference, Sept. ers.

Refreshments 5-7 at St. Charles will be free during Convention Center in St. Louis, MO this show preview,

sponsored by FlexPay Plus.

“This will be your opportunity as an owner to meet one-on-one with all of the exhibitors at the show,” Reiling said. “The vendors will be going all out to make this a worthwhile experience. We decided to make this a special time just reserved for shop owners who want to improve their businesses.

If you really want to get something valuable out of the show, this is your time shop owners.”

This year’s show will also be more convenient for attendees, Reiling explained. “This year we will have all of the events on the same level of the St. Charles Convention Center and all of the meals will be right next door and connected to the trade show. We know that time is important at these busy shows, so we’ve made everything as easy as accessible as possible, so that attendees and exhibitors can get the most they can out of the show.”

Management classes at the 33rd Annual EXCEL Trade Show and Training Conference will include Efficient Shop Management - Don’t Put Out fires; Prevent Them, presented

by Tom Ham; The Exceptional Service Advisor, presented by Tom Ham; Communicating For Success, presented by Rick White; I Want To Retire, How Do I Plan It? What’s My Business Worth & More, presented

by Laura Boedges; Mechanics of Management, presented by Lisa Moehlenkamp and How to Attract, Manage and Retain More Customers and Revenue in A Consolidating Market, presented by Frank Terlep.

Rick White has been working in the consulting, software and automotive industry for almost 25 years. He owned a highly successful automotive repair shop in Melrose, MA for many years and was the President of the Massachusetts & Rhode Island chapter of the Automotive Service Associ-

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starting during this weekend. We want people to plug into this potential opportunity and take the information offered here back to their shops.”

Later during the conference, White will be teaching a seminar, Communicating For Success. “Sales are more important now than ever,” he explained.

Last year’s AASP-MO’s Conference/Trade Show was a huge success and a big crowd is also anticipated for this year

White will be the weekend’s keynote speaker and his opening talk will be what’s called a Kickstart, he said. “We’re calling it Opportunity is Knocking, Are You Going to Answer the Door? It’s basically a fun presentation but the message is not frivolous—step back see the opportunity around you and take advantage of it

“We’re going to analyze how shops can offer a consistent customer experience and how they can get that only through their employees. We will teach these owners and managers how they can get their employees onboard for what we call a ‘crusade.’ We want them engaged at a higher level, so that they can turn your customers into raving fans of your

business. That’s really what the seminar is about and I believe the owners who attend will be able to achieve these things on top of all the other information we will be sharing with this presentation.”

Laura Boedges from Rogers Investments is bringing three panelists with here from St. Louis to make a presentation entitled I Want To Retire, How Do I Plan It? What’s My Business Worth & More. Boedges is excited to share her ideas and concepts with the automotive repair shops in attendance, she said.

“There are a lot of shop owners approaching retirement age (55-70), yet they have no plans in place for either retirement or selling the business,” Boedges said. “We’ve put together a three-hour presentation to outline all of the different aspects of retirement, including business valuation, succession plans and estate planning. We’d all love to be able to work forever, but that’s not reality. We can teach these owners about things like cash balance plans, which allow family members and current employers who want to buy the shop after the owner steps down. If you fail to plan, you plan to fail and that’s why it’s so essential that

these shop owners have the right information they need.”

Technical classes at the conference will include: Advanced Electronics: Automotive Solid State Electronics course including Sensor Simulation and Circuit Emulation Electronics Class Bottom Line: Verifying Expensive Part Replacement by Dave Scaler; Intelligent Power Distribution and Smart Junction Box Diagnosis taught

by Dave Scaler; Electronic Vehicle Stability Controls (ESC) Anti Slip, Anti Slide, Anti Spin, Anti Skid Import and Domestic by Al Dambrauskas, including many more.

I-CAR classes offered during the conference will include: (DAM15) Advanced Steering and Suspension Systems Damage Analysis; (FOR06) 2015 Ford F-150 Structural Repair Training Course; (WCS04) Squeeze-Type Resistance Spot Welding; (SSS01) Structural Straightening Steel and (SPS10) Replacement of Steel Unitized Structures.

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Southwest Associations with Chasidy Rae Sisk

Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.

HABA’s Focus: Re-imaging Collision Repair in Texas

dependent body shops in order to es- networking opportunities and support our efforts, but it’s not about receiving tablish a professional and profitable for the critical issues that impact the credit—it’s about furthering the inBack in May, the Houston Auto Body organization, to promote harmony and industry as a whole. Kozadinos says, dustry as a whole!”

Association (HABA) held their 4th cordial business relationships, and to “we successfully lobbied for a reOf course, no matter how great Annual Body Shop Owners and Man- establish common ground for an association’s intentions may be, agers Appreciation Event at the Cadil- better understanding between every new association faces certain lac Bar and Grill on I-10 in Houston. insurance companies, shops, challenges. “Like any new organizaAttendees were treated to a buffet- vendors and consumers. Leo tion, HABA is an all-volunteer assostyle dinner, beer and margaritas as Kozadinos, President of ciation,” Kozadinos explains. “This they indulged in a fun evening of net- HABA, shared some of the means that everyone has to step up for working with their collision repair in- association’s goals, projects the greater good and take time away dustry peers. Prizes were presented by and progress thus far. from their busy professional and perevent MC Corey Cook.

HABA was formed four sonal lives to further our association HABA President Leo Kozadinos years ago when a core group as it grows. Eventually, we hope to be says, “the event went great—it was a of independent and dealerable to hire a full-time staff for the adlot of fun! The attendees enjoyed owned shops recognized the HABA Members enjoy a relaxed evening of socializing ministrative tasks, but for now, we are with their industry peers themselves, and the food and com- need for a local industry asjust focused on continuing to move in pany were terrific. As promised, no sociation to promote consumer advo- duced franchise tax rate, and we were the right direction.” official business was discussed; we cacy, to improve the image of the able to thwart a city ordinance that Kozadinos identifies two key just enjoyed networking and fellow- industry, and to empower industry would have been very expensive for challenge areas: a lack of organization ship with other collision repair pro- professionals. Kozadinos notes, “these our members in Houston. HABA is in terms of formalizing processes and fessionals. The door prizes were also efforts contribute to our ability to re- focused on the things you expect and procedures, and a shortage of qualiterrific, and lots of folks walked away store our customers’ vehicles to pre- need an industry association to do. A fied technicians. “A lot of people with items, including an iPad mini, loss condition. It’s all about safety and lot of people who do not currently parstumble into the collision repair inmaintaining the value of the ticipate in HABA will benefit from See HABA’s Focus, Page 32 vehicle—this is what the customers expect and what they www.LoanerCarsforShops.com www.LoanerCarsforShops.co w. deserve, so we decided to come together and start from scratch.”

As a group comprised of collision repair professionals devoted to advancing the industry, HABA’s mission is “to create an environment of professionalism, respect, accountability, excellence, Everyone was a winner at HABA’s business-free event!

Valid through enthusiasm, and the ability to 7/31/2014 $250 store gift certificates, restaurant collect fair and reasonable compensagift cards and even a beautiful Lexus tion for collision repairers who propmodel car. We can’t wait until next erly restore vehicles to their safe year!” pre-loss condition.”

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One of the keys to the upbeat atIn addition to improving the to start up a car mosphere was obvious in retrospect: image of the industry and acting as rental service from om your No business was discussed. Not all consumer advocates to ensure that veshop?

Become operational erational rational association meetings can be quite so hicles are safely repaired, HABA is in less than a week k an and nd carefree since the association itself has currently working on further defining you only need 1 car to o a serious purpose. the nuts and bolts of their organization start. Software and For the Houston Auto Body As- as well as seeking more benefits to Training included. sociation (HABA), improving the offer members in hopes of increasing Counter Procedure image of the collision repair industry membership.

Training included! and promoting consumer advocacy Servicing the formidable 50-mile are amongst the most important ac- radius of Houston and its surrounding Call today to request a tions an association can take. As “an suburbs in Southwest Texas, HABA organization devoted to the advance- boasts members from 44 collision reno-obligation quote: ment of the collision repair industry pair businesses, excluding their assoobjectives,” HABA encourages coop- ciate members. Currently, the main eration between dealer-owned and in- benefits the association provides are

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Historical Snapshot

—John Yoswick is a freelance writer based in Portland, Oregon, who has a body shop in the family and has been writing about the automotive industry since 1988.

He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact him by email at jyoswick@SpiritOne.com.

Slippery Labor Rates, Cost Shifting, Benchmarks, Sterling Autobody with John Yoswick

20 Years Ago in the Collision Repair Industry (August 1994) Not too many consumers are told, “We charge you for ‘x’ hours even though we know it’s only going to take ‘y’ hours because our labor rate is only a percentage of what it should be if we charged you for ‘real time.’

“The system by which our industry gets paid to do what we do is terribly antiquated,” Kansas shop owner Bill Eveland says. “It’s basically a joke.”

California shop owner Erick Bickett agrees that a less “slippery” system would make explaining repair costs to customers much easier.

“If we defined that our charges are based on some standard way of calculating, I would have something other than a story to tell them,” Bickett said. “A definition would help add credibility.”

If it’s hard to feel credible explaining labor times to a customer,

think about explaining it to a federal judge. A shop in Tacoma, WA, facing charges of fraud, opted to settle outside of court earlier this year, in part because the shop’s attorney felt it would be difficult to explain in court how the industry charges for its work.

The Louisiana legislature has completed action on Senate Bill 32, which will establish stricter definitions and penalties for air bag fraud. Act No. 105 will take effect in August of this year and is comprised of the following: • No person shall knowingly install or reinstall in any motor vehicle a counterfeit or nonfunctional air bag or any other object intended to fulfill the function of an air bag that does not meet the definition of “air bag” set forth in this bill.

• No person shall knowingly manufacture, import, sell or offer for sale a counterfeit or nonfunctional air bag.

• No person shall knowingly sell, install or reinstall a device in a motor vehicle that causes the diagnostic system of the vehicle to indicate inaccurately that the vehicle is equipped with a functional air bag.

“Air bag” means an inflatable occupant restraint system, including all component parts, such as the cover, sensors, controllers, inflators, and wiring, designed to activate in a motor

vehicle in the event of a crash to mitigate injury or ejection and that meets the federal motor vehicle safety standards set forth in 49 C.F.R. 571.208 for the make, model, and model year of the motor 16 vehicle.

(2) “Counterfeit air bag” means an air bag displaying a mark identically 18 or substantially similar to the genuine mark of a motor vehicle manufacturer, without the authorization of the motor vehicle manufacturer.

(3) “Nonfunctional air bag” means any of the following (a) A replacement air bag that has been previously deployed or damaged. (b) A replacement air bag that has an electrical fault that is detected by the air bag diagnostic system after the air bag is installed. (c) A counterfeit air bag, air bag cover, or some other object that is installed in a motor vehicle in order to mislead or deceive an owner or operator of the motor vehicle into believing that a functional air bag has been installed.

California shop owner Erick Bickett was among those critical in 1994 of the way shops calculated charges, a system largely unchanged 20 years later Bickett is now CEO of Fix Auto USA

Louisiana Legislature Enacts Bill to Curb Air Bag Fraud, Fines and Imprisonment Both Authorized

See LA Air Bag Law, Page 36

18 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

“The attorney didn’t want to go before a federal judge or a jury and try to explain the difference between flat rate time and what I’ll call real time,” said Bob Mickey, until recently the executive director of the Autobody Craftsman Association in Washington.

—Excerpted from “Is there really anything funny about ‘funny time?’” in Nashville Automotive Report, August 1994.

15 years ago in the collision repair industry (August 1999) Insurers and shops have jointly called for an end to “cost-shifting,” the practice in which all or some of the cost of one estimate line item is transferred to another.

“Cost-shifting is a disservice to everyone,” John Loftus, executive director of the Society of Collision Repair Specialists said at the Collision Industry Conference. “If you write up an agreement with someone and put something

on there you’re not going to do to compensate for something you are going to do, it’s fraud. The ticket must clearly state what is going to be done.”

Insurers at the meeting, held in St. Charles, IL, also issued a call for the end of the practice.

“It’s something we all need to say no to,” said Ray Trevethan of the Auto Club of Southern California.

“Insurance companies across the nation for years have helped create this system and we need to stop it. If we’re going to pay for hazardous waste [disposal], put it on the estimate and pay for hazardous waste [disposal].

“If you’re going to pay to bag a car, pay to bag the car and put it on the estimate as a line item. Trying to put it somewhere else is not proper.”

—As reported in The Golden Eagle, August 1999.

10 years ago in the collision repair industry (August 2004)

The nation’s largest auto insurer has no plans to join the other insurers setting performance benchmarks for shops participating in its direct repair program – but it may do more to help those 20,000 shops understand how their performance stacks up.

George Avery, auto estimating consultant for State Farm Insurance, said his company looks for four primary things from the shops it does business with: competitive estimates, quality repair, accurate billing and customer service. But unlike some other insurers, Avery said, he doesn’t anticipate State Farm providing percentage targets for such things as alternative parts usage that Service First shops have to meet.

“We are not interested in giving you a number to hit,” Avery said, during a panel discussion at the Collision Industry Conference (CIC) held in Chicago in early August. “We don’t feel that’s our place. We feel you are the best ones to determine, for example, what the recycled parts use should be based on your market area and availability.”

Avery did say that State Farm is looking at ways to give shops more access to statistics to see how their

performance in key areas compares with other shops in order to help them remain competitive. He said the multishop businesses in the company’s “Select Service” program, which handle about 3 percent of the company’s claims nationwide, may soon have password-protected internet access to such performance numbers. There may be technical challenges to giving 20,000 Service First shops similar access, he said, but he’d like to find a way to give shops more ongoing feedback.

“I think we’re going to lean more toward giving you more global information and letting you see how you compare to the market or to the state... so you can see where you fit and you can make decisions on how to move that number around,” Avery said.

–As reported in Autobody News.

About a year later, State Farm was rolling out its “dashboard” scorecard and beginning to convert its “Service First” program to “Select Service,” significantly reducing the number of participating shops.

5 years ago in the collision repair industry (August 2009) A source within Sterling Autobody

Centers, the Allstate subsidiary with 62 shops in 16 states, said the Pacific Northwest is among the regions in which it is actively searching for locations in which to open shops. The company does not generally buy existing businesses but looks for property or “open-box” buildings (usually about 12,000 square feet or larger) it can lease for its shops.

Speaking on a panel at I-CAR’s recent conference, Sterling President Nick Notte said that based on the calls he receives “from repairers on a weekly basis wanting to sell me their businesses,” shop closures are resulting in “a lot of additional work out there to capture.”

He criticized efforts in some states (successful only in Texas) to pass legislation banning insurer-owned shops.

“There are organizations in our industry that seem to have forgotten that this country was built on free trade and competition,” Notte said.

He also said the slow-down at many shops has allowed his company to pick up trained employees leaving other shops.

“So I want to thank all the repairers out there who donate those good people to us,” Notte said.

Another panelist, Mike Quinn of Arizona-based 911 Collision Centers, appeared to be only half-joking when he told Notte it was only “the wrong ones,” the employees who couldn’t make it at his business, that might end up at Sterling.

—As reported in CRASH Network (www.CrashNetwork.com), August 10, 2009. Despite the talk of growth, Sterling still had 62 shops this year when Allstate sold the company to Texas-based Service King. Quinn sold his seven 911 shops to Caliber Collision Centers in 2011.

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Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.

Western Associations with Ed Attanasio

How UABA President Cory Stanger Sees the Industry As the collision industry demographic shifts to younger owners, people like Cory Stanger, 30, represent a new breed while assuming increasingly important leadership roles in their respective states and on the national stage.

Stanger is the general manager at Alpine Auto Body in Salt Lake City, UT and the current President of the Utah Auto Body Association (UABA).

His father Don started the shop the same year Cory was born and today runs the shops’ day-to-day operations.

Cory Stanger, 30, with his wife Kayti, is the new president of the UABA, a two-year-old professional collision organization consisting of body shop owners throughout Utah

“My parents ran the business together and I grew up here in this shop,” Stanger explained. “The first chance I had to help out, I was right there. I remember my dad used to have me cut cardboard into squares for him to spread body filler on the cars and that was one of my jobs at the shop early on. My father just kept teaching me new things--like how to do body work, prime, how to paint—everything one step at a time as he worked me into the business slowly. Eventually, I ended up in the front office, so it’s been a gradual evolution since I was about 7 years old. The things my dad taught me about hard work really are important and working at the shop is my heritage and something I really enjoy.”

Stanger recently took the helm at the UABA, a two-year-old professional collision organization consisting of body shop owners throughout Utah. “We formed the UABA in 2012, when a group of shops got together and decided we needed one,” Stanger

said. “I am the organization’s second president and we’re really making a run at it. It’s tough out there, because we have a lot of DRP shops here in Utah, just like anywhere else. We have some DRPs at Alpine, but I don’t necessarily believe in the system. Most shops don’t like them either but realize that DRPs are a necessary evil in this industry.”

Stanger isn’t afraid of the big bad insurance companies, especially when it comes to the quality of his repairs.

“I’ve come to the conclusion that in no way will I ever be backing down to the insurance companies,” Stanger said. “My goal is to always make it better for the shops and the customers, by doing proper repairs and getting paid for proper repairs. That part of the industry will never go away. The insurance companies are always going to look for places where they can save money and the good shops are always going to push to do the repairs right, and we’re always going to be one of those shops.”

Finding good, qualified technicians is a real problem in Utah right now, Stanger explained. “One of the things I’d like to change in this industry is the fact that there’s a real lack of qualified technicians here in Utah and from what I’ve heard from other shops in other states, it’s a problem that is industry wide. It’s a big concern for us, so we need to sit down and decide where these new technicians can come from. Should we invest in high school programs, junior colleges and tech schools, so that we can actually get people excited and want to enter this field? The schools in this country have forgotten about the blue collar jobs.

Now they want to direct students to become lawyers and doctors in general. Sure, we need doctors and lawyers but we shouldn’t label blue collar jobs as being inferior. Part of the problems stems back to the insurance companies—we need to work harder to get paid more for what we do, so that we can pay our employees what they’re worth. Right now, if you’re on the outside looking in you’re thinking ‘hey—I can do okay in the body shop industry.’ I can do well if I really work my guts out, but

22 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

it’s not the easiest place in the world to make a living. So, we need to make it better for our employees and then we need to make the wages more attractive to people that are considering this industry as a viable career. If we can

Is steering by the insurance companies alive and well in Utah?

We asked Stanger.

“It has not been a personal directive of mine to go after steering and confront insurance companies about it—yet,” he said. “I often hear about steering techniques used by certain insurance companies from my customers. It’s the same old bag of tricks where they tell them things like you may pay more if you go to that shop and we will not warranty the work… on and on. I’ve made some bold moves with some insurance companies over the years and I’ve seen a huge reStanger is the general manager at Alpine Auto Body in duction in work coming from Salt Lake City, UT those insurers. I know they’re help people to receive the proper trainvery good at what they do and they ing they need, I really believe that this obviously won’t call it steering. It is one of the biggest things we need to eventually becomes obvious that See Cory Stanger, Page 34 do to help this industry right now.”

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The Legal View

Erica Eversman is an attorney, frequent speaker and author on automotive legal topics.

She has been quoted in such publications as The Wall Street Journal Online, USA Today, Kiplingers Personal Finance, Cars.com, Yahoo! News and other trade magazines.

How to Write an Authorization to Repair and Repair Contract—Documentation Part 1 with Erica Eversman

by Chasidy Rae Sisk

When I first started to write about the collision repair industry, I was astonished by the plethora of issues that can arise on any given day, but what surprised me the most was the difficulty that so many repair facilities face when trying to receive proper compensation for the work they have (already performed); after all, I fully expect to be paid for the work I do, and as a consumer, I would hope that the people who repair my vehicle receive the same consideration.

Unfortunately, I now know that is not always the case, but I’ve also learned that there is a way for repair facilities to protect themselves better—by developing and maintaining records of proper Repair Documentation (such as the Repair Contract, Authorization to Repair, Assignment of Proceeds, Parts Notice and others).

In fact, legal documentation plays such an integral role in successful repair businesses that it seems foolhardy to ignore its benefits, yet though many repairers have heard about it from attorneys or colleagues, they are often unfamiliar with the role it can play in their businesses.

I decided to ask Erica Eversman, Chief Counsel for Vehicle Information Services, Inc. and founder of the Automotive Education and Policy Institute, to outline the basics so that readers can compare their own practices and determine what is best for their business. What follows is her response to my questions.

“Fixing a car means engaging in a significant activity that involves large amounts of money, yet there is no written contract to protect your interests.

Maybe you discussed the repair with the customer and believe this serves as an oral contracts, but oral contracts are difficult to enforce because, sadly, people lie. Even if a customer does not mean to be deceitful, people view and remember events and conversations differently. So what can you do? Before beginning a repair, be sure to get your customer to sign an Authorization of Repair and a Repair Contract.

Though the specifics vary depending on state laws, having a valid contract

makes it easier to file suit to obtain the money rightfully owed to you after all other options have been exhausted.

Eversman stresses that documentation is imperative because “the better prepared you are for litigation, the easier it is to get what you need.”

“First, it is important to understand the relationships between collision repair facilities, insurance companies and consumers, specifically how these are impacted by whether or not the shop participates in the insurers’ direct repair program (DRP). In a non-DRP relationship, there are two separate contracts—the insured has one contract with their insurer and a second contract with the shop repairing their vehicle. These two contracts still exist in a DRP relationship, but in this case, a third contract comes into play, the DRP contract between the insurer and the repair facility. This agreement dictates how each party will satisfy their obligations of their individual contracts with the customer, usually before a collision actually occurs. It is key to note that, in a DRP relationship, the insurance company is not required to provide business or any other benefits to the shop. Though the insurer will make it appear as though the repairer has duties to fulfill to them, they do not seem to feel any obligation to the shop, as demonstrated by their insistence that the repair facility keep them appraised of every detail pertaining to the repair while they show no inclination of reciprocating by sharing information on their part.

Eversman notes, “insurers like to think that they’re in charge of everything; they want all of the control and none of the responsibility.”

“Second, repairers must be aware of their obligations as well as the consumer’s obligations. The repairer has three responsibilities: to inform the consumer about what is needed to repair the vehicle, to obtain the customer’s authorization to complete the repair, and finally, to fix the vehicle and restore it to its pre-loss condition.

On the consumer side, obligations included receiving the information provided, authorizing the repair, and paying the repair facility for the completed product. Repair estimates were

24 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

designed to protect the customer by ensuring informed consent, but because insurance companies now pay for the vast majority of repairs, this is not as meaningful today as it was in the past. These obligations must conform to state laws, mainly in the sense that these laws dictate what is prohibited, rather than what is actually required.

Preparing your Repair Contract When it’s time to prepare your Repair Contract, there are five essential terms that must be adequately defined: the customer, the duties of each party, the parts, the damages and the shop’s professional judgment. Begin by defining your customer, including any relevant consumer protection laws, whether an estimate is required and any authorization received. It is imperative to recognize that the insurance company cannot be the customer as they cannot authorize the repair without the vehicle

owner’s consent (some state laws may require written consent from the consumer). If a shop repairs a vehicle based on consent from the insurer and something goes wrong resulting in an accident, the insured can sue their insurance company for engaging in bad faith, but the insurer can also file suit against the repair facility, so protect your business by accepting authorization only from the consumer.

The next section of the Repair Contract should define the obligations of the repairer and customer as defined above. In defining the parts to be used, the Repair Contract should specifically indicate whether OEM, aftermarket or used parts will be utilized in the repair. The party who makes this decision depends on state laws but is generally left up to the consumer, with the repair facility’s advice playing a role in the decision hopefully. Many states require that the inSee Authorization to Repair, Page 31

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Social Media for Shops

Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.

Is Your Shop Afflicted by Phonitis? Call the Telephone Doctor! with Ed Attanasio

Since my recent column about how the returned phone call is a lost art, I received several emails and even some phone calls about the subject.

It seems that unprofessional phone manners are rampant in all industries, including collision repair. So, I decided to call the doctor and get more advice about the topic that I can pass it on to our body shop readers. The doctor is Nancy Friedman, a keynote speaker/author and the founder and President of Telephone Doctor Customer Service Training in St. Louis, MO. Friedman has appeared on the Oprah Winfrey Show, Today Show, CBS This Morning and Fox News and has spoken in front of groups of automotive professionals, including Big O Tires, Carstar, Goodyear, Tuffy, Grease Monkey, Tire Pros, the Alliance of Automotive Service Providers and a wide range of other auto dealerships and automotive-re-

lated manufacturers. She’s been a featured speaker at SEMA for seven years and will be there this year again as well. Fittingly, I called Friedman on the phone and she called me back—promptly—for this interview.

Q: Hello Nancy. Why is there such a problem nationwide with people who don’t seem to know how to act on the telephone (or care)?

NF: Anyone can answer the phone effectively, if they’re properly trained. I don’t care what their title is; it does not matter if they’re the president or a tech. There are a lot of top-level managers out there who don’t know how to answer the phone. The problem is that most employers point at the telephone and tell their people to smile and be nice.

They don’t put any emphasis on that part of their business, and untold millions of dollars are left on the table as a result. We believe in a sim-

Church Brothers Hosts Own Collision Repair Car Show in Indianapolis

An expectation-shattering 284 entries ultimately raised for Wounded Warrior in the Inaugural Church Brothers ColProject.” Every dollar from entry fees, lision Repair Car Show enabled the Ina raffle, bottled water sales, and on-site dianapolis-based collision repair firm contributions was earmarked for the to raise $11,000 to benefit Wounded cause, and Church Brothers matched Warrior Project (WWP). that amount dollar-for-dollar to bring The recent event, held at the the total raised to $11,000. A group of Church Brothers Shadeland Avenue shop on the city’s far eastside, earned high praise from entrants and spectators alike. One Top 20 winner said, “I can’t believe this is the first show Church Brothers has held. It was first-class from start to finish. Everything ran smoothly, the quality of the entries was top notch, and everyone already is looking Church Bros Car Show forward to next year.”

Organizers were amazed by the active duty Indiana National Guardsturnout. “We were expecting around men and women accepted a ceremonial 120 entries,” said Church Brothers check in behalf of WWP. Collision Repair co-owner Dan Hall, Former NFL player Joe Staysniak, “and would have been thrilled with that co-host of 1070 The Fan’s Grady & number. Luckily, we were prepared for Big Joe Show, was the event’s emcee. more, and were absolutely delighted Indianapolis Motor Speedway histowith the actual turnout and the amount See Church Brothers, Next Page

26 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

ple phone answering approach and uniformity is crucial. I don’t care if you have 3 or 300 people answering the phone—you need to have everyone doing it the same way. Some companies are able to have 1–2 people answering their phones, but for small body shops, that’s not Nancy Friedman always possible. is known as the You would you Telephone Doctor hire a technician —a keynote and not train them speaker/author to do their job, so and the founder and President of why not train Telephone Doctor someone on the Customer Service phone? This is not Training in St. surgery or rocket Louis, MO science and we do have some very useful tips we offer to our clients, but most of what I teach is just common sense. Most of

the body shops we work with use our online training (www.ServiceSkills.com), which contains a lot more than just how to answer the phones, such as conflict resolution, management skills, leadership skills—it’s a full-service training and any employee that has to deal with the public on even a semi-regular basis should go through this training.

Q: How bad is it, because I personally encounter bad phone protocol almost every day?

NF: No, you’re right, it’s bad. Before I go to speak at any company’s conference, I do some mystery calling, to find out how they answer the phones and sometimes I am surprised how bad it is. With many phone calls, your company has one shot to get that business and by fumbling that first interaction on the phone, it can cost you money and most of the time you’re not even aware of it.

Q: How about those companies that leave callers on hold for long periods?

NF: People ask us, how long is it okay to leave people on hold and we tell them that it’s not how long you leave someone on hold, but how you handle it when you’re busy. In the reality of today’s business world, people are going to have to be put on hold and it’s not avoidable in many cases. The important thing with people on hold is communicating with the person on the other end of that phone line. Let them know how long you think they will be on hold. “I have one other caller ahead of you and it should only take 2–3 minutes.” Full disclosure goes a long way, believe me. If it’s going to take longer, ask them if you would prefer to take a message and call them back.

People get upset when they sit on hold without any updates or interaction, so if the person answering the call can check in, that’s preferred. But to say, “I’ll be back with you in a second,” well usually that ends up being a big fat lie, because nothing takes a second.

ple who don’t return phone calls or emails and I tell them—not much.

With an e-mail, it’s even easier to respond. All you have to do is give them a one-word answer if you’re busy. It boggles my mind when I find out that some people never return phone calls.

Assuming what people want is always a mistake, because you can’t find out what someone wants until you communicate with them. How many people have lost out on opportunities because they made assumptions and never returned a phone call? Countless.

Q: Some companies have their phone people using scripts. Do you recommend this?

NF: We used to give scripts to people to read over the phones, but we found out it really doesn’t work, because these people aren’t actors and it sounds too rehearsed. Plus, it’s scary for them to have to memorize it and we always want people to sound natural on the phone. So, we give them talking points and allow them to say it their way and it works very well.

NF: The #1 mistake is that people are not friendly enough on the phone. It’s that simple. It’s not with just auto body shops, it’s across the country.

But, once companies find out that there’s money connected to that phone call, people suddenly get friendlier. It takes specialized training and a specific mindset to achieve, but once they realize the value in handling the phones properly, the light goes on! I tell people to start smiling before answering the phone, even if it’s forced smiling, because it improves the voice quality and energy to prevent emotional leakage. A phony smile is better than a real frown, I tell people. Negative audibles like the “big sigh” or verbally chewing gum are the first steps toward poor customer service, so continually let your customers know that you are “delighted” to help them first, to set the stage, before telling them negatives, if any exist.

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Continued from Page 26

Church Brothers

rian Donald Davidson appeared for a conversation about this year’s Indianapolis 500 plus fan meet-and-greets.

Organizations on-site with displays and demos included Indiana State Police, Indiana National Guard, Indiana Pacers, Meguiars Car Products, and Volunteers of America Veteran Services, among others.

“We’re going to be getting our car show committee together soon to discuss what worked well and what we can do even better,” Hall said, “and we definitely will be back next year!”

Church Brothers Collision Repair, founded in Indianapolis in 1929, is family-owned-and-operated. Church Brothers has six locations throughout the metro area: Avon, Castleton, Downtown, Greenwood, Shadeland, and Zionsville/Carmel. For more information, visit www.church-brothers.com, and follow on Facebook at www.facebook.com/churchbrothers.

Q: How about my pet peeve, the unreturned phone call?

NF: People ask me all the time— Nancy, what do you think about peo-

Q: Give us a takeaway that we can use, Nancy—one tip that can make us to be better on the phone.

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On Creative Marketing

Tom Franklin has been a sales and marketing consultant for fifty years. He has written numerous books and provides marketing solutions and services for many businesses.

He can be reached at (323) 871-6862 or at tbfranklin@aol.com.

See Tom’s columns at www.autobodynews.com under Columnists > Franklin

Using Emotional Intelligence to Close Sales with Thomas Franklin

A driver improvement course authorized by the DMV in California tells us there are five basic emotional categories: HAPPINESS, SADNESS, FEAR, LOVE and HATE. The course goes on to tell us the way these emotions are expressed can determine our driving performance, either temporarily or permanently. The course notes that emotions can color our behavior and, when out of control, cause us to do unintelligent and even dangerous things. In fact this truth not only applies to driving a car, but can also apply to making any intelligent decisions. One of these is deciding where to take a vehicle after an accident.

People generally come only when they and or their vehicle have suffered damage. For the driver this may include shock and pain. They come to have something fixed. They come when they are in a highly vulnerable state. They often come when they are caught up in the powerful negative emotions that follow pain of loss. If you are lucky, by the time a car owner comes to you, he or she will have already moved beyond the initial shock and disbelief brought on by the accident.

Most buying decisions are emotional decisions. Most choices of repairer decisions are emotional decisions arising out of one particular emotion: FEAR! Why do damaged car owners go to the body shop suggested by their insurance company or agent? Because they are afraid the work won’t be properly guaranteed. Or because they fear complications that won’t be covered by

their insurance, that may cost them outof-pocket money. Fear also motivates people to go to shops referred by their friends, their attorney, their usual mechanic and just about anybody else they think will prevent them from getting burned as they shop for a service they generally know very little about.

It is at this point in the customer’s life that a shop estimator steps in.

How he or she handles this prospective customer determines whether or not the vehicle is left at the shop to be repaired. It’s likely that few estimators realize the emotional consequences of what they say and do at this point. And the fact that more than half of these prospects may be women puts an even higher importance on the handling of emotions. A team from Cambridge University led by Professor John Suckling has found key differences between the brains of men and women. In women, parts of the brain linked to the emotions, calculating risks, and the ability to listen were more prominent. In men, on the other hand, the areas of the brain tied to motor skills and co-ordination were denser and larger. In general, this indicates that women are better listeners, while men take more risks. I’ve interviewed estimators in a number of shops. I found that a female estimator often had a better closing ratio, especially with female customers. Men are apparently more likely to talk while women tend more to ask and listen.

Training estimators in listening skills could increase a shop’s volume and profitability.

Tesla Halts Production to Retool Plant

Tesla Motors Inc. halted production at its sole assembly plant for the first time for a revamp the company said is necessary to speed Model S output and prepare it to make electric crossovers. Work to reconfigure the production floor at the former NUMMI plant in Fremont, Calif., began today and vehicle assembly resumes Aug. 4 with a goal of boosting production by 25 percent, Simon Sproule, a Tesla spokesman, said in an interview. Upgrades mainly involve modifications to the factory’s body and general assembly lines and will cost about $100 million, he said. “This represents the single biggest investment in the plant since we really started operations and enables us for higher volumes,” Sproule said.

“It gets us ready to build X and to do it on the same line as the S.” 28 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

Fear and anxiety often come about because of a lack of understanding. A vague pain in the body can cause all kinds of wild speculation about what might be going wrong, but once the pain has been diagnosed and a remedy has been prescribed, most fears will be alleviated unless the pain is truly related to a life-threatening condition. Similarly an engine noise or other inexplicable noise in a customer’s car can raise all kinds of fears about serious problems until the exact reason for the noise is known and the necessary repair specified. Educating a car owner still suffering from the shock of a recent accident may not be an easy task, but it can be by far the most effective sales tool to ease the person’s fears and doubts.

An old proverb says: I hear, I forget. I see, I remember. I do, I understand. When fear or anxiety is present, solid contact and sensory perception will have a much stronger impact than

words. Perhaps this goes back to childhood when we frequently fell and bruised ourselves. At those times, a loving mother held us, rubbed the sore spot or kissed the injured part. While there were probably words of reassurance, the physical touch is what we most remember as alleviating our shock, our pain, our fear and anxiety. It might be a useful sales tool to have a damaged part (like a fender or hood) and an identical perfectly repaired part set up as a demonstration prop. As part of doing an estimate and selling the job, it could be useful to have a prospective customer touch the damaged part and the repaired part to really feel the difference in paint finish, points where welds had been made, dents filled, etc. Prospects coming away with a solid sense of having touched an expertly finished end product should be less fearful of having work done where they have actually “experienced competence.”

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The Legal View with Jennifer Driscoll-Chippendale

Jennifer Driscoll-Chippendale is a partner in the Antitrust and Trade Regulation practice group in Sheppard, Mullin, Richter & Hampton LLP’s Washington, D.C. office. Ms. Driscoll-Chippendale has counseled international clients about antitrust laws relating to mergers and acquisitions and represented both corporations and individuals in the Antitrust Division’s investigation of the auto parts industry.

What Does the First-Ever Extradition on an Antitrust Charge Mean for the Auto Parts Investigation?

On April 4, 2014, the U.S. Department of Justice, Antitrust Division announced a milestone victory, having successfully litigated its first extradition for an alleged antitrust violation.[1] Romano Pisciotti, an Italian national and former Parker ITS Srl executive, was extradited from Germany for his involvement with the marine hose cartel, almost seven years after the Division began its investigation with raids in Houston, Texas on May 2, 2007. Pisciotti was arrested in Germany on June 17, 2013, and surrendered to the U.S. authorities under the terms of the U.S.-Germany extradition treaty, which provides for extradition where the alleged offense is punishable under both German and U.S. federal law.

Prior to Pisciotti’s case, in 2010, the Division won a protracted battle to extradite Ian Norris, formerly the

Crucible, who was alleged to have fixed the prices of carbon products and concealed evidence relevant to the Division’s investigation. In contrast to Pisciotti, Norris was turned over the U.S. authorities solely on the basis of the obstruction charge because pricefixing was not a crime in the United Kingdom during Norris’ alleged misconduct. Another significant difference was Norris’ tortuous extradition process, which was heard at least once by all three English courts and spanned seven years. In the end, Norris was sentenced to 18 months in prison, which he served at Rivers Correctional Institution until his release in November 2011.

As the Division continues its largest ever criminal investigation of the auto parts industry,[2] Pisciotti’s case serves as a cautionary tale in several respects. First, Japan should not

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be considered a “safe haven” for in-

dividuals seeking to avoid prison in the United States for obstruction of justice or criminal antitrust violations.

The extradition treaty between the United States and Japan allows extradition for any offense that is listed in the treaty and is punishable by one year of incarceration in both countries. Obstruction of justice is a basis for extradition under this “list approach.” As a result, Japanese residents accused of obstructing justice in the auto parts investigation are easy targets under the express terms of the treaty.

The U.S.-Japan treaty also incorporates the “dual criminality” rubric, which includes any offense that is punishable by one year imprisonment under the federal laws of the United States and the laws of Japan. Therefore, cartel misconduct also qualifies as an extraditable offense because (i) in the United States, an individual who participates in cartel activity faces up to 10 years in prison; and (ii) Japan now imposes up to five years imprisonment for cartel offenses, although individuals have received probationary sentences, rather than actual prison time, in Japan thus far.

For the 19 individuals indicted in the auto parts investigation, the vast majority of whom are resident in Japan, the Pisciotti extradition is a shot across the bow. Empowered by its recent success with Pisciotti, the Division could soon pursue extradition of one or more Japanese nationals both to reinforce the seriousness of its agenda and to encourage culpable individuals to voluntarily go to prison in the United States rather than attempt to avoid punishment by remaining in Japan for the rest of their lives.

But considering the evolution of antitrust law in Japan, it is not a foregone conclusion that Japan would agree to extradition solely on the basis

of antitrust misconduct. Enforcers in Japan have only recently embraced the idea that cartel activity should be regarded as a criminal offense and did not have a leniency program until 2006. On the other hand, by increasing the potential sentence from three to five years, the 2009 Amendments to the Anti-Monopoly Act—Japan’s antitrust law—divested the sentencing court of the power to impose probationary sentences in lieu of actual prison time, signaling that criminal antitrust violations will be treated more severely in the future.

To the extent that passage of time lulls individuals living abroad into complacency, the examples of Ian Norris and Romano Pisciotti cases should dispel any notion of comfort.

In both instances, the Division tenaciously pursued these individuals for years and, in Norris’ case, outlasted the twists and turns of contradictory U.K. court rulings. Given the high profile of the auto parts investigation, the Division should be expected to take the same measured approach if it makes an extradition request to Japan.

In sum, for individuals facing antitrust charges in Japan and elsewhere, the Pisciotti extradition should underscore that one never truly lives beyond the Division’s grasp.

1] See Press Release, U.S. Department of Justice, First Ever Extradition on Antitrust Charge (April 4, 2014).

[2] See Sharis A. Pozen, Acting Assistant Attorney General, U.S. Department of Justice, Antitrust Division, Remarks as Prepared by Acting Assistant Attorney General Sharis A. Pozen at the Briefing on Department’s Enforcement Action in Auto Parts Industry (Jan. 30, 2012).

This article is reprinted by permission of the author who retains all rights and priveleges.

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www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 29

Industry Insight with John Yoswick

—John Yoswick is a freelance writer based in Portland, Oregon, who has a body shop in the family and has been writing about the automotive industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).

Contact him by email at jyoswick@SpiritOne.com.

How Average Labor Rates Have Kept Up With Inflation Varies by Market Recent government data (see sidebar below) show that for a 5-year period ending early this year, the overall cost of autobody repair barely exceeded inflation over that same period (with the price of auto insurance rising even more during that period).

But have shop labor rates—excluding the parts and other costs that make up overall repair costs—kept up with inflation? Some shops say there has been no change in the “prevailing competitive labor rate” in their market for three, four or even five years.

Based on data from CCC Information Services, comparing national labor rate averages in 2013 to those averages in 2006 shows that for the most part, labor rates (when looked at on a national basis) aren’t keeping up with the overall U.S. inflation rate for that time period.

Take the national average rate for mechanical labor in the U.S., for example. In 2006, the average mechanical labor rate was $67.56, according to CCC; by last year, the average had increased about 14 percent to $77.04. But that’s about $1 less than the average would need to have been last year just to equal overall inflation since 2006.

Body and paint rates increased about 11.4 percent over the period, compared to an overall inflation rate of 15.6 percent; that meant the national average body rate for last year ($46.12) was about $1.74 less than it would have been if body labor rates

had kept up with inflation since 2006.

The news was even worse for frame labor rates, which rose just 10.2 percent over the period, making last year’s national average ($52.43) more than $2.50 lower than it would have been if it had kept up with inflation.

than they have in other markets?

Similar comparisons to inflation can be done using historical labor rate data provided by shops. One shop in Northern Virginia, for example, reported a body labor rate of $28 in 1999; the shop owner felt certain that an in-

If there was any initially-positive news for shops in terms of rates versus inflation it involved paint materials.

The national average rate for paint materials last year was $26.64, according to CCC. That’s up about 19 percent from 2006, making it about $1 higher last year than it would have been had it only kept up with inflation.

But most shops say their costs for materials has outpaced inflation by even more than that from 2006 to 2013.

crease that averaged about $1 year (to the current labor rate of $44) couldn’t have kept up with inflation. But in fact, if adjusted only for inflation since 1999, the shop’s labor rate today would

Market-by-market comparisons Labor rates continue to vary widely market by market throughout the United States, so have rates in some markets kept up better with inflation

Inflation and the overall price for auto insurance, body work

CollisionWeek (subscription required) regularly reports government data showing how the price of autobody repair and auto insurance have risen in comparison with inflation. The autobody figures account for all costs for that service, not just labor rates.

Over five years ending in January of this year, for example, the cost of body work had risen 12.7 percent, just ahead of overall inflation (11.9 percent) for that period.

But auto insurance prices had jumped a whopping 22.4 percent for that same period.

For comparison, during that same 5-year period, new car prices were up 6.7 percent, and the cost of vehicle maintenance and repair (mechanical) was up 9.5 percent.

30 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

be about $39.84, more than $4 less than the shop’s current rate.

The news was less good for a Portland, Ore., shop whose hourly body and paint labor rate has risen from $40 in 2002 to $48 this year; adjusted solely for inflation since 2002, that shop’s rate would be $52.71.

That shop’s paint materials rate has just kept up with inflation (though again, paint prices have likely outpaced inflation), but its current frame rate ($52) is $7 shy of keeping up with inflation since 2002, and its mechanical rate ($75) is $10 less than it would be if adjusted just for inflation.

To the south of Portland, the current mechanical labor rate ($62) reported by a shop in the Eugene-Springfield area in Oregon is actually running ahead of inflation over the 15-year period. But the other labor rates in the market haven’t kept up with inflation. Frame labor was $44 per hour in 1999, meaning it should See Average Labor Rates, Page 33

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Continued from Page 12

Continued from Page 24

first two cases we tried, one a first party claim and the other being a third party claim, were both lost and are presently either on appeal or being prepared for appeal. The policy holders won the second two cases, again, both a first party claim and a third party claim. We are set to try another first party claim and are optimistic that this case will turn out well for the policy holder. There are many variables, including juror attitudes, which cannot be predicted with great accuracy, so we’ll just have to wait and see. Hopefully, we can establish a string of verdicts for policy holders that will give these claims greater credibility.

As always we welcome responses from opposing counsel or defendants and will report on them if received.

sured be explicitly notified and that they authorize the use of used or aftermarket parts in writing. Next, the Repair Contract should indicate what damages were sustained in the collision, along with the repairer’s professional judgment on what needs to be repaired, and how much it will cost.

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Authorization to Repair

The Authorization to Repair Generally, the Authorization to Repair goes hand-in-hand with the Repair Contract; it serves to obtain written permission to repair the vehicle based on the terms of the contract. These two documents protect the repair facility from the insurance company by establishing the shop’s independence, their relationship with the customer, and their need to make a profit. When a repair is needed, the customer has the right to receive the best repair possible, but the repair facility also has the right to receive appropriate compensation for their hard work.

Another thing pertaining to these three relationships that collision repairers should be aware of is that, since

it is the customer’s duty to pay for the repair, shops have no right to expect payment from the insurance company.

It is the customer who must receive the repair estimate and provide authorization for the repair, but still, consumer protection is no longer about the cost – because insurers actually pay the repair bill most of the time, consumers’ concerns are centered around how their vehicle is being repaired. The Repair Contract provides for informed consent by obtaining the customer’s Authorization to Repair only after the repair process has been explained to them so they know exactly what is being done to their vehicle.

When it comes to conflicts between the repair facility and the insurer regarding the repair estimate, the repairer’s opinion carries more weight because they are the professional, not the insurance company. If an insurer wants to exert total control over a repair, they can do so by electing to repair (provided state law allows them to do so), but they rarely choose this option since it leaves them 100% liable for the repair. As such, they will usually choose to handle the claim by paying for the damages or declaring a total loss. The beauty of the DRP contract

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(for the insurance company, at least) is that it allows the insurer to exert more control over the repair without accepting liability, especially because of the indemnification clauses included in DRP contracts.

Please take note: because state laws vary so greatly, it is a nearly impossible feat to compile all of the requirements pertaining to each individual state. Eversman’s advice is intended to assist you in getting started with the process, but it is absolutely imperative that you enlist the aid of a local attorney who can ensure that your documentation complies with all state laws and requirements.

If you run into a situation where the insurer refuses to pay the full cost of the repair, there are methods you can take to secure payment, such as through an Assignment of Proceeds (more on this in Part 2 of this series), but it all starts with the Repair Contract and the Authorization to Repair, so invest in your business by enlisting an attorney to help you draft these vital documents and you’ll be on your way to receiving proper compensation from every repair.

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Lean Operations

David Luehr is the owner of Elite Body Shop Solutions, LLC, a collision business consulting firm based in Nashville, Tennessee. He is a 30 year veteran of the collision repair industry.

David is an expert in Body Shop Operations and specializes in Lean, and Theory of Constraints methods. Email him at dluehr@msn.com

The Wrong Bonus Plan Can Be Much Worse than None at All with David Luehr

In my article The Process of Winning (see Autobody News, June 2014 edition or in my column section of the Autobody News website) I briefly explained why it is important for collision shop leaders to reward the vital behaviors that contribute to a proven process being carefully followed instead of only offering incentives for end results.

In this article I am going to expand on this idea as well as challenge the thinking on what a good bonus program should look like. Let me be clear about one thing, this article is not referring to technician commission systems, but instead the bonus, or incentive plans that are used as an attempt to motivate managers, estimators and other administrative staff.

When it comes to technicians I have conflicting views on commission systems, but mainly support them unless they are tied to a bad bonus plan.

Continued from Page 16

HABA’s Focus

dustry. That’s why HABA is so focused on promoting the industry and improving its image. We want to demonstrate what a fantastic career it is and how much money can be made in this industry.”

Though HABA takes a stance against mandated parts-procurement systems, such as State Farm’s PartsTrader, and anything else that involved outside entities interfering with collision repair businesses, Kozadinos states, “the reality is that insurance companies wanting more control of the repair is nothing new, and it will continue, but everyone has to make their own decisions about what’s best for their businesses.”

HABA has developed the following position statement for the insurance industry: “At HABA, our position in dealing with the insurance industry is one of mutual respect and accountability where every insurer believes they have received a quality repair at a fair settlement for quality work in a reasonable time and in a re-

I will illustrate my points by beginning with a story.

Once upon a time, a body shop owner that I worked for approached me about creating a new employee bonus program for his company. “What is

people to be happy, but they still don’t seem to appreciate it.”

After spending considerable time interviewing the employees of this sizable MSO, there were several things I discovered.

“The best use of money as a motivator is to pay people enough to take the issue of money off the table… But once we’ve cleared the table, carrots and sticks can achieve precisely the opposite of their intended aims.”

—Daniel Pink, Drive: The Surprising Truth About What Motivates Us

wrong with the bonus program we have now?” I asked. He told me “Every time someone doesn’t make bonus, they are ticked off at me!” Then he confided, “If the estimators come close to meeting their sales and CSI objectives I usually give them some money anyway as a kind gesture, I want my spectful manner due any professional relationship; where all services that are performed are paid for and all services paid for are performed; and where ethics and morals, respect and appreciation are the norm, not the exception.”

Going forward, HABA plans to get more organized in terms of their administration and goals, to increase the benefits they offer members as a means of providing more value to local shops, and to continue their lobbying efforts on the legislative front.

Because all of HABA’s legislative goals were met during the last cycle, they do not currently have anything in the works regarding legislation. When working on legislative issues, Kozadinos admits that the association’s lack of resources is the biggest challenge since they cannot afford to hire professional lobbyists; however, “our legislators generally have open ears to collision repair professionals, especially if our proposal is beneficial for the consumer. We just have to demonstrate how the legislation harms the consumer and is bad for the collision repair industry as a whole… It takes See HABA’s Focus, Page 37

32 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

1. Almost every admin employee had a slightly different bonus plan than the next guy or gal.

2. Many admin employees said they had given up trying to reach the benchmarks and felt they were set too high.

3. All admin employees felt that they

didn’t have enough control over the factors leading to their bonuses, thereby making it “unfair.”

4. Most employees complained that company leadership changed their bonus plans often, sometimes two or three times a year. Some employees said they felt like the bonus plans would change whenever it was convenient for the company to “bilk” them out of their money.

5. Employees acknowledged that the bonus plans caused motivational silos which caused them to sometimes perform well at things they are being measured for, but poorly at those they were not being measured on.

6. When pressed a little, most of the employees said that the bonus plan was more of a de-motivator than a motivator!

So it seems the boss was right!

The employees not only were unappreciative of his “kind” gestures, many were absolutely fed-up and ready to

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look for another job! How could something intended to motivate the employees have the complete opposite effect?

With so many problems in play, it was difficult to determine which employee complaints were justified and which were just lazy employees looking for an excuse. Either way, it was clear the current admin bonus plan was creating a lion’s share of the discontent.

Although it took me several years of failed incentive programs to figure it out, I now know there are several forces at play here that can make these systems fail miserably.

Here’s what the boss unknowingly did wrong.

● Employee bonuses made up too large a percentage of overall wages, so if employees didn’t make bonus, they didn’t have enough money to pay their bills. Understandably they felt punished. ● A handful of the employees felt that management was not paying them what they had agreed upon when hired. ● Created unrealistic benchmarks for people to reach without considering market fluctuations and unforeseen circumstances. ● Held people accountable and incen-

tivized only on end results such as outcome KPIs. ● Jeopardized the whole system by breaking the rules and giving out partial bonuses to key people.

Even though the boss did several things wrong, many pieces of his bonus program closely resemble those found in many collision businesses in this country. Results-based admin bonus programs are extremely common in many industries because on the surface they seem to be fair and just. Who could find fault with a system that is as old as time and that pays people based on the results they produce? I’ll tell you who. The millions of hard working people that are negatively affected by this madness every day! If you think that I am being overly dramatic, ask yourself this question. What are we trying to accomplish by offering a cash-based incentive program? What is the goal?

Although there could be many goals, most would list the following two most basic and worthy goals.

1. Motivate the employees to get results, KPIs, Sales, etc.

2. Attract and retain good people If these are your goals as collision

shop leaders, are you happy with the results your bonus program is contributing towards reaching these goals? If so, congratulations! Everyone else may want to read on.

involved to ensure a consistently accurate repair plan? What vital behaviors does he need to execute?

Continued from Page 30

north central Pennsylvania had data showing its body and frame labor rate is up 4.3 percent since 2011, and its frame and mechanical rate is up 3.8 percent; all of that falls short of the 5.4 percent rate of overall inflation since 2011.

Solution #1 - Become Process Driven What behaviors are we really trying to influence?

If the goal is to produce good results, then management needs to look at the individual tasks that make up the processes. So if a shop has crummy processes, then wouldn’t it be unfair to hold people accountable for the results produced? Since it is the individual tasks of the process that determines the outcome’s success or failure, then individual task execution should be where management looks closely for the vital behaviors to take place. Let me give you an example.

Blueprinting a vehicle is a very important process to achieving desired results. If people fail at Blueprinting, there is a good chance that CSI and cycle time metrics could suffer. The guy doing the Blueprinting probably knows this fact whether or not you are giving him a bonus. The question is this: Does the guy doing the Blueprinting know what specific tasks are

Average Labor Rates

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be $62 now to have kept up with inflation; the shop reported a $55 frame labor rate currently. The shop’s current $50 body and paint labor rate is about $4 less than it should be if it had been adjusted only by the overall inflation rate since 1999.

Rates reported by an Iowa shop in the Quad Cities area are a bit closer to keeping up with inflation since 1999.

At $58 per hour, the current body and paint labor rate is $1.77 lower than had it risen 42.3 percent (as overall inflation has) from what it was in 1999.

Frame labor rates are also about $2 behind, but the paint materials rate has actually risen 50 percent since 1999, putting it almost $2 higher than it would be based solely on inflation.

A shop outside of Newark, N.J., had body and paint labor rate data back to 1989; with inflation, the $30 labor rate in 1989 would have grown to more than $57 today, which is about $10 more than most insurers there are paying today, according to the shop.

A shop in a smaller community in

1. Review vehicle check-in sheet 2. 100% meticulous disassembly 3. Photo documentation 4. Separate good parts from bad parts on table 5. Use group sequenced arrow down method in estimating system 6. Load parts cart, separating good/bad parts 7. Verify Blueprint accuracy on printed estimate to repair 8. Go over completed Blueprint with technician If the Blueprint guy properly follows these eight steps, one can expect a consistent quality standard every time. So if management wants to incentivize him and change his behavior for the better, they would want to tie these eight specific tasks to his incentive, not some outcome he has limited control over like cycle time or gross profit. Yes he has some control over cycle time and gross profit, but he has ALL the control over following the proper process in Blueprint. Use your own creativity; what would you do to ensure that all the vital behav-

Check your own rates Want to do your own comparison? All it takes is historical information about your labor rates going back three, five, 10, 20 or even 30 years. Gather that data and then find one of the many online “inflation calculators” (for example, www.usinflationcalculator.com).

There you can indicate the oldest year for which you have data, enter one of your labor rates for that year, and hit calculate. The website will show you what the inflation rate has been since that year, and what you labor rate would be today if it had been adjusted based only on overall inflation in the United States.

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www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 33

iors of Blueprinting were being followed? What could you do to reward him or her?

Solution #2 - Identify What Truly Drives Motivation What is truly important to our employees?

The reason most bonus plans fail is that they actually demotivate the staff! In Daniel Pink’s book, DRIVE, he states: “The best use of money as a motivator is to pay people enough to take the issue of money off the table…

But once we’ve cleared the table, carrots and sticks can achieve precisely the opposite of their intended aims.”

Pink is right. In fact, scientific studies have revealed that when you use rewards expecting to gain the benefit of increasing another person’s motivation and behavior, they often incur the unintentional and hidden cost of undermining that person’s intrinsic motivation toward the activity. This problem is severely compounded when management gives employees a bonus for routine work, and then takes it away from them later on while performing the same work. This causes the employee that once was happy to perform his job at his regular pay, to Continued from Page 22

Cory Stanger

they’re re-directing work from my door, and I know the cause. It’s because I’m not always easy to work with from their perspective, because I push for proper repairs and then expected to be paid fairly for my work.

So, I’ve seen work go away as a result, without a doubt. So, yes there is steering in Utah and it happens every day.”

Is Stanger planning for aluminum transition in the collision industry?

“I think it’s tough for a body shop to keep up with all of the changing technology out there, but I am happy to embrace anything that will make the world a better place to live,” Stanger said.

“Making cars lighter, in order to save fuel is admirable and I totally support it and want to be onboard for that. So, if we can achieve it with either aluminum or carbon fiber or with other materials—that’s great and we want to definitely be a part of that evolution. Only the automak-

now be discouraged and unappreciated performing the same job.

So what can leaders do to motivate employees? From the dozens of studies I have read there is one important thing that appears on every list.

People want to be RELEVANT. Everybody wants to feel that what he or she is doing will make a difference. If leaders want to have a motivated work force, start there! Top leaders figure out

opinions and ideas freely. This will help people become relevant. ● Read these books, available at Amazon..

▪ Drive—Daniel Pink ▪ Influencer—Patterson, Grenny, Maxfield, McMillan, Switzler. ● Leaders need to listen to people carefully. What are they actually saying? It may not be what you think you’re hearing.

how to tie employees’ values to vital behaviors that will then produce the desired results you are after. There will never be an incentive program that can make up for the lack of proper management and leadership! There are many ways to connect to employees’ intrinsic needs and thereby motivate them. Here are a few suggestions:

● Praise work being done correctly more often than you may think necessary. Praise from someone not known for offering it is much more powerful than you may realize. ● Punish those that violate your company’s values. ● Make relevance more important than monetary rewards. ● Consider re-evaluating bonus plans to be more in-line with employee values and critical processes, or just eliminate them altogether and pay people what they are worth. ● If you insist on a bonus system,

“Top leaders figure out how to tie employees’ values to vital behaviors that will then produce the desired results you are after.”

● Give small tokens of appreciation such as $10.00 gift cards for properly following key processes. ● Make the workplace a safe environment for everyone to contribute their ers know what they’re thinking right now, and the big question I have is will aluminum be around for the long haul?”

Stanger also wants unlicensed body shops to either get licensed or stop doing business, he said. “There are definitely some body shops in Utah right now that aren’t licensed and bonded as certified facilities and doing business as usual. The rest of us are doing it right and playing by the rules and these midnight shops are taking work away from us. We are looking at solutions to this problem and in conversation with the Division of Air Quality, who may be working with us. If we can get them to make the paint jobbers to sell products only to body shops that are licensed and bonded, maybe it will make it a little more difficult for these midnight body shops to do business in Utah.”

www.autobodynews.com CHECK IT OUT!

34 AUGUST 2014 AUTOBODY NEWS | www.autobodynews.com

make sure the bonus is 10% or less of overall wages.

Many readers may not like or agree with these “soft skills” being used in place of the old dependable bonus plans that we are used to, but we are not living in the old days any longer. When holding on to these antiquated ideas, it is easy to see why many in our industry find difficulty understanding the new generation of worker and what truly motivates them. When leadership does not provide the employee with what they are truly hungry for intrinsically, eventually it becomes only about the money for them. In other words, because many lack the necessary leadership skills, they use extrinsic motivators instead to get the job done and often with mediocre results. As Daniel Pink pointed out “The best use of money as a motivator is to pay people enough to take the issue of money off the table.”

This article is rooted in behavioral sciences that are factual not merely my opinion, however, it is my opinion that the era of the iron-fisted manager is nearing its end. Those that embrace modern leadership skills have the best chance to prevail.

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Midwest Associations with Chasidy Rae Sisk

Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.

Plans Underway for 7th Annual Pro Paint Trade Show On Tuesday, August 12, the 7th An- part seminar will cover “Proper Gun Set nual Pro Paint Trade Show will take Up and Care” by Graco and “Pre-Treatplace at the Orchard Banquet Hall and with Chasidy Raement SiskPremier,” presented by Doug Van Restaurant in Baldwin, WI. In addi- Duyne.

From noon until 4PM, Nick Dahl tion to six educational seminars, the will present “Hands On Introduction to event, which is the largest trade show in the Midwest, will feature a special House of Kolor Shimrin2” where atguest appearance by 16-time NHRA tendees are encouraged to bring their Funny Car Champion Force. Raegun and respirator as they cover prodwithJohn Chasidy Sisk ucts and processes, undercoats, karrier bases, and effect pacs. From 2PM through 4PM, a seminar focused on “Improving Transfer Efficiency and Reducing VOC Emissions Along with the Virtual Paint System” will be led with Ed Attanasioby the Minnesota Technical Assistance Program (Mn-TAP) and the Iowa Waste Reduction Center.

The longest seminar, “Envirobase Attendees at last year’s Pro Paint Tradeshow High Performance Waterborne RecertiThe seminar, “Collision Shop Best fication,” presented by PPG, will run from 10AM until 4PM, covering an upPractices” presented by Darrell AmberEd Attanasio date on new products and techniques son, Chairman of with the Automotive Service Association (ASA), will run from for technicians. Completion of this noon until 2PM. Simultaneously, a two- course will allow a technician to move

National Associations

up to the next level of PPG Certified Technician status. From 3PM to 4PM, PPG will present the seminar on “Ad-

Northwest Associations Shop Showcase

Advertising Advantages

Associations Assembling Audi Genuine Parts

with Ed Attanasio

John Force will make a special guest appearance at Pro Paint’s 7th Annual Trade Show

justrite Estimating,” a web-based Class A truck estimating program that is used and regarded by insurance companies.

Although seminar pre-registration costs $20 per session, this fee is refunded to attendees upon arrival.

Registration also includes free dinner and refreshments, as well as the opportunity to win a plethora of door prizes. Additionally, pre-registered attendees will receive a $10 BP gas gift card to offset the cost of travel.

The trade show floor will open from 4-9PM with over 100 product lines represented, and all vendors showcasing products will be offering a minimum of 10% discounts with some vendors offering additional discounts and specials at the Pro Paint 7th Annual Trade Show. The complete vendor list is not yet confirmed but will include 3M, AASP, American Tape, C’Aire, Dynabrade, House of Kolor, Innovative Tools, Inver Grove Honda & Toyota, Anest Iwata, Kadingers, Luther Auto Group, MADA, Malco, Mirka Auto Refinish Solutions, Norton, Pliogrip, PPG, Reading Technologies, SATA, SEM, Stericycle Inc., TG Products Inc., Transtar, UPOL, USC, WACTAL, WalSee Trade Show, Page 38

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National Associations with Chasidy Rae Sisk

Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.

ARA Holds ‘Hill Days’ to Discuss Industry Concerns with Congress On June 18 and 19, professional automanagement systems, inclusion of remotive recyclers from over 20 states cycled OEM parts in repair options for with Chasidy Raevehicles Sisk in the Federal Fleet, and for gathered in Washington, DC to participate in the Automotive Recyclers Asthe Environmental Protection Agency sociation’s (ARA) annual Capitol Hill (EPA) to continue relying on best manDays. As the group met with their agement practices to control stormwaMembers of Congress to educate them ter pollutants.

According to Michael Wilson, CEO of ARA, “Much interest was with Ed Attanasiogenerated from these visits. Specifically, members of the Michigan, Ohio and Kentucky congressional delegations expressed interest in helping ARA advance these issues as well as discussed touring professional automotive recycling facilities when they with Ed Attanasiowere back in their districts.”

Following these visits, a Small Rep. Darrell Issa accepting the ARA CongresBusiness Administration official and sional Champion Award on Hill Day. representatives from two major national business associations formed a about the automotive recycling industry, ARA members requested support Business Panel in the House Budget from federal representatives require Committee hearing room, giving ARA with Ed to Attanasio automotive manufacturers provide OE members an opportunity to ask quesparts data to recycled parts inventory tions about health care, tax reform, re-

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outMeetings hard labor, for not more than one Associationyear, or both, except as provided in

Continued from Page 18

LA Airbag Law with Thomas Franklin Paragraphs (2) and (3) of this Sub-

section.

(4) “Serious bodily injury” means (2) Upon conviction, if the cumulabodily injury that involves 28 uncon- tive sales price of the air bags or obsciousness, extreme physical pain, jects involved in the violation is at protracted and obvious disfigurement, least five thousand dollars but less protracted loss or impairment of the than one hundred thousand dollars, with Ed Attanasio function of a bodily member, organ, or if the number of air bags or obor mental faculty, or a substantial risk jects involved in the violation is at of death. E. Whoever violates the pro- least one hundred but less than one visions of Subsection A or C of this thousand, be fined not more than Section shall: (1) Upon first convic- five thousand dollars, or imprisoned, tion, be fined not more than one thou- with or without hard labor, for not sand dollars, or with imprisoned for not than six months nor more than Chasidy Raeless Sisk more than six months, or both, except two years, or both. as provided in Paragraph (2) of this (3) Upon conviction, if the cumulative Subsection. sales price of the air bags or objects (2) Upon a second and subsequent involved in the violation is one hunconviction, or if the violation results dred thousand dollars or more, or if in the serious bodily injury or death of the number of air bags or objects inany person, be fined notThomas more than two volved in the violation is one thouwith Franklin thousand five hundred dollars, or imsand or more, be fined not more than prisoned, with or without hard labor, ten thousand dollars, or imprisoned, for not more than one year, or both. with or without hard labor, for not less F. Whoever violates the provisions of than one year nor more than five Subsection B of this Section shall: years, or both.

(1) Upon conviction, be fined not G. Each manufacture, importation, inmore than two thousand fiveAttanasio hundred stallation, reinstallation, sale, or 26 with Ed dollars, or imprisoned, with or withSee LA Air Bag Law, Page 37

Old School Know How

cycling, and regulatory burdens on small businesses.

Recyclers participating in ARA’s Hill Days consisted of both returning members and first-time participants.

Wilson notes, “ARA members look forward to this annual event to reconnect with their legislators and to update them on issues affecting the industry on the national, state and local levels. Those automotive recyclers who are frequent Hill Day attendees enjoy visiting with members and staff who are now familiar with the profession and our issues…Issues surrounding automotive manufacturers’ recalls and the safety ramifications surrounding those vehicle parts have been all over the news and have generated much interest within the entire automotive sector. This provided a critical opportunity for professional automotive recyclers to talk with policymakers about their need for those OE parts numbers.”

As the only professional association whose sole purpose is to promote a fair, open marketplace for OEM recycled parts, ARA holds its annual Hill Days as a means of reinforcing year-

(l to r) Ricky Young, ARA First Vice President and Ed MacDonald, ARA President

long efforts to elicit congressional support for critical issues impacting the industry. Often, the relationships formed during Hill Days allow for working more closely with Congressional repre-

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sentatives when they return to their districts, and it gives politically active ARA members a means of meeting more effectively at a federal level.

Wilson adds, “ARA members are uniquely qualified to communicate with policymakers to help them understand the value of recycled automotive parts and make sure they have access to valid, reliable information about the industry. When professional automotive recyclers speak with one consistent voice, our industry has more influence, and the efforts of ARA staff to represent the profession here in Washington are strengthened. For example, ARA staff recently made nearly two dozen visits to Congressional offices about automotive manufacturers’ recalls and the safety ramifications surrounding those vehicle parts. Having ARA members up on the Hill to further engage their elected officials about this issue helps keep the pressure on automakers to make this information available.”

Since their event, ARA has received positive feedback from attendees. ARA members were on the Hill mere hours after General Motors CEO Mary Barra testified a second time about the massive ignition switch recall, and ARA published a press re-

lease urging GM to adhere to their “New Industry Standard for Safety” by providing recyclers with access to important OEM parts data.

Nearly a third of ARA members’ visits were with actual Members of Congress. “Coincidentally, many of our members’ Hill appointments were scheduled at the same time that Republicans met to elect a new House

objectives. ARA staff is now in the process of following up with the Congressional offices that were visited.”

Representing over 1200 professional automotive recyclers, through direct and affiliated chapters in the US and 14 countries internationally, ARA has found that, though their members’ business models are all unique, there is a lot of commonality in the issues fac-

(l to r) Michael Wilson, ARA CEO; Rep. Darrell Issa; Ray Colas, LKQ Director of Government Affairs; and Herb Lieberman, LKQ

Majority leader after Eric Cantor’s stunning defeat,” Wilson recounts; “however, the energy and adrenaline caused by the impending vote helped drive conversation about the future of the congressional Republican leadership, and many ARA members were able to engage in dialogue on this issue in addition to ARA’s prepared policy

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ing the profession. Wilson believes that association-sponsored events, like Hill Days, bring recyclers and industry supporters together, and “there is no better way to prepare for future success, learn of new products, programs and services, discuss the top issues impacting the profession, and network with industry partners than by joining with colContinued from Page 32

HABA’s Focus

time and resources, but people CAN bring about meaningful change, even if there’s only a handful of people working together.”

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LA Airbag Law

offer for sale in violation of this Section shall constitute a separate and distinct violation.

In addition, the New York legislature is considering Assembly Bill 9730, which affects the sale and installation of recycled air bags. It also proposes penalties for those who install, reinstall, or offer for sale any “inflatable occupant restraint system” that does not meet federal safety requirements.

leagues at these events. Since our members are so geographically diverse, these events allow for professional automotive recyclers and their industry partners to meet face-to-face to discuss and plan how best to address the latest challenges and opportunities. By coming together at these annual association events, recyclers grow stronger and present a lucrative profession to the industry.”

Next on ARA’s agenda is their 71st Annual Convention and Exposition which will be held October 22-25, 2014 at the Gaylord Opryland Resort and Convention Center in Nashville, Tennessee. According to Wilson, “ARA leadership continues to enhance the quality of this event and has assembled top-notch speakers, focusing on the tools needed to achieve long-term success and the broader trends impacting the entire automotive parts market.” Visit www.araexpo.org for more information on the Convention or to register to attend.

ARA 9113 Church St. Manassas, VA 20110 571-208-0428 www.a-r-a.org

Caliber Collision Food Drive Nets Over One Million Meals

A record-breaking food drive by Caliber Collision associates nationwide surpassed all goals and expectations, collecting enough food and cash donations to help food banks provide more than one million meals for at-risk children this summer. The recent three-week food drive ended June 27th and netted 33,325 pounds of food, $105,000 in cash donations plus a $20,000 corporate contribution. The results shattered the goal Caliber Collision associates set for themselves as they challenged each other to top last year year’s effort by 25%. The final tally easily surpassed that initial goal with an incredible 200% increase over previous year’s efforts. The all-volunteer, grassroots Rhythm Restoration Food Drive involved 100% participation from all 180 Caliber locations in eight states—Arizona, California, Colorado, Nevada, New Mexico, North Carolina, Oklahoma and Texas—and headquarters in Lewisville, Texas.

“One million meals will make a significant difference in the lives of thousands of children this summer who might otherwise go hungry without the routine of school lunches” said Steve Grimshaw, Caliber Collision President & CEO.

www.autobodynews.com | AUGUST 2014 AUTOBODY NEWS 37

neers and sales staff who can truly exU.S. Senate Commerce Chair Proposes Auto Safety plain the value of their products.”

Mirka, C’Aire, 3M and others are Bill, Increases Highway Safety Authority scheduled to attend the trade show in In response to recent recalls and ve- uate the number of safety defect incom USA, Wisconsin Parts Advantage, full force. PPG management will also hicle safety concerns, U.S. Sen. Jay vestigations opened by NHTSA, the Wizards, Zorn, and others. be in attendance, as representa- to this matters affecting the industry.

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Rockefeller (D-W.V.), chairman of duration of each safety defect invesAccording to Pro Paint’s cotives from WACTAL, AASP and other the Senate Commerce Committee, tigation, and the percentage of the introduced S. 2559, a bill to expand safety defect investigations that reowner and event planner, Dayna Hennational collision repair associations. the National Highway Traffic Safety sult in a safety defect or recall. nessy, the distributor is anticipating Customer service is the primary Administration’s (NHTSA) authorAnother report would require utobodynews.com between 1100 and 1400 attendees. goals of the vendors whopublisher@autobodynews.com will participate ity to recall unsafe vehicles and in- the secretary of transportation to preShe believes that their annual trade in the trade show. Hennessy emphasizes, crease funding for automobile safety. pare a report regarding the operations “it is the responsibility of the distributors This bill would demand greater of the Council for Vehicle Electronand vendors to do what is beneficial for transparency from NHTSA by requir- ics, Vehicle Software and Emerging your business with Promote your business with ing that all customer satisfaction cam- Technologies. their customers,Promote not to take advantage of paigns, customer advisories,article recalls, featuring S. 2559 would also increase exclusive an exclusive them, but to doanwhat’s right byarticle them. featuring consumer complaints, warranty claims, funding for NHTSA’s vehicle safety The customer needs to do our best yourusproducts or services. your products or services. field reports, technical service bulletins programs. The additional funding To advertise practice in order to help them do their y and other activity involving the repair would stem from a manufacture’s fee call Joe Momber at: best practice so they can handle their ry or replacement of motor vehicles or of $3 per vehicle beginning in 2015, 800-699-8251 business and make a profit.” motor vehicle equipment be made rising to $6 a year later and then $9 in Pro Paint is the largest PPG Platavailable to the public.

2017. The fee would be based on aue-mail: NHTSA to tomakers’ U.S. sales. Rockefeller’s inum Distributor in the Midwest withfor details!It would also require CALL: Joe Momber Call for details! jmomber@autobodynews.com 51 Live demonstrations at 2013 Pro Paint make several regular reports to Con- bill is currently before the Senate two facilities, in Roseville MN and Tradeshow www.autobodynews.com gress, including a800-699-8251 report on the re- Committee on Commerce, Science Baldwin WI. This is800-699-8251 the seventh year sults of a study of the use of early and Transportation where it awaits n. show is beneficial to the industry be- they are hosting this trade show bewarning data. The study would eval- further consideration. cause the one-day event provides netcause, Hennessy cautions, “if you don’t working, educational and buying give back to your own industry, you’ll opportunities while still allowing atwatch it fade away!”

Register Your EmailTofor Our Register Your Email for Our tendees to return home the same night register to attend the Pro so they don’t lose time at work, plus Paint 7th Annual Trade Show, visit Free Twice Monthly Newsletter collision repair professionals can athttp://propaintinc.com/automotivetend the trade show at to no cost. paint-trade-show to download and atlittle www.autobodynews.com at www.autobodynews.com “The difference between our trade submit the registration form. show and others is that we engage real collision repair professionals,” HenAUTOBODY MARKETPLACE nessy explains. “Providing the information people are actually seeking is an integral part of Pro Paint’s Annual Trade Looking for Good ® Collision Personnel?

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ABAT Hosts Inaugural Meeting with More than 80 in Attendance

by Chasidy Rae Sisk

Last month we reported on the upcoming Auto Body Association of Texas (ABAT) inaugural meeting which occured after our press time. See Autobody News July 2014 issue, or online at: autobodynews.com search ‘ABAT’ As advertised, ABAT held their Inaugural Meeting on June 18, featuring guest speaker Barrett Smith, President and Founder of Auto Damage Experts, Inc. Burl Richards, Acting President of ABAT, reported that the meeting went very well with over 80 attendees present. “The event exceeded our expectations as we originally were expecting about 40–60 participants, but as the meeting got closer and we received more responses, it was obvious that we should prepare for more. We believe that, as word gets out and positive changes begin to happen, we will have even more participation which will be crucial as it will truly take a group effort to get things turned in the right direction.”

ABAT organizers were excited about the various collision repair in-

dustry fields represented at the meeting as well as the interest expressed by distant shops. In addition to body shop representatives from all across eastern Texas, attendees included vendors and jobbers such as Kent Automotive, English Color, Paint Works and BASF who sponsored the food at the event.

keeps us where the insurance companies want us – uninformed.”

Smith also discussed the problem with many required repair procedures going overlooked and unpaid and how, when omitted, these can create significant, yet unnecessary, liability issues for the repair facility. After highlight-

Representatives from Gulf States Toyota were also present as well as two members from “Team PRP” Highway Auto Parts and even Snyder’s Auto Salvage, visiting from Temple TX which is nearly 200 miles away.

After opening with prayer and the Pledge of Allegiance, Smith led the group in a discussion about the fact that “when it comes to Anti-Trust laws, we must abide by them, but that in no way restricts us, as collision repair shops, from discussing the viable issues that we face,” Richards recalls.

“Being scared to discuss issues only

ing these processes and explaining how shops can prevent being subjected to this extraneous liability, Smith presented on the value of Variable Rate Surveys and how this information, when gathered properly, can indicate the labor rates in specific areas, as well as to highlight deficiencies in training, certifications and equipment.

Following Smith’s presentation, attendees discussed ABAT’s mission which is “to create an environment of professionalism, respect and accountability while also having the ability to collect fair and reasonable compensation for repairs,” Richards explains.

Lastly, the group debated the possibility

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of inviting CSI to conduct a rate survey in their region, an initiative that will be put to a vote at ABAT’s next meeting.

Overall, attendees responded very positively to ABAT’s Inaugural Meeting and seemed ready to meet again as soon as possible. ABAT fulfilled their purpose for this meeting which was, according to Richards, “to educate shop owners and managers of their rights, not as the insurance companies instruct, but to be open to discussion with other shops without being fearful.”

Richards further explains that the formation of ABAT and all associationsponsored events are important because “as vehicle technology increases and insurance companies want to pay less and less for procedures and operations required to restore vehicles to their pre-loss condition, we must remain profitable in order to educate and equip our shops with the necessary tools to put ‘safe’ vehicles back on the road.”

ABAT has schedule a board meeting on July 2 to discuss their upcoming agenda, and they hope to hold their next meeting at the end of July or early in August.

For more information about joining ABAT, contact Burl Richards at Burl@BurlsCollision.com.

Consumer Groups Seek CarMax Probe Over ‘Deceptive’ Ads

Car-safety groups and a U.S. senator asked the Federal Trade Commission on June 24 to investigate CarMax Inc., the biggest seller of used cars nationally, for deceptive advertising claims. In a petition filed with the FTC, the groups allege that CarMax engages in deceptive advertising by claiming every vehicle it sells passes a rigorous 125-point inspection. The groups said the inspection fails to examine and disclose whether a car has been recalled and repaired. The petition also seeks to block CarMax sales of unrepaired recalled cars. CarMax, however, said that used-car retailers were not authorized by automakers to carry out repairs to recalled cars.

“CarMax provides the necessary information for customers to register their vehicle with the manufacturer to determine if it has an open recall and be notified about future recalls,” CarMax spokesman Casey Werderman said in a statement to Reuters.

The petition is being supported

by Sen. Charles Schumer, D-N.Y., The New York Times and Los Ange-

les Times reported.

“Car dealers shouldn’t sell used cars that have a safety recall to consumers, period,” said Schumer. “Far too many times we have seen the tragic and often fatal consequences when deficient cars are allowed on the road, and it’s time for the FTC to do everything it can to put a stop to it.” Werderman also said CarMax supports legislation mandating usedcar retailers to fix recalled cars. The company sold 526,929 used cars in the year ended Feb. 28, according to its latest annual filing.

Consumers for Auto Safety and Reliability supported a bill in California that would ban dealers from selling used cars that have been recalled but not fixed, but the legislation died in an committee earlier this month. In a June 2 letter to the California Assembly’s Business, Professions and Consumer Protection Committee, which was weighing the bill, attorneys for CarMax argued it was impractical for the used-car retailer to manage repairs, the L.A. Times reported.

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