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Allstate Announces ‘Process Changes’ Designed to Improve Network Cycle Time Back on July 11, Allstate Insurance Company announced to its DRP participants that shops will be required to honor completion dates or assume all related costs, expedite estimate and upload completion times, and extend their hours of operation, when necessary, for the convenience of Allstate customers. Now Allstate’s customer service initiative for 2011 has been expanded. The new program requirements were introduced to shops in a series of cycle time web conferences held recently. Those unable to view the web conferences are encouraged by the
company to contact their local performance managers.
by John Yoswick
contract. The shop owner, who asked that his name and the provider’s not be used, said he purchased a complete package—hardware and software—from the provider, but realized shortly after he did so that he did not intend to the use the shop management module of the package. “We’re not a large enough shop to benefit from the time I’d have into using it,” the shop owner said. While he wants to continue using the company’s estimating system, as his shop has for more than 15 years, the information provider has refused to accept any changes to the 40-plus months that remain on the shop man-
Tracy Tramm, Allstate Claim Service Manager, announcing process changes via video
Allstate is making “several key process changes” within its Good See Allstate Process, Page 30
Shop Owners Share Frustrations Renegotiating Contracts with Information Providers The experiences of a number of shop owners around the country serve as a reminder to make sure you always understand the terms of any contract you are signing. Failure to read the fine print—or negotiate clauses for additional rights to end even something as seemingly innocuous as a software contract—have cost some shops tens of thousands of dollars. A shop owner in California, for example, has been disappointed in the response he has received from one of the Big Three information providers to his requests over the past 18 months to renegotiate his software
See Contract Frustration, Page 14
VOL. 2 ISSUE 6 AUGUST 2011
Georgia Collision Industry Association Hosts Consultant at Monthly Meeting The Georgia Collision Industry Association (GCIA) July meeting was held on July 14th at the Crowne Plaza Perimeter Atlanta NW. Patrick Delaney from Summit Consulting International was the night's guest presenter. The presentation centered on how to improve performance in your collision shop. Delaney’s presentation covered how to measurably improve the processes that impact the most vital areas of your business—profitability and customer loyalty. Delaney spoke about Production Management Foundations, Measuring in Order to Manage and Making an Impact. He also discussed how to set up production controls to address the following four areas; customer interaction, managing repairs, pro-
duction processes, and administrative processes. He explained the impact each area has on the production process and how these area can affect the repair planning process. Summit Consulting has a computer program to help shops with their production management. Refreshments and food began at 6:30 pm. The group also discussed the upcoming 15th Annual GCIA Golf tournament and the Property and Casualty Insurance Stakeholder Advisory committee meeting scheduled for Wednesday, August 10th at 1:30PM in Atlanta (Location yet to be determined). Please visit www.summitci.com for more information about Summit
REGIONAL ARTICLES in this issue...
See GCIA, Page 11
Former San Diego Car Dealer Found Dead In FL Home . . . . . . . .p. 4 Kia Hires 1,000 New Employees for Georgia Plant . . . . . . . . . . . .p. 4 Sikes & Stowe Downtown Collision Celebrates 85th Anniversary .p. 6 Hyundai-Kia Supplier Bringing Jobs to Alexander City, AL . . . . .p. 8 Gunder’s Files Appeal With the United States Supreme Court . .p. 8 Auto Angels Up to Speed for 2011 Car Giveaway . . . . . . . . . . . . .p. 10 FL Gov Signs Deregulation Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 11 Gunder’s Auto Center Alleges State Farm Altered Prevailing Rate Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 15
NATIONAL ARTICLES in this issue...
Chevy Cars Get Highest Brand Share in 20 Years, GM Says . . . .p. 13 Companies Working to Expand Natural Gas Vehicle Options . . .p. 20 Groupon Offers First New Car Deal With Detroit Auto Dealership .p. 31 Hyundai and Kia Both Raise 2011 Sales Forecasts . . . . . . . . . . . . .p. 31
COLUMNS in this issue...
Attanasio — Prestige Imports, a BASF Waterborne Advocate . .p. 12 Williams — What Makes A Dealership Distinctive? . . . . . . . . . . .p. 16 Schroeder — Carl Owen’s Paint and Body in Tyler, TX . . . . . . . .p. 17 Chess — Are Your Repair Methods Ten Years Out of Date? . . . .p. 18 Gonzo — How to Keep Your Cool With HVAC Diagnostics . . . . .p. 21 Yoswick — State and Federal Governments Consider New Insurance Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 22 Horn — Devil in the Details: Measuring Metrics Properly . . . . . .p. 29
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Contents Waterborne Advocate in Colorado . . . . 12
AL Governor Names Insurance Market
Chess - Are Your Repair Methods Ten
Alabama-Built Car Sales Up 20% From 2010 . 4
Horn - Devil in the Details: Measuring
Study Commission . . . . . . . . . . . . . . . . 9
Auto Angels Up to Speed for 2011 Car
Years Out of Date? . . . . . . . . . . . . . . . . 18 Metrics Properly . . . . . . . . . . . . . . . . . 29
Giveaway. . . . . . . . . . . . . . . . . . . . . . . 10
I-CAR - Thin-Film Technology Comes to
Repeat Large Contribution . . . . . . . . . . 10
Schroeder - Carl Owen’s Paint and Body in
FL Gov Signs Deregulation Bill . . . . . . . . . 11 FL Reinstates Online Driver Permit Tests
Collision Repair . . . . . . . . . . . . . . . . . . 28 Tyler, TX, Offers Top Rated Auto, RV and
Truck Repair . . . . . . . . . . . . . . . . . . . . 17
for Teens After Ban . . . . . . . . . . . . . . . . 8
Weaver - How to Keep Your Cool When
Research Group. . . . . . . . . . . . . . . . . . . 6
Williams - What Makes A Dealership
Dead In FL Home, Police Arrest
Yoswick - State and Federal Governments
Florida’s Insurance Market Earns “F” From Former San Diego Car Dealer Found
Live-In Girlfriend . . . . . . . . . . . . . . . . . . 4
GA Cyclists Praise New Law Requiring
Drivers Yield Space . . . . . . . . . . . . . . . . 9
Georgia Collision Industry Association
Hosts Consultant at Monthly Meeting . . . 1
Gunder’s Auto Center Alleges State Farm
Altered Prevailing Rate Surveys . . . . . . 15
Gunder’s Files Appeal With the United
Working With HVAC Diagnostics . . . . . 21
Distinctive? . . . . . . . . . . . . . . . . . . . . . 16 Consider New Insurance Regulations . . 22
Allstate Announces ‘Process Changes’
Designed to Improve Network Cycle Time. 1
Allstate Shakes Up President’s Position,
Shares Drop on the News . . . . . . . . . . 30
And You Thought You Knew Ugly Dogs. . . 25
States Supreme Court . . . . . . . . . . . . . . 8
Automatic Braking, as Implemented by
Alexander City, AL . . . . . . . . . . . . . . . . . 8
Chevy Cars Get Highest Brand Share in
Hyundai-Kia Supplier Bringing Jobs to
Kia Hires 1,000 New Employees for GA Plant . 4
Volvo, Does Prevent Crashes . . . . . . . . 24
20 Years, GM Says . . . . . . . . . . . . . . . 13
LKQ & Arbor Day Foundation Help Florida
Companies Working to Expand Natural
New KIA Dealership Moves Into Old KIA
Comprehensive Review of Distracted
Nissan: Despite Japanese Disasters, US
Fiat, Chrysler to Unite Management . . . . . 30
Get Green . . . . . . . . . . . . . . . . . . . . . . . 8 Property in FL . . . . . . . . . . . . . . . . . . . . 9
Gas Vehicle Options. . . . . . . . . . . . . . . 20 Driving Research Released. . . . . . . . . . 25
Leaf Full Launch Will Be On Time . . . . . 13
Groupon Offers First New Car Deal With
Issued in Kentucky. . . . . . . . . . . . . . . . 10
Hyundai and Kia Both Raise 2011 Sales
Only 144 Texting While Driving Citations
OSHA Cites Cooper Tire in Mississippi . . . . 4
Sikes & Stowe Downtown Collision
Celebrates 85th Anniversary . . . . . . . . . 6
Three Arrested for Auto Insurance Fraud in
Detroit Auto Dealership . . . . . . . . . . . . 31
Forecasts. . . . . . . . . . . . . . . . . . . . . . . 31
J.D. Power Survey Ranks Ford 23rd out of 32 Auto Brands, of US Manufacturers
Only Cadillac Makes the Top Ten . . . . . 27
Tampa, FL . . . . . . . . . . . . . . . . . . . . . . 11
Nissan Researching Solar Charging for
Dealerships . . . . . . . . . . . . . . . . . . . . . 11
Shop Owners Share Frustrations
Walker Automotive Among Largest US
Attanasio, BASF - Prestige Imports is a BASF
Batteries in its All-Electric Leaf . . . . . . . 20
Renegotiating Contracts with
Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Assistant Editor: Erica Schroeder Contributing Writers: Tom Franklin, Stefan Gesterkamp, John Yoswick, Lee Amaradio, Toby Chess, Mike Causey, Dan Espersen, Tom McGee, Jeff Webster, Rich Evans, Ed Attanasio, Chasidy Sisk Advertising Sales: Joe Momber, Sean Hartman (800) 699-8251 Sales Assistant: Kristy Mangum Art Director: Rodolfo Garcia
Collision Industry Legal Fund Reports
Information Providers. . . . . . . . . . . . . . . 1
Serving Florida, Georgia, Alabama, Mississippi and adjacent metro areas, Autobody News is a monthly publication for the auto body industry. Permission to reproduce in any form the material published in Autobody News must be obtained in writing from the publisher. ©2011 Adamantine Media LLC.
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AkzoNobel. . . . . . . . . . . . . . . . . . . . . 5 Arrigo Dodge-Jeep-Chrysler. . . . . . 10 Autoland Scientech. . . . . . . . . . . . . 21 Bill Penney Toyota. . . . . . . . . . . . . . 14 BK Listings . . . . . . . . . . . . . . . . . . . . 9 BMW Wholesale Parts Dealers . . . . 24 Chief Automotive. . . . . . . . . . . . . . . 15 Classifieds. . . . . . . . . . . . . . . . . . . . 31 Delray Honda . . . . . . . . . . . . . . . . . 25 Don Mealey Chevrolet . . . . . . . . . . 23 Don Reid Ford. . . . . . . . . . . . . . . . . 19 Equalizer Industries . . . . . . . . . . . . . 6 Ford Wholesale Parts Dealers FL, GA, AL, MS . . . . . . . . . . . . . . 32 Galloway Mazda . . . . . . . . . . . . . . . 14 Garmat USA . . . . . . . . . . . . . . . . . . 11 Global PDR Solutions . . . . . . . . . . . 13 GM Wholesale Parts Dealers . . . . . 30 Gus Machado Ford . . . . . . . . . . . . . 16 Honda Wholesale Parts Dealers. . . 31 Hyundai Wholesale Parts Dealers . 27 Kia Motors Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . . 2
Mazda Wholesale Parts . . . . . . . . . 30 Mercedes-Benz Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . 24 MOPAR Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . . 4 NACE / CARS Registration . . . . . . . . 7 Nalley BMW. . . . . . . . . . . . . . . . . . . 19 Nissan Wholesale Parts Dealers. . . 29 Palmers Toyota . . . . . . . . . . . . . . . . 18 Porsche Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . 16 Safety Regulation Strategies . . . . . 10 SATA Spray Equipment . . . . . . . . . . 8 Scorpion . . . . . . . . . . . . . . . . . . . . . 17 Serra Mazda . . . . . . . . . . . . . . . . . . 22 Southtowne Hyundai . . . . . . . . . . . 11 Subaru of Gwinnett . . . . . . . . . . . . . 22 Subaru Wholesale Parts Dealers . . 26 Tameron Hyundai . . . . . . . . . . . . . . 23 Toyota Wholesale Parts Dealers . . . 26 Volkswagen Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . 18
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 3
Kia Hires 1,000 New Employees for Georgia Plant
Kia Motors America is ramping up its U.S. production at the manufacturer’s West Point, Georgia plant. The plant will increase output from the current 300,000 vehicles per year to 360,000 beginning this September. In a public statement made June 2 President and CEO of Kia Motors America, Ahn Byung-mo, said, “Kia is experiencing unprecedented growth in the U.S., led by the best-selling Sorento. And with demand for the critically acclaimed Optima currently outpacing supply we are proud to add the popular sedan as the second Kia vehicle on the production line.” In anticipation of the increase, Kia has just hired 1,000 new U.S. worker. Byung-mo hopes this expansion will keep up with the high demand for Kia’s Optima sedan and Sorento SUV, best-sellers for the brand. Kia’s Georgia plant will begin producing both models exclusively. Excellent safety ratings and rave reviews from the auto press for several popular Kia models have shot Kia Motors’ U.S. sales through the roof for a third straight month. Kia’s U.S. sales numbers were up a stunning 53.4 percent in May. Dealers are welcoming the news of increased domestic production
since Kia’s popularity is on the rise. “While other car manufacturers are still struggling with production issues in the wake of Japan’s crippling natural disasters, Kia will not only remain unaffected, but will be able to get its most popular models out to the public even faster,” says local dealer Josh Aaronson of Yonkers Kia. Keeping up with demand for the Optima and Sorento have been a challenge for Aaronson. While he says Yonkers Kia’s inventory has been able to keep up so far, the production increase will be a welcome relief.
OSHA Cites Cooper Tire in Mississippi
Cooper Tire & Rubber Co. will challenge charges by the Occupational Safety and Health Administration that the company committed safety violations at its plant in Tupelo, MS. OSHA recommended the tire maker, along with two of its maintenance contractors, pay a $254,900 fine for 25 violations. The Tupelo plant was cited following an inspection at Cooper Tire’s Findlay plant, which was fined for violations. OSHA said the allegations are associated with combustible dust.
Alabama-Built Car Sales Up 20% From 2010
Through May, combined U.S. sales of the eight models produced in the state of Alabama totaled 230,603, a 20 percent rise from the same period in 2010, according to reports made by the Birmingham News. Only one vehicle, the Honda Ridgeline, registered a decline. The pickup’s year-to-date sales totaled 4,598, down 31.6 percent. Meanwhile, the two models built by Hyundai in Montgomery lead the growth. The Sonata sedan is the volume leader, with year-to-date sales of 96,370, up 35 percent. The Elantra compact, redesigned late last year, has shown the greatest growth, with year-to-date sales of 20,006, a 104.5 percent improvement over 2010. In brighter news for the Ridgeline, which is built at Honda’s Lincoln factory, it topped the midsize pickup category in the J.D. Power and Associates U.S. Initial Quality Study released last week. The annual survey measures new-vehicle quality at 90 days of ownership. The Honda brand finished with its best-ever overall ranking. The Japanese automaker placed No. 2, behind Lexus and ahead of Acura.
Mercedes, which has a plant in Vance, finished fourth in the overall ranking, while Hyundai placed No. 11. As for other major brands, Toyota was No. 7, Chevrolet was No. 14, Chrysler was No. 16 and Ford was No. 23. Three Alabama-built vehicles finished in the top three models per segment. Along with the Ridgeline, the Honda Odyssey placed second in the minivan category, and the Mercedes-Benz GL-Class place second in the large premium crossover/SUV category. And in auto supplier news, Birmingham’s Mobile Fluid Recovery Inc., an absorbent materials recycler, received the General Motors Environmental Excellence Award. The GM supplier was recognized for providing unique recycling ideas and collaborating on projects such as turning oil-soaked booms from the Gulf of Mexico into components for the Chevrolet Volt. Fifteen years ago, Mobile Fluid Recovery and GM collaborated on an eco-friendly method to process solvents from rags that were used to prepare the surface of vehicles for adhering emblems. That work led to a recycling process where the used rags were turned into car parts.
4 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
Former San Diego Car Dealer Found Dead In FL Home, Police Arrest Live-In Girlfriend
Police in Fort Lauderdale, FL, are investigating how a former San Diego County car dealer died in his milliondollar mansion on June 30. 70-year old Ronald Vinci, the former owner of Pacific Honda in Kearny Mesa, has owned several dealerships in the San Diego area since the 1960s. He also owned several Honda dealerships in the 1960s, rose to millionaire status and then later sold his franchises. Fort Lauderdale police now believe they found out who killed the former San Diegan. Police arrested Vinci’s live-in girlfriend, Catherine Pileggi on July 5, according to NBC San Diego. Detectives said Vinci was trying to break off his relationship with Pileggi at the time of his death. They believe an argument between Pileggi and Vinci turned fatal. Homicide detectives arrested Pileggi on July 5 after finding several items linking Pileggi to the scene. Pileggi is charged with first degree murder. 10News San Diego also reported that Vinci’s body was wrapped in duct tape when it was found discovered in-
side the home, which is in an upscale neighborhood along Fort Lauderdale’s New River. Neighbors were stunned by the sudden, reportedly suspicious death. “We moved here because it is real quiet and slow paced and everybody walks their dogs and says hi to each other. It is a real shock to hear something like this has happened,” said neighbor, John Anderson to 10News. Vinci formerly lived in Rancho Santa Fe, CA; reports showed he moved from San Diego to Florida in 2005. Vinci leaves behind his son and grandson.
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 5
Florida’s Insurance Market Earns “F” From Research Group The Heartland Institute, a national nonprofit research and education organization issued its annual “2011 Property and Casualty Insurance Report Card” of all 50 states and Puerto Rico, according to PropertyCasualty360. The report garnered Florida with an “F”. The report, which provides a state-by-state analysis of regulatory burden, gives Florida a letter grade of “F” and a numerical score of -35. Heartland has long been critical of Florida’s insurance environment. This is the fourth year in a row that the Sunshine State has been placed in the lowest-ranking position. In its 2009 report, Heartland noted, “Consumers in Florida are paying higher premiums for homeowners’ insurance than necessary thanks to illadvised regulation. ... Florida’s insurance environment, no holds barred, is the worst in the country.” In that year’s p&c report card, Florida scored a -36. It also scored a -36 and an “F” in 2010. Along with Florida, other lowranking states in the 2011 report include Hawaii (-22), Texas (-25), and California (-28). Florida lost points for every variable considered except market concentration for the homeowners’ market and credit scoring. Author Eli Lehrer says the organization’s annual report seeks answers to two “fundamental questions” about the nation’s p&c insurance regulatory environment: 1. How free are consumers to choose the p&c insurance products they want? 2. How free are insurers to provide the p&c insurance products consumers say they want? Florida also scored the lowest possible grade (-6) in the politicization category. The report says that although both states have appointed rather than elected insurance commissioners, the insurance industry became “a major campaign issue” in elections. Curiously, the author also makes special note that Florida “saw insurance involved in its race for chief financial officer.” It would be difficult for that not to occur. Florida’s CFO serves on the state’s Financial Service Commission, which handles the regulation of banking, securities and insurance. Additionally, the office regulates insurance
agents, is court appointed as the receiver or rehabilitator of insolvent insurers, administers the workers' compensation insurance act, appoints the Insurance Consumer Advocate, and is the administrator of the division of insurance fraud. Florida’s Office of Insurance Regulation comes under harsh criticism as well, with the report’s author alleging, “Florida experienced a wave of insurer insolvencies resulting mostly from over-regulation of the market. Many insolvencies that the Florida Office of Insurance Regulation kept secret from consumers in the early months of the year ended up sending consumers and regulators scampering to other companies and the state’s residual market, the Florida Citizens Property Insurance Corp.” According to PropertyCasualty360, Insurance Commissioner Kevin McCarty says his office “does not agree with the findings [of the report]. The claim is that Florida ‘experienced a wave of insurer insolvencies in 2010, resulting mostly from overregulation of the market.’” “In any marketplace, some businesses fail,” McCarty says. “The insurance marketplace is no different. Regulators do not run insurance companies. In an effort to keep a company solvent while a potential buyer is looking at a troubled company and prevent the proverbial ‘run on the bank,’ the law provides that the OIR keep the names of troubled companies confidential until such time that all options have been exhausted to save a company,” he explains. “Prematurely alerting the public of every single concern with each company’s book of business would certainly cause even more strain and instability in the market. “To accuse regulators of causing insolvencies in the marketplace is wrong,” McCarty states. “In fact, the OIR proactively identified and addressed issues affecting Florida’s property insurance market. These cost drivers include an explosion of sinkhole claims, reopened claims from the 2005-2005 hurricane season, rising reinsurance costs and other factors. As a result, regulators worked closely with state lawmakers to craft meaningful reforms with the passage of SB 408 during the 2011 legislative session, which the governor recently signed into law. The benefits of these
6 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
reforms will be seen over time,” McCarty predicts. Florida Insurance Council Executive Vice President Sam Miller also points to Florida’s progress toward reforms made during the 2011 session. “Florida took important steps this spring to improve its troubled regulatory climate,” Miller says. “These were expanded rate deregulation for commercial insurance and expanded homeowners insurance recoupment for catastrophe reinsurance costs. “In addition, the insurance community worked with the Office of Insurance Regulation to pass SB 408 attacking sinkholes and other property insurance cost drivers,” Miller continues. “This initial signal to private capital that Florida wants it to play in our market was good. We still have many regulatory hurdles to overcome, including competition with the private property market by Citizens Property Insurance Corp. and redefining the role of the Florida Hurricane Catastrophe Fund. We still have much to do.”
Sikes & Stowe Downtown Collision Celebrates 85th Anniversary
Sikes & Stowe Downtown Collision, the oldest independent, familyowned body shop in downtown Jacksonville, is currently celebrating its 85th anniversary.
Founder John E. Sikes Sr. started the business in 1926, his son John E. Sikes Jr. took over in the 1960s until his death in 1999 and grandson, John E. “Bud” Sikes III is the current owner. The Owners have always credited their loyal customer base throughout the years for their longevity of success, and are, as always, committed to the growth and development of downtown Jacksonville. For more information please visit www.sikesandstowejax.com.
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IT’S ALL ROLLED INTO ONE: World class exhibits // Unmatched education & training you won’t find anywhere else Live on-floor demonstrations // Opening general session // Welcome reception // ASRW Town Hall ASRW Industry Forum // Association Leadership Summit // Networking Events Vehicle Display Featuring the Muscle Car Network of Florida Co-Located With: Held During:
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www.ASRWEVENTS.com www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 7
Hyundai-Kia Supplier Bringing Jobs to Alexander City, AL
More than 150 jobs are coming to Alexander City, AL, thanks to a new manufacturing facility that will supply the Hyundai and Kia automotive plants, according to CBS 8 News Montgomery. The Lake Martin Area Economic Development Alliance along with Gov. Robert Bentley have announced that C and J Tech Alabama will be moving into a former Russell Corporation plant on the Russell campus. The plastic injection molding company will hopefully create the jobs by 2013. Materials produced at the plant will be used at the Hyundai plant in Montgomery, which builds the Sonata and Elantra car models and at the Kia plant in West Point, Georgia, which manufactures the Kia Sorento and Hyundai Santa Fe SUVs.
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LKQ & Arbor Day Foundation Help Florida Get Green
LKQ Corp. announced the successful completion of its recent partnership with the Arbor Day Foundation for the 2011 Get Green promotion, according to aftermarketNews. Every visitor who supplied a valid email address at the Get Green website during the month of May received a tree donated in his or her honor. As part of the program, LKQ donated more than 10,000 trees, which will be planted in Florida’s Belmore State Forest. “As one of North America’s leading automotive recyclers, being green is important to us, and we stand by our commitment to the environment. The Get Green promotion is a way for us to support our local communities and raise awareness of environmental concerns,” said Laurie Garcia, LKQ’s VP of growth initiatives and marketing. Trees donated during the 2010 promotion were planted in northern Michigan’s Pere Marquette Forest as part of the Michigan Department of Natural Resource’s reforestation project to support the federally endangered Kirtland Warbler.
8 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
FL Reinstates Online Driver Permit Tests for Teens After Ban
Florida teenagers once again will be allowed to take their learner’s permit tests online, according to Insurance Journal. The Department of Highway Safety and Motor Vehicles pulled the online testing option back in January when they determined that about 40 percent of the test-takers who passed the exam online failed in person. A law signed by Gov. Rick Scott brought back the online testing option, taking effect July 1. The agency’s legislative affairs administrator, Steven Fiedler, said the new testing system is improved and holds parents more accountable. If a teenager is found to have cheated, the parent’s driver’s license could be suspended. Fiedler said the online testing is driven mostly by customer convenience. About 70,000 teenagers apply for the learner’s permit each year.
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Gunder’s Files Appeal With the United States Supreme Court
In April of this year Gunder’s Auto Center received notice whereas the United States Court of Appeals for the Eleventh Circuit upheld a lower court’s order granting summary judgment in favor of State Farm Insurance in Gunder’s claim of slander and tortious interference with a business relationship against the nation’s largest personal auto insurer. Ray Gunder stated; “after considerable thought, counsel and discussion with family and close friends, and as a result of recent activities on other pending cases against State Farm I decided to proceed with submitting what is referred to as a Petition for Writ of Certiorari to the United States Supreme Court requesting their review and opinion of the lower court’s ruling. As we continue to ‘pound that rock’ I see we are standing on a substantial amount of gravel, and as I’ve said before, we’re all-in and we’re too close to quit now and will continue until we either prevail or exhaust all opportunities to do so!” A copy of the court’s prior ruling may be found at: http://www.courtlistener.com/ca11/26Fy/gunders-autocenter-v-state-farm/
AL Governor Names Insurance Market Study Commission Alabama Gov. Robert Bentley has appointed 24 people to a panel that will examine the state’s insurance market and suggest improvements, according to Insurance Journal. The commission will be led by Baldwin County Probate Judge Tim Russell. Bentley has said he’ll hold a special session of the Legislature on the issue of insurance. The panel also includes state Insurance Commissioner Jim Ridling, state Revenue Commissioner Julie Magee, lawmakers, insurance agents, policyholders and representatives of three insurers. The commission originally was meant to address the coastal Alabama insurance market, but the governor expanded its scope following the devastating April tornadoes. Rising insurance rates and fewer choices have been problems along the coast since Hurricane Ivan in 2004, so the commission hopes to meet about what to do in this situation. “The lack of affordable insurance is an important issue that many in Alabama face. After the devastating tornadoes in April, insurance reform needs to be examined now more than ever,” Bentley said in a statement. “I want this new commission to work to-
gether to stop the rising cost of insurance for the benefit of all Alabamians.” Russell said the first step would be to meet with Bentley and his staff to hear the governor’s plan for the commission. He said he envisions a series of meetings on insurance issues, ranging from education and listening to consumers to finding solutions. “We’re not going to have a shortage of solutions,” Russell said. He hopes to again propose the idea of a captive insurance company to accumulate reserves tax-free and provide less expensive reinsurance to companies covering Alabama customers.
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New KIA Dealership Moves Into Old KIA Property in FL
Southside Kia opened two weeks ago in the same spot on Atlantic Boulevard in Jacksonville where a previous Kia dealership was shut down under court orders, according to The Florida Times-Union. The new dealership has no connection to Premier Kia, which closed in October 2009, said Joe Esposito, general manager of Southside Kia. “We just thought the location was strategic,” Esposito said. “It would make sense to be where people identify it as a Kia dealership.” Esposito was also general manager of Kia of Orange Park and said he is still involved with that dealership but that the two are owned by different groups. Esposito said he’s still adding employees and expects to get to about 70. In the meantime, the dealership is fully operational with sales and service. It has more than 300 new cars, Esposito said, which is about a 60-day supply. And sales have been above the projections, he said.
GA Cyclists Praise New Law Requiring Drivers Yield Space
Georgia cyclists are celebrating what they are calling the biggest improvement to the state’s bike safety laws in decades, according to reports made by Insurance Journal. A new traffic law requires cars and trucks to keep at least 3 feet of distance from bicycles when passing them on the road. The measure took effect July 1, and biking clubs across the state planned group rides over the Fourth of July weekend to raise awareness of the new law among local motorists. Frank McIntosh of the Savannah Bicycle Campaign said the change was needed because Georgia law previously only required passing drivers to keep a “safe distance” from cyclists. He said that was too vague and some motorists would get dangerously close to cyclists on the roads. Georgia Bikes, a nonprofit group, lobbied for the new rule. Its director, Brent Buice, said it’s the most important change to Georgia biking laws since the 1970s.
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Collision Industry Legal Fund Reports Repeat Large Contribution In June, a prior Collision Industry Legal Fund contributor sent yet another check for another $2,500 aimed at assisting body shop owner Ray Gunder in his ongoing battle with State Farm Insurance Company. The donation came with a simple note: “Ray, Thank you for everything you do! You’re the BEST!” The Collision Industry Fund was established last year to provide financial assistance to Gunder’s Auto Center in Lakeland, Fla., which has been involved in a lawsuit against State Farm for slander and tortious interference, as well as the failure to pay for certain repair procedures. “This mirrors this same contributor’s record donation they provided last year! We remain extremely grateful and thankful for the donation and support” stated Ray Gunder. “I’m thankful for all the financial support we’ve received from people we don’t even know from across the country. I’m humbled at the support we’ve received and encouraged to continue on with our efforts to level the playing field. “As I have said many times before; This fight isn’t just about Gunder’s and our customers, or just about
State Farm; it’s about repairers and their customers across the country that face the same issues of abuse daily from many insurers. State Farm has and continues to stall and delay and outspend us but so far, and by the grace of God, we have reached a point I believe will come to a positive outcome sooner than later.” To mail a donation to the fund, make the check out to “The Collision Industry Legal Fund” and send to: Brent Geohagan, Attorney at Law, 3001 Bartow Rd., Lakeland, FL 33803.
Only 144 Texting While Driving Citations Issued in Kentucky
Kentucky police agencies say the state’s texting-while-driving statute is well intended, but difficult to enforce. The law took effect a year ago, but officers issued only verbal warnings for the first six months. Citations and fines have been handed out since Jan. 1, but there were only 144 of them statewide in the first half of this year, according to The Kentucky Enquirer. The areas where the most citations have been written are: Jefferson County leads with 23; Fayette follows with 12.
10 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
Auto Angels Up to Speed for 2011 Car Giveaway A mid-year update reveals the ‘Auto Angels’ of Central Florida are on target for this year’s Christmas Giveaway of reconditioned vehicles to needy recipients. David Stewart of Stewart’s Auto Repair in Winter Haven, FL, stated; “Thanks to the support of many sponsors and the collision repairers involved in this program, thus far we have 5 vehicles which will be ready at the end of July.” These include: 2001 Ford Escort 4dr.,1999 Neon 4dr.,2002 Chrysler Voyager van, 2001 Grand Marquis, and a 1991 Nissan Pathfinder SUV. The group’s goal, while lofty, is to have 14 to 15 vehicles ready for this year’s Christmas give-away. Currently the group is seeking donor vehicles and is in discussion with several insurers and others in hopes of getting suitable vehicles as well as sponsors for cash and/or material donations. The group would like to give credit to those who have stepped forward thus far in making this program a resounding success: Bernie’s Body Shop (Lakeland) Ben’s Paint Supply (Lakeland) Winter Haven Honda Douglass Collision (Lakeland)
Gunder’s Auto Center (Lakeland) LKQ-Auto Parts (Brandon) All-Pro Used Auto Parts (Auburndale) Jenkins Lincoln Mercury (Lakeland) Meisner ‘s Paint & Body (Lakeland) NAPA- Auto Parts (Lakeland) 1-800 Radiator (Central Florida) Stewart Auto Repair (Winterhaven) Maurice’s Auto Body (Lakeland) Watkins Motor Lines (Lakeland) The group welcomes contact from those in and around Polk County who would like to offer their time, resources and/or donate their services/products to this very worthwhile program. Please contact: David Stewart of Stewart’s Auto Repair in Winter Haven, Fl at email@example.com or call (863) 965-2030 for more information.
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Three Arrested for Auto Insurance Fraud in Tampa, FL
Three people have been arrested in an insurance fraud case involving the theft of thousands of dollars in auto insurance premiums. Suspects Bella Jenkins, Torrance Blake and David Ball of Insurance Plus in Temple Terrace, FL, surrendered to authorities and were charged with insurance fraud and selling insurance without a license. In August 2010, the Florida Department of Financial Services, Division of Insurance Fraud, began an investigation into the agency. The division acted after receiving complaints that customers were given automobile insurance coverage quotes by phone only to have the price for the coverage increase greatly at the time of purchase. Many customers paid the additional money and left the agency believing that they had insurance coverage with either Kingsway Amigo Insurance Co. in Miami or Security National Insurance Co. Customers later learned that they had no coverage, either by getting pulled over for a traffic violation and being told that their license was suspended for not having insurance, or by getting notices from the Florida Department of Highway Safety and
Motor Vehicles advising of the lack of coverage. Further investigation determined that payments customers made were never sent to Kingsway Amigo or Security National. The victims stated that Jenkins, the owner of the business and a licensed insurance agent, was not present when they went to the agency, and that Ball and Blake conducted insurance business with consumers without the required licenses. All suspects were booked into Hillsborough County jail and released on bond. If convicted, they each face up to five years in prison per charge.
Walker Automotive Among Largest US Dealerships
For the fifth straight year, Alexandriabased Walker Automotive has made Ward’s Dealer Business magazine’s list of the 500 largest automobile dealerships in the country. Walker was No. 52 on the list, which ranks dealerships based on total revenue. Billy Navarre Chevrolet and Honda in Lake Charles also made the list, at No. 235, the only other Louisiana dealership on the list.
FL Gov Signs Deregulation Bill
Florida Gov. Rick Scott signed into law a commercial rate deregulation bill this month that expands the types of commercial insurance exempt from the rate filing and approval process, according to PropertyCasualty360. The National Association of Mutual Insurance Companies (NAMIC) in a statement says the governor’s signing of the “rate modernization” bill, HB 99, is an “important component of a healthy insurance market.” NAMIC adds Scott’s “support of freemarket principles is evidenced” by the signing of the legislation. HB 99 expands on legislation signed into law last year by thenGov. Charlie Crist that exempted certain excess and specialty commercial lines from rate regulation. This year’s bill includes commercial property, excess property and general liability. It also includes commercial auto lines for fleets under 20 vehicles. Larger fleets were included in the bill last year. Rates still cannot be excessive, inadequate or unfairly discriminatory. Should the industry successfully demonstrate that commercial deregulation works, it hopes the same can be extended to personal lines, industry members have said.
Continued from Front Page
Patrick Delaney makes his presentation to GCIA members at their July meeting
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 11
Prestige Imports is a BASF Waterborne Advocate in Colorado by Ed Attanasio
When his customers are spending big money on vehicles costing more than $50,000 and sometimes well into six figures, Jim Frost, the manager at Prestige Imports Collision Center in Lakewood, Colorado, knows his paint jobs have to be top-tier every single time. That’s why he’s enthused on several levels about his conversion to waterborne paint. Frost is pleased about the performance and the finished product he’s getting with Glasurit 90-Line, BASF’s waterborne product, and Prestige is proud to be a Colorado waterborne pioneer—the very first body shop in the Centennial State to adopt the green approach nearly three years ago. Frost, 41, started working for his father’s shop at age 15. Now his collision center serves three Colorado dealerships: Prestige Imports Porsche Audi, MercedesBenz of Littleton and Mile High Honda Acura Mitsubishi. Prestige Imports Collision Center will repair any type of vehicle, but primarily focuses on the European brands its dealership sells, as well as Ferraris, Bentleys, Maseratis and Lotuses, among others. With 19 employees, this 19,000 square-ft. facility has an average repair ticket of approximately $3,300 and at any given point it’s likely that the shop will have more than a dozen repair orders in-house averaging more than $20,000 each. Frost conducted an in-depth study before he chose BASF as his paint vendor, he told Autobody News. “We decided to change to waterborne and adopt all of the California laws even before they went into effect there. We analyzed all of the waterborne paint lines that were out there starting a little more than three years ago. We discovered that BASF offered an ideal solution for us in our environment. Many of the cars we repair were originally painted with BASF waterborne from the factory. We liked the product and appreciate their support, so that was a big part of the decision.” Becoming familiar with BASF Glasurit 90-Line involved watching other shops using it, Frost explained. “I went out to Southern California with my painting team to their training facility there and BASF took us around to local body shops that were using the BASF waterborne product. At that point, we went through some training and when we came back here, we felt as though we were
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ready to roll. FinishMaster, our local jobber, assembled all of the necessary materials and we came in one Saturday and switched over to water.” It was a challenge for his paint crew during the first month or so, but Prestige didn’t have a single comeback and the learning curve flattened out quickly. “Change is never easy, but we’re always looking to make ourselves better,” Frost said. “We decided to push the envelope and make a definitive move. After 30 days of saying this is the way we’re painting cars and we’re not looking back, the painting staff accepted it. And now I can guarantee that they would never go back.” What was the biggest issue to converting to BASF Glasurit 90Line? “The main challenge for us is our climate here in Colorado,” Frost said. “The humidity swings and the temperature changes here all the time, so we had to start what I call “cocktailing our mixes” to make them correct. Once we were able to solve that, it was seamless. We retrofitted the booths and we installed more fans and that was essentially it. A lot of people were telling us that we had to buy a lot of other equipment, but we determined it wasn’t actually necessary.” Frost also uses BASF’s paint inventory system and values it for its ease-of-use. “We have incorporated their SmarTools inventory control and management system, and we like it. Every week, I get an accurate report, so I know what to order and exactly what I have at any given time. I also credit that to an increase in profitability, because we don’t run
12 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
out or ever buy too much of the product.” Even without any pending legislation on the horizon in Colorado, body shops are flocking toward the waterborne solution statewide, Frost said. “Since we switched over in 2008, roughly 35 shops have converted and we always invite other shops here so they can see how we’re doing it. We’ve even had other shops sending their painters here, pulling the triggers alongside our crew to learn the product and tell them “hey, it’s not so hard. You don’t need to be afraid of it.” We tell other shops to try the BASF Glasurit 90Line and make your own call. There is no substitute for doing it yourself. Some of these shops are competing with us, but we have no problem with sharing information this important. In the end, we should all be stewards of the land, and if I can help to get one guy over his apprehension using this product, then so this is definitely a win for everyone.” Business life is a series of tradeoffs, but switching to waterborne was a win-win for Prestige, Frost says. “The product costs slightly more, but the coverage is superior. The color matches are more accurate and we have experienced an increase in our overall material gross profits since we made the change. We’re very environmentally-minded here in Colorado and we participate in the Environmental Leadership Program sponsored by the state. They’ve recognized us for our green practices from a recycling perspective and they awarded us with their silver certificate for the changes that we’ve made here.”
Combined Production Space: 19,000 square feet
Prestige was the very first collision facility in Colorado to make the green move to waterborne paint, when they embraced BASF Glasurit 90Line in 2008
Prestige is pleased to report that their color matches are dead-on with BASF Glasurit 90Line
BASF Company Contact: David Brez Strategic Initiatives Manager Phone: 951-315-1395 (Mobile) email: firstname.lastname@example.org website: www.basfrefinish.com
Nissan: Despite Japanese Disasters, US Leaf Full Launch Will Be On Time Although Nissan North America Inc.’s timetable for preparing the Smyrna, Tenn., complex to build the Nissan Leaf and its batteries was set back by more than a month by the March 11 earthquake and tsunami in Japan, the automaker still hopes to start production of the Leaf on time, according to Automotive News.
Nissan’s all-electric Leaf
Nissan’s head of North American manufacturing isn’t worried—he is confident his teams will make up for the delays to the $1.6 billion electricvehicle project at the automaker’s Smyrna, Tennessee plant. “We’re still targeting to launch on time,” Bill Krueger, head of the company’s manufacturing and sup-
ply chain management, said in an interview with Automotive News. “It’s too early to give up on meeting our original timing. We have just shy of a year and a half to make it up.” Two plants in Japan are currently building the electric Nissan Leaf sedan and its battery modules in limited numbers for world markets. Nissan North America Inc. plans to begin mass producing them in Smyrna, TN, for the Americas in late 2012. “We had people over there training when the lights went out,” Krueger said. “Production didn’t happen for a month. That drove the training curve back.” Krueger had two dozen people from Smyrna at the Leaf’s Japanese production sites when the disaster brought large parts of Japan to a standstill. Also, utility problems continue to complicate business operations in some areas. Nissan is spending $1.6 billion to build a plant that will yield as many as 200,000 battery modules a year and an assembly operation inside Smyrna to
produce as many as 150,000 Leafs annually. Most of the U.S. staff in Japan is training to handle production. In addition, Japanese tooling companies are making equipment for the 2012 launch, and parts suppliers and technical staffs from Japan are following their own schedules to meet the Smyrna launch. “We’re looking at work-arounds to try to accelerate the schedule now,” Krueger said, referring to changes in the order of project tasks. “The tsunami and the destruction certainly didn’t help. But we’re going to try to make up those losses.”
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Chevy Cars Get Highest Brand Share in 20 Years, GM Says
U.S. Chevrolet car sales in the first half of the year are set to reach their highest share for the brand in 20 years, outselling trucks in June for the third straight month. Chevy cars accounted for just above 50 percent of the brand's total U.S. sales for June—the third consecutive month in the majority—and 47 percent for the first six months of 2011, said Alan Batey, vice president of sales and service for Chevrolet. He declined to disclose GM's expected total results for June, which the company reported on July 1. Through May, Chevy sold 385,257 cars and 362,443 trucks— with total brand U.S. sales rising 17 percent in an overall market that improved 14 percent. "You'll see continued strength in passenger cars, particularly in the compact and mid-car segments," Batey said. Citing gas prices that are still about $1 a gallon higher than a year ago, GM pointed out that 46 percent of Chevy's retail buyers in the first six months chose a more fuel-efficient four-cylinder engine in their vehicles, double the rate of five years ago.
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Continued from Front Page
agement module contract. “I’ve never have even had the program turned on,” the shop owner said. “They already have a year-and-ahalf of my money. I said they can keep the amount I’ve paid but just cancel it from there on. But they want it all. I know if I ran my business like that I would be out of business.”
Stuck in contract after DRP changes Steve Schaefer is only too familiar with being locked into a contract with an information provider. Schaefer is the president of Schaefer Autobody Centers, which operates six shops in the St. Louis, Missouri, area. Four years ago, he said, the company joined an insurer’s direct repair program that necessitated that he add a particular estimating system, signing a 4-year contract with that system provider for three of his shop locations. “Having been burned before, a clause was added to the agreement such that if I ever ceased to participate in that specific insurer’s DRP pro-
gram, the contract could be terminated,” Schaefer said. However, a few months later, the insurer switched to a new information provider, requiring its DRP shops to use a different system than the one the insurer had previously required. Schaefer said he was among the similarly-situated shops that asked the first information provider for some sort of release or relief from the contract for the system they no longer needed or wanted. “I was told I was bound to the full term of the contract since I was still participating in the insurer’s DRP program, despite the fact that the insurer was no longer using (that system),” Schaefer said. “I understood that they had some up-front imSteve Schaefer plementation costs that had to be covered, but a 4-year contract for a product I wasn’t using was ridiculous. Their excuse was they had stockholders to protect. My thought was: How about your customers and this industry?”
Today, almost $42,000 later, Schaefer said, he is almost done paying off that obligation. “It’s a shame when these companies don’t respond with the same reasonable ethical business practices we expect of ourselves and business partners in general,” Schaefer said.
Beware of automatic renewals Scott Johnson of Greensboro Body Company in Greensboro, NC, said shop owners should remain keenly aware of when any software contracts end. Such contracts, he said, often include automatic renewal clauses, and if you make even one payment beyond the term of the original contract, it automatically renews for another year or more. John Hackleman of Hackleman Auto Collision Repair, in Danville, Ind., concurred. He switched shop management systems last year, and told the previous system provider he no longer needed the support he was paying for every month. “I found out that although we were well beyond our original contract, it renews automatically in oneyear increments,” Hackleman said. “I
discovered this at my anniversary month but had not given them the 30days’ notice to stop as required in the contract. So I was required to pay for an additional year and was not able to change their mind.” Another Indiana shop owner, who also asked not to be identified, said he actually had some success in renegotiating a contract with an information provider. Like Schaefer, he had signed the agreement for an estimating system—even though his shop already had another one—in order to participate in a particular DRP. When he decided to part ways with that DRP, he called the information provider to say he no longer wanted that second system, only —like Johnson and Hackleman—to find out he was several months into an automatic renewal period. “The only answer I could get was, ‘Sorry about your luck,’ and information on what page in the contract that was so I could get my magnifying glass out to look at the clause,” the shop owner said. He now considers himself lucky that the information provider soon upgraded to a new system. When rep-
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resentatives of the company contacted his shop to see why it hadn’t converted over, the shop owner told them he wasn’t using it and didn’t want it. “The next day a lady called and said she could not get me out of the contract but could put me into a less expensive alternative,” the shop owner said. “I am now paying about a third of what I had been paying.” His recommendation: First thing upon signing a new contract, take the low-tech approach to knowing when you are able to get out of it. “I now have it on every calendar in the office to cancel the contract by sending them a letter 90 days, 60 days and 30 days before the end of this contract,” he said.
John Yoswick is a freelance automotive writer who has a body shop in the family in Portland, Oregon. He has been writing about the industry since 1988. He is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact John by email at jyoswick@SpiritOne.com.
Gunder’s Auto Center Alleges State Farm Altered Prevailing Rate Surveys According to the legal team for Gunder’s Auto Center in their infamous battle with State Farm Insurance, limited documentation surrendered by State Farm in response to a court’s discovery order revealed the results of the insurer’s annual labor rate surveys have been altered. While the nation’s largest private auto insurer has not provided all the information demanded in the court’s order; the information they did provide is seen by many as the preverbal “smoking gun” and a strong indicator of an even more pervasive nationwide practice. In review of surrendered documents it was found whereas response to State Farm’s labor rate survey submitted by Gunder’s Auto Center, along with other local competitors, had been altered by State Farm’s Estimatics Team Manager, Robert “Bob” Davis in an apparent effort to skew the results to best serve the insurer by lowering rates and allowances. Ray Gunder states: “I am confident this is not an isolated instance and that this is the likely the reason
they have failed to supply us all the surveys and other information as ordered by the court. For years, across the entire country, monies have been withheld from repairers under the guise of the so-called survey and “Prevailing Competitive Pricing” by State Farm and all those insurers who follow their lead. Such deceit and unethical business practices have earned State Farm many billions of dollars in unjust profits. Billions that the consumer never received benefit of through proper and thorough repairs.” As shown in the accompanying copies of Gunder’s survey and State Farm’s internal documents, Gunder’s “Repair Facility Survey” was completed and submitted on 09-29-2009. This survey shows where it lists 15 technicians and 34 work stalls. Furthermore it is asked of the repairer: “Do you use an automated paint materials rate calculator?” which Gunder’s marked “YES” and left the question: “Rate charged for paint materials” blank. As illustrated in State Farm’s internal “Repair Facility Rates” page,
dated 09-30-09 (the following day), it clearly shows whereas the results of the information submitted by Gunder’s was changed and the survey was altered to reflect that the ”shop capacity” was noted as “10” and the “use paint/mtrl rate calculator” was noted as “N” (NO). Furthermore State Farm entered a “rate charged for paint materials” of $26.00 where Gunder’s had listed none. This information also shows to have been updated by State Farm’s Bob Davis. The third and final document: State Farm’s “Market Area Information” reveals whereby 55 market area shops were surveyed representing a total “capacity” of 260 and suggests a “PCP” of $26.00 per refinish hour for materials. This report reflects that “0”, ZERO, none; not one respondent noted the “use of a paint/mtrl rate calculator usage” even though Gunder’s clearly had. This document shows “last approved by BCXO Davis, Bob”. The full text of these documents can be seen at www.autobodynews.com.
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 15
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What Makes A Dealership Selling Wholesale Parts Distinctive? I invite other parts managers to 35 miles, and a scheduled delivery What makes a dealership distinctive? and his partner customers to grow contact me, and tell me their own stoeven goes 125 miles for some very even in the hardest times. He talked to By my definition, that dealership must Automaker Actions and Announcements ries of success. Wholesale relationspecial customers. have a greater image of integrity, serv- me about his operation, and I pass with Larry Williams
with Jeremy Hayhurst along some of his ideas here. AJ has two full time parts repreice, and loyalty than their competition. They have the greatest number of regQuicker loading of his delivery sentatives, and visits his customers trucks happens with a drive-through whenever he can. ular customers, and the best word-ofAJ belongs to the California Aumouth reputation. Even their smallest system that avoids congestion. tobody Association, and attends their AJ handles all the stocking orcustomers know that their business is meetings. ders, but delegates the customer orappreciated. All of these ideas have one thing ders for better service. VW, Honda, I offer you an example, an organwith Jeremy Hayhurst in common, they all relate to customer ization that has not just survived, but and Chrysler programs assist him www.autobodynews.com service. All the dealers who failed has grown steadily based on their cus- when Insurance Company demands CHECK IT OUT! their customers, several in this area, create excessive use of non-OEM tomer service. Lasher Auto Group in parts. Hopefully other manufacturers are now closed. I believe that the conElk Grove, CA is an excellent examwill follow their lead, and also help tinuing increase in this dealers busiple of the rewards of good service. AJ their dealer body to compete. ness is due to overall attitude. Positive Killian, the parts manager, was deterattitudes will create positive results. Separate inventories, approachmined to stay active even when others If you are in the southern Sacrawere cutting back or even closing. He ing 1.5 Million, but with combined faadvertise mentoTo area, and need parts for a VW, cilities, for more efficiency. now offers eight full time delivery vecall Advertising Sales at: Dodge, Audi, Subaru, Isuzu, Suzuki, Expanding when necessary, hicles covering the greater SacraAcura, or Jeep, I wholewatching driver over-time for clues, Chrysler, mento area. 800-699-8251 heartedlye-mail: recommend Lasher Auto and always having a spare delivery This is no sudden success; it has Group. I have no doubt that you will come slowly over the last eight years. vehicle available. email@example.com be pleased with their service. Trucks routinely deliver within Steady, reliable service enabled AJ
ships, quality personnel, always striving to be better, these philosophies deserve rewards. I will be happy to add you to my list of distinctive dealerships. Give us your opinion on matters Larry Williams is a former parts manager and consultant with national awards and over 30 years of experience in creating profitable departments. He publisher@autobody can be reached at firstname.lastname@example.org.
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Erica Schroeder is a writer and editorial assistant for Autobody News in Oceanside, CA. She can be reached at firstname.lastname@example.org.
Carl Owen’s Paint and Body in Tyler, TX, Offers Top Rated Auto, RV and Truck Repair Owens Jr. currently oversees all manCarl Owen’s Paint and Body in Tyler, TX, is a family run business that has agement operations at both shops. grown into a business with two area “This business was started in shops; one specializing in auto body 1965 by Carl Owens Sr. and it was work and one inwith RV andJohn truck work. Yoswickpassed down to Carl Jr. in 1981 who still runs the business today,” said Andy Wood, Manager of Carl Owens RV and Truck Collision Center. The truck shop is a 9 acre facility and employs about 40 people. The auto shop is a 2 acre facility and emwith Ed Attanasioploys about 20 people. Between both shops the business sees around 120 cars and various trucks per month and is able to pull in $600,000 gross per RV and Truck Collision Center Manager Andy Wood month. Carl Owens Paint and Body has “We’re the biggest shop within been a family-run business for over 40 about a 100 mile radius, from Dallas years; Carl Owens the to Shreveport,” said Wood. Between withSr.Edopened Attanasio Erwin Street shop in 1965 and had all both locations Carl Owen’s is able to operations running out of one shop for service all sorts of different vehicles. decades. Carl Owens Jr. took over According to Wood both shops management in 1981 and was able to are outfitted with the latest state of the open a second location dedicated to art equipment. The truck shop has just auto repair about 5 years ago. Carl some custom equipment pieces most
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body shops would not normally see because Carl Owen’s deal with trucks, trailers, RVs and field equipment. Both shops use a laser alignment machine and 2 downdraft spray booths. The truck shop is outfitted with a 50 ton car grabber frame machine and a 35 foot, 60 foot and 65 foot truck booth. The truck equipment enables technicians to repair vehicles that most shops would be unable to work Auto Collision Center Manager with. This ranges Johnny Nipper from big rigs to trailers to tractor equipment used by area farmers. Both shops are using PPG paints for their auto and truck painting needs. The auto shop is using PPG Deltron DBC acrylic paints and the truck shop is using PPG Dell Fleet paints.
Both Carl Owens shops also offers a lifetime warranty on any of the work done at either shop. This warranty covers anything that may happen as a result of the shops work and includes any body or mechanical repair work. Technicians at both shops are also I-CAR Certified. The business offers free estimates and rental cars in order to better serve Carl Owens’ customers every need when having their car repaired at either facility. More information can be found at www.carlowenspaint.com. Carl Owens Auto Collision Center 10145 Hwy. 64 East Tyler, Texas 75707 (903)566-5300
Carl Owens RV and Truck Collision Center 2415 E. Erwin Tyler, Texas 75702 (903)597-2628
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 17
Toby Chess is an I-CAR program instructor, Welding specialist, and former salvage yard operator. Toby is universally known in the collision industry for his charitable works, worthy causes, and magic tricks. He can be reached at email@example.com
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Are Your Repair Methods Ten Years Out of Date? The other day I received a report form What was written in the introduction Aaron Schulenberg, the Executive of the study is what I and others have Director of the Society of Collision been preaching for years. Repair Specialists, about a study done “The new materials mean that in Germany on collision repairs. body shops must continuously ensure that they are conversant with the reCrash-test results and analysis of the quirements for new tools, procedures impact of a non-professional repair on and information about the repair the performancewith of the David side structure McClune of a car (VW Passat) by KTI GmbH& processes. New welding machines need to be used, training is required, Co. of Lohfelden, Germany. The study took a late model VW and OEM information has to be acPassat, with ultra high strength steel recessed to make sure that the correct reinforcements in the rocker and “B” pilpair methods will be applied. Without lar, conducted a side impact at about this knowledge it is likely that an inad30mph, detailed all the damage, and equate repair will be the result, potenrebuilt the vehicle using used parts, tially placing the car and its occupants MIG welds, and an older Squeeze at much higher risk in a later crash.” Type Resistance Welder. They did not “In parallel to the introduction of use any OEM with currentJohn replacement new Yoswick materials, single component parts data, but they utilized common acof earlier vehicles have been replaced cepted repair methods used in the colby highly integrated, multi-material lision industry. They referred to those components on more recently designed in the article as “10-year old repair cars. The production of a modern methods.” Body-in-White is characterized by
complex manufacturing processes and bonding techniques. Taken together, the technical progress made by the OEM’s has resulted in corresponding new challenges for the repair shops. Repair shops must ensure they have well trained staff and are equipped with appropriate tools to cope with the techniques needed for professional repairs on today’s cars when they are damaged in an accident. If such techniques and knowledge are not available, a nonprofessional repair may lead to a significant reduction in the safety and quality of these cars.” “Unprofessional repairs may result from of all or any of the following: ● Incorrect method and/or sequence of repair ● Poor assembly of correct/incorrect spare parts, components and sub-systems ● Fitment of low-quality spare parts, components and sub-systems
California Autobody Association
Year in Quotes
● Incorrect assembly and connection of electrical/electronic systems and sub-systems ● Absence of correct, special or custom tools ● Repair of damaged parts when actual replacement is necessary.” Let’s take a look at the study. I going to give you a condensed version for this article, but you may read the entire study at the SCRS website (www.scrs.com) or at autobodynews.com (see my column section). The following scenario, including two high-speed crash tests was carried out, and then analyzed: 1. The car was damaged by a side impact similar to an intrusion by the front of another car into the passenger side of the test vehicle, according to the side-impact tests of Euro NCAP. 2. A repair was carried out as if done in a car body shop or garage with no information about the correct way
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to repair this particular car and without the correct tools or welding machines. The repair conforms to a typical standard carried out about 10 years (two car generations) ago. This would be considered as a non-professional repair by today’s standards. 3. After the repair, this vehicle was involved in a follow-up crash simulation in the same configuration i.e., a side impact on the repaired passenger side, at the same speed. The picture below shows the set up of the side impact test.
“After the side impact the car was severely damaged on the passenger side, as intended. The sill and the floor/undercarriage behind it were particularly distorted. Additionally, the doors and the B-pillar were considerably damaged. There was no damage
to the screen pillar or windscreen glass. The pyrotechnic protection/restraint systems (Front and rear passenger side airbags, front passenger belt pre-tensioner and passenger side curtain airbag) were correctly deployed. Overall the car body structure deformed and behaved as expected. As well as the visual analysis, electronic measurement of the car body was carried out. This showed the maximum intrusion to be 161 mm.” The vehicle was repaired after the test and these were the procedures followed:”
NON-PROFESSIONAL REPAIR The damaged car was repaired with an older spot welding machine with fixed pressure and 6.4 kA maximum current. Note: It is recommended that an Inverter type welding machine is used with 10 kA maximum current and a variable pressure (maximum 10 bar) to join the high strength steel safely. The deformed inner sill, made from ultra high strength steel, was re-shaped and partially replaced on a bench then refitted using a MAG welding process. Note: The “Professional” repair would include complete renewal of the
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B-Pillar and other deformed structures with components made from high strength steel. A partial repair of such steels is not acceptable, as the structure and therefore the strength of the material will be severely degraded while welding and reforming.” “After the vehicle was repaired,
MIG Welding instead of Spot welding
Sectioning instead of full panel replacement
the vehicle was crashed again and all the noted areas in the first crash were compared with the second crash. It was immediately evident that there was a substantial difference, with far more comprehensive deformation of the car body after the second impact. The B-pillar had noticeably higher intrusion into the passenger compartment in comparison with the first crash, especially at the lower part at the connection with the sill. Note: Later measurements of the car body confirmed there was 60mm more intrusion after the second test, compared to the first crash. Other differences were noticeable at the cant rail/roof and the transmission tunnel which both displayed severe deformation not seen in the first crash. It seems that the load paths were quite different in the second crash. It was also noted that the top right corner of the windscreen was damaged in the second crash, further indication of changed load paths. These comparisons made it evident that a change of load paths and therefore of the energy dissipation was due to the unprofessional repair. The pyrotechnic protection/restraint systems See Ten Years Old?, Page 26
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Nissan Researching Solar Charging for Batteries in its All-Electric Leaf Autobody News
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Japanese automaker Nissan is testing an easier and greener way to recharge its Leaf electric vehicle by using solar power, part of a broader drive to improve electricity storage systems, the Associated Press reported. Nissan’s Leaf went on sale late last year, but the automaker is looking ahead to about five years time when aging Leaf vehicles may offer alternative business opportunities in using their lithium-ion batteries as a storage place for electricity. Nissan Motor Corp. acknowledges that, once the Leaf catches on, a flood of used batteries could result as the life span of a battery is longer than an electric vehicle’s. Electricity generation and storage are drawing attention in Japan after the March 11 earthquake and tsunami caused massive blackouts in
the country’s northeast. A nuclear power plant that went into meltdown, Fukushima Dai-ichi, after backup generators were destroyed by the tsunami, is also renewing fears about a power crunch. In the new charging system, demonstrated to reporters earlier this month, electricity is generated through 488 solar cells installed on the roof of the Nissan headquarters building in Yokohama, southwest of Tokyo. Four batteries from the Leaf had been placed in a box in a cellar-like part of the building, and store the electricity generated from the solar cells, which is enough to fully charge 1,800 Leaf vehicles a year, according to Nissan. Although interest is growing in renewable energy such as solar and
wind power, a major challenge is the storage of electricity, which remains expensive without a breakthrough in battery technology. Such interest is likely to keep growing in Japan because of fears about the safety of nuclear power. The Hamaoka nuclear plant is being shut down because of such concerns, and more may follow. Other Japanese automakers, such as Toyota Motor Corp. and Honda Motor Co., are working on similar projects, such as linking hybrids with solar-equipped homes as part of energy-efficient communities called “smart grids.” Electric vehicles produce no pollution or global-warming gases but need electricity, whose production mostly relies on polluting oil or gas. Even after a Leaf is ready to be
scrapped, its battery is likely to have 80 percent of its capacity. On the plus side, the Leaf with its high-capacity battery can store the equivalent of two days of household electricity use, Nissan said. “What’s important for Nissan is to show solutions through EVs, step by step,” said Corporate Vice President Hideaki Watanabe. A joint venture with Sumitomo Corp. called 4R Energy Corp. plans to offer eletricity storage systems like the one at Nissan headquarters for business and public facilities as a commercial product by 2016. Nissan also hopes to start selling such storage systems for regular homes by the fiscal year starting in April 2012. It will carry out field tests starting in December, 4R Energy President Takashi Sakagami said.
Vehicle owners who opt to convert vehicles to run on compressed natural gas have a new refueling option, according to the Detroit News. Michigan Consolidated Gas Co. on July 14 unveiled a new, four-pump compressed natural gas station— complete with a credit card reader for the public. It is one of 13 such stations in Michigan that are open to the public. The natural gas utility is hoping the alternative fuel’s lower emissions and lower cost per equivalent gallon of gasoline will propel more companies that use heavy vehicles such as trucks or low-gas-mileage vans to consider making the switch to compressed natural gas. “As you make it more convenient for people and there are more options for refueling, it makes it a more attractive alternative,” said John Austerberry, a spokesman for DTE Energy, the parent company of MichCon.
In 2009, MichCon was awarded $5.4 million in federal money through the nonprofit Clean Energy Coalition to boost the number of natural-gas fueling stations in Michigan and convert 173 new Ford Econoline vans to operate on natural gas. DTE Energy is investing $6.8 million toward buying the new vans and refurbishing more than 10 other natural gas stations it operates across Michigan. Jerry Norcia, MichCon president and chief operating officer, said he personally bought a Ford F-150 Harley-Davidson model this year and converted it to run on natural gas. “Especially at $1.94 a gallon (equivalent to gasoline), it makes me feel good every time I jump in that truck and drive it,” he said. The cost to convert a regular gas vehicle to natural gas, though, is a barrier that prevents some companies and others from making the switch. Conversions can range from
$11,000 to $20,000, depending on factors such as the natural gas tank size, said Ken Baranski, director of sales for Suburban Ford of Sterling Height’s fleet division. The dealership sold the vans to MichCon and contracted with National Fleet Services of Michigan for the conversions. “I’ve already saved about $1,000 in fuel,” Norcia said, after filling 2.9 gallons of compressed natural gas into his truck for $5.67. The U.S. Energy Information Administration estimated in 2009 that 645 vehicles were running on compressed natural gas in Michigan, up from 518 in 2008. The 2009 numbers are the most recent available. Nationally, more than 114,000 natural-gas powered vehicles are on U.S. roadways, according to the federal government. About 1,000 natural-gas fueling stations are available across the nation, about half of which are publicly
available, says National Gas Vehicles for America, a Washington D.C.based trade association representing the natural gas vehicle industry. Refueling infrastructure and the range of a natural-gas vehicle are among other barriers to more adoption, said Sean Reed, executive director of the Ann Arbor-based Clean Energy Coalition. Although these barriers will potentially exist for any new vehicle technology. The coalition, through its $15 million federally funded Green Fleets initiative, works with other Michigan entities to deploy clean-fueled vehicles, such as those running on natural gas and liquefied petroleum gas, and build infrastructure to support them. “If they don’t know anybody who has a vehicle like this, it makes it seem like a challenging thing to do because of the unknown,” Reed said. “When people see more of them around, it gives people a greater comfort level.”
Companies Working to Expand Natural Gas Vehicle Options
20 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
This is a new story by Scott “Gonzo” Weaver as posted on his website, www.gonzostoolbox.com. Gonzo has been serving the Tulsa area at Superior Auto Electric for over 27 years. See his book “Hey Look! I Found The Loose Nut”, which provides a Good Laugh for Mechanics of Any Age. The book is available at amazon.com. Contact Gonzo at Gonzosae@aol.com.
How to Keep Your Cool When Working With HVAC Diagnostics with Gonzo Weaver
Leave it to the manufacturers to take nitely try to use a scanner when posa simple thing like heat and air condi- sible. An interesting fact: even on tioning and turn it into an electronic jungle of wiring, sensors, and com- some of the aftermarket scanners with Richard Arnold there is a wealth of information on puter components. HVAC units have come a long HVAC systems. Before purchasing a way from when I started in the busi- scanner I would ask whether or not it ness. Not that I want to dwell on the covers HVAC units and which years, which models, and how thorough it is. past, but it might be a good idea to make sure we understand the basics The more information you can have before diving into problem of before you have to get your hands withtheEd Attanasio today’s systems. I always feel that if I dirty the better. One of the more common repairs understand a system fully before doing any repair work I’m more I’ve see on both domestic and imports is connections. The manufacturers (in likely to get it right the first time. Diagnostics procedures vary my opinion) have gone to the point of making these connection just barely from car to car and from year to year. I’m finding more andErica more Schroeder these survivable, but, not for the length of with days it’s a lot easier to diagnose the time that consumers are stretching HVAC system with a scanner rather their vehicles useable years on the than with a print and test light. With road. The other item of concern is the the advent of the electronic door motors and the crazy locations on some control sensors, i.e. high pressure senof these components I would defi- sor, low pressure sensor, sun load, etc.,
for the most part I wouldn’t drag out that test light and start stabbing the wires. They may look like a sensor, they may have wires like sensors, but there’s a good possibility that it’s not a positive or negative signal at the sensor. In some cases the sensor maybe reading a digital type signal (wave form voltage) that would be easier read on a scanner screen instead of that 12v test light. These values are then sent to the PCM to be interpreted and used to determine the actual A/C clutch engagement or door positions. There again, a scanner is the proper tool of choice, not the test light. Assuming we don’t have a component failure and that the entire problem is a connection somewhere—let’s say at the blower switch—which in some cases is also the “ON” switch for the entire system. If the plastic housing has been melted and the physical “metal” connector is skewed out of
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place chances are that no matter how much manipulating you do to “re-fit” the metal tab back into place it’s still going to end up back where it started at and your customer will be back at your door with the same problem. I would locate a replacement connector either from the dealer or the local parts store. (I’ve had next to no luck getting a connector from the salvage yards, most of the connectors that come from the salvage yard are just as bad as the one I already have in the car. But, you might get lucky.) The advantage of using a scanner to see certain sensor values and door positions also has one extra quality to the diagnostic process. Codes; codes for the HVAC system are valuable information for you as the tech. However, a code is not the answer, a code is a starting point or a direction for repair. So many times I see vehicles come in See HVAC Diagnostics, Page 28
Consumer Callout with Ed Attanasio
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 21
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.
State and Federal Governments Consider New Insurance Regulations A similar bill, which requires From California to Massachusetts, the judicial system and lawmakers are only that health insurers operate under tackling related to the auto insurance antitrust laws, passed the House durthat pays for much of the colli- ing the last Congress but was not with Edwork Attanasio sion repairers do. The federal govern- acted upon in the Senate. The Automotive Service Associment is also considering the role it ation (ASA) has supported such legisshould play in regulating insurers as lation, saying it is a step toward well. Here’s a wrap-up of some of the broader repeal of McCarran-Ferguinsurance-related news that will likely son. Meanwhile, former Illinois Insurbe of interest to with shops. Ed Attanasio ance Commissioner Michael McRaith Feds eye more insurance oversight. Federal legislation (HR 1943) started work in June as the first directhat would partially repeal the Mc- tor of the new Federal Insurance Office. McRaith previously worked in Carran-Ferguson exemption from anvarious capacities in connection with titrust regulations for insurers has the National Association of Insurance been reintroduced into Congress by Reps. Peter DeFazio (D.-OR) and Commissioners, and was an attorney in private practice for 15 years in Louise Slaughter (D.-NY). Chicago, representing insurers and “No matter what political ideology, most can agree that insurance other financial institutions. McRaith leads a new federal ofcompanies should play by the same fice with little regulatory power but rules as virtually every other industry that will report to Congress next year in America,” DeFazio said.
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the insured asks for a referral or is notified in writing of the right to use any shop. Hughes’ suit said Progressive has a company-wide practice of using “its position of power over its insured, in the form of incentives and requirements to carry out its program of steering.” Progressive argued that prior court rulings held that suits brought by private parties to enforce the insurance code are not provided for under California law. But the appellate court found that Hughes was not suing over a violation of insurance code but for violation of unfair competition law. Texas again cautions insurers. Texas, too appears to be brewing as a key battleground in the fight over steering. For the second time within a year, the Texas Department of Insurance has issued a bulletin reminding insurers that state law prohibits them from “directly or indirectly” limiting
on gaps in the existing state-based regulation of insurers. Court decision clears way for lawsuits. A California appeals court ruling in June appears to open the way for policyholders to sue insurers for violations of the state’s anti-steering regulation rather than leaving enforcement of that section of the insurance code up to the Insurance Commissioner. The appeals court reversed a lower court’s dismissal of Chris Hughes’ potential class action suit against Progressive. Hughes sued Progressive claming that the insurer didn’t tell him after a 2005 accident that he had the right to select the shop that would fix his vehicle (and he thus took it to a Progressive DRP shop and was unhappy with the work). California insurance code prohibits insurers from suggesting or requiring use of a particular shop unless
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auto insurance coverage by limiting with clean driving records in Wayne from a vehicle’s “event data recorder” tember 6. Commercial and fleet cuspolicyholders from using a shop of County (which includes Detroit) to as a condition of a policy or lease. The tomers are not eligible. MetLife has their choice. purchase reduced personal injury auto bill requires vehicle manufacturers to the option to cancel the coverage after The bulletin also states that while insurance coverage for lower rates; disclose the presence of such recorders, one year, and GM offers no discounts an insurer is not required to pay more data from the Insurance Information and designates the vehicle owner as the for those who choose to stick with to Give us your opinion on matters affecting the industry. Want to Contribute than a reasonable amount for repairs Institute indicates Detroit drivers have owner of any such data. their current insurer and opt out of the or repair parts, neither that nor policy the highest premiums in the country, Reports on insurance complaints MetLife coverage. The automaker www.autobodynews.com language suggests that the reasonable 56 percent more than second-place available. Missouri regulators have re- said it may expand the program to amount for repairsIT or OUT! parts must be New Orleans. leased the latest report on consumer other markets if successful. email@example.com publisher@au CHECK based on the amounts charged by DRP A new law in Nevada raises the complaints about auto insurers, showAlso in the Northwest, some inshops. penalties for drivers who let their in- ing complaints fell by 14 percent last surers are clearly keeping an eye on Insurance Commissioner Mike surance lapse; a single lapse of 30 year to fewer than 3,100. For a copy: the ranking they are given by shops in Promote your busines Geeslin said that despite his similar days or less carries the same $250 http://tinyurl.com/64kp2yf an annual surveys similar to one conwarning last August, his department penalty that had been in place in the And Wisconsin regulators said ducted by a number of state associaan exclusive article fe continues to receive reports of insurstate, but longer or multiple lapses can they received about 780 complaints tions around the country. Oregon your products or ser advertise ers steeringTo and limiting reimburse- raise the penalty as high for as $1,250. year, about Mutual Insurance, the 14th-largest The to source timely against auto insurersTolastadvertise call Advertising Sales at: call Joe Momber at: ment rates. Rhodeinformation Island has passed a budget that every 10 percent of all consumer complaints auto insurer in that state, is including Others states pass or consider in- bill that as of October 1 will require related to insurance. For a copy: with its policy renewal mailings to its 800-699-8251 800-699-8251 bodyvehicle shop isneeds! surance legislation. Alabama Gov. consumers whose a total http://tinyurl.com/65dt64a insureds a flier touting the “B+” grade e-mail: e-mail: Robert Bentley has signed a new law loss to pay sales tax on the full value Otherjmomber@autobodynews.com insurance-related news. it received (which tiedJoe it forMomber the high- for CALL: firstname.lastname@example.org CALLvehicle. 800-699-8251 to create by 2013 an electronic data- of a replacement SuperintenGM will include one year of free auto est grade among 21 insurers) from www.autobodynews.com www.autobodynews.com 800-699-825 base to match up cars in that state to dent of Insurance Joseph TortiFREE has is- insurance through MetLife for resi- collision shops in a survey conducted Start Your valid insurance policies; the system sued an advisory saying insurers will dents of Oregon or Washington who by the Northwest Automotive Trades Mail Subscription. will enable law enforcement officials have to include sales tax in their set- purchase a new GM vehicle by Sep- Association. and DMV officials registering vehi- tlement calculation on total losses in cles to verify proof of insurance. Of- order to fully compensate the policySee the NEW Register Your Email for Our ficials estimate that about 22 percent holder. of Alabama drivers lack car insurUnder a legislative proposal in ance. Massachusetts, insurers and lienholdA legislative proposal in Michiers could not mandate that a vehicle www.autobodynews.com at www.autobodynews.com gan would allow low-income drivers owner release of any “black box” data
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Automatic Braking, as Implemented by Volvo, Does Prevent Crashes Collision Week has reported that a new study of insurance claims data by the Highway Loss Data Institute (HLDI) finds that Volvo's City Safety collision avoidance system is working well in real world situations, and may be preventing as many as one in four lowspeed rear-end crashes that happen in everyday commuter traffic. The study found that Volvo XC60 midsize SUVs outfitted with the standard collision avoidance feature are far less likely to be involved in lowspeed crashes than comparable vehicles without the system. In fact, HLDI found that claims under property damage liability coverage were filed 27 percent less often for the XC60 than other midsize luxury SUVs. The implications for the future collision repair market could be enormous. This system is designed to avoid typical low-speed (read repairable) rear-end crashes. Each time the system successfully avoids a collision, it avoids a single crash, but as in many rear-end collisions, the system eliminates two repair jobs, and sometimes more.
City Safety, an automatic braking XC60, the only Volvo with the autosystem based on forward scanning matic braking feature in the study, laser, is designed to help a driver were lower than all other midsize luxavoid rear-ending another vehicle in ury SUVs combined, as well as other slow-moving, heavy traffic. In the Volvos, under all three types of insurevent of an impending collision, City ance coverage. Safety automatically brakes when Adrian Lund, president of traveling at speeds of about 2 to 19 HLDI, said, "The pattern of results mph. It detects and reacts to other vestrongly indicates that City Safety is hicles within 18 feet of the front preventing low-speed crashes and rebumper. If the speed difference beducing insurance costs. tween vehicles is less than 9 mph, City XC60s in the study had fewer Safety helps avoid some crashes alto- www.autobodynews.com claims, but when owners did seek gether. If the difference is between 9 payment under property damage liaCHECK IT OUT! and 19 mph, the feature may not prebility, the average claim cost of $3,058 vent the crash but will reduce the was higher than for vehicles in either severity. It's not designed to work at control group, 10 percent higher than speeds faster than 19 mph. for other midsize luxury SUVs and 27 HLDI analysts compared claim percent higher than for other Volvos. Original BMW Parts frequency and claim severity for theNorth County BMW "Although it may seem counter2010 XC60 with 2 groups: other intuitive, higher payouts for property To advertise 2009-10 midsize luxury SUVs and call damage liability Sales are a sign Advertising at: that City bmwusa.com other 2009-10 Volvo models. Re-(800) 564-8222 Safety works," says Matthew Moore, 800-699-8251 searchers examined claim frequency HLDI vice president and director of e-mail: Original BMW Parts and payouts under three types of autoNorth County the BMW study. email@example.com insurance coverage: property damage Because the feature is preventing liability, bodily injury liability, and www.autobodynews.com the kinds of fender-benders drivers get bmwusa.com (800) 564-8222 collision. into on busy roads, XC60 owners Claim frequency rates for the aren't filing as many low-cost claims www.ncountybmw.com
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(those less than $1,500) as people who drive other midsize luxury SUVs. The frequency of high-severity claims ($7,000 and higher) was about the same for the XC60 as it was for the control vehicles. City Safety has been standard on XC60s since the 2010 model year and is standard on 2011-12 S60 sedans and 2012 model S80 sedans and XC70 Give us your opinion on matters wagons. HLDI is working with several automakers to similarly evaluate the loss experience of other crash avoidance publisher@autobody systems technologies as the features make their way into more vehicles.
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Comprehensive Review of Distracted Driving Research Released The Governors Highway Safety Association (GHSA) released the first comprehensive overview summarizing distracted driving research for state officials. The report considered research from more than 350 scientific papers published between 2000 and 2011. GHSA produced the new report—Distracted Driving: What Research Shows and What States Can Do—with a grant from State Farm®. The report summarizes: what distracted driving is, how often drivers are distracted, how distraction impacts driver performance and crash risk, what countermeasures may be most effective and what states can do to reduce distracted driving. “Despite all that has been written about driver distraction, there is still a lot that we do not know,” said GHSA Executive Director Barbara Harsha, who oversaw the report’s development. “Much of the research is incomplete or contradictory. Clearly, more studies need to be done addressing both the scope of the problem and how to effectively address it.”
The report outlines the following certainties: •Distractions affect driving performance. •Drivers frequently are distracted, perhaps as much as half the time. •Drivers adapt to some extent: they pay more attention to driving and reduce their distracting activities in more risky driving situations. •Distractions are estimated to be associated with 15 to 25 percent of crashes at all levels from minor property damage to fatal injury. •Texting likely increases crash risk more than cell phone use. •Cell phone use increases crash risk. Based on the existing research, the report urges states to implement the following countermeasures: •Continue to leverage effective, lowcost roadway countermeasures such as edgeline and centerline rumble strips, which alert motorists when they are drifting out of their driving lane. •Record distracted driving in crash reports to the extent possible, to assist in evaluating distracted driving laws and programs.
•Monitor the impact of existing handheld cell phone bans prior to enacting new laws. States that have not already passed handheld bans should wait until more definitive research and data are available on these laws’ effectiveness. •Evaluate other distracted driving laws and programs. Evaluation will provide the information states need on which countermeasures are effective and which are not. The report also lists countermeasures that states should consider, such as: •Enact a texting ban for all drivers and a complete cell phone ban (both handsfree and hand-held) for novice drivers. •Enforce all existing cell phone and texting laws. •Implement distracted driving communication programs. •Help employers develop and implement distracted driving policies and programs. GHSA Executive Director Barbara Harsha stressed, “While distracted driving is an emotional issue that raises the ire of many on the road, states must take a research-based approach to addressing the problem.
Until more research is conducted, states need to proceed thoughtfully, methodically and objectively.” Harsha also noted that high visibility texting and hand-held cell phone enforcement demonstration projects in New York and Connecticut, funded by the states and the U.S. Department of Transportation and modeled after the Click It or Ticket seat belt program, are proving to be effective in helping to change motorist behavior. “Our report includes the preliminary results of these cell phone crackdowns, which have prompted dramatic declines in hand-held cell phone use and texting behind the wheel. The final results are expected shortly and should be considered as states move forward with education and enforcement initiatives.” Visit www.ghsa.org to view the full report.
One of our reporters, Ed Attanasio, recently entered his Chihuahua mix named Ratdog in the 23rd annual World’s Ugliest Dog Contest, held June 24th at the Sonoma-Marin Fair in Petaluma, California.
The first prize was $1,000, which comes with the coveted Ugly Trophy and a year-round modeling contract from House of Dog (which also To advertise comes with another $1,000!). call Advertising Sales at: Unfortunately for Ratdog, there was one800-699-8251 canine uglier than Ed’s pooch e-mail: (isn’t that always the way it happens?) a firstname.lastname@example.org dog from Sacramento, California named Yoda. Ratdog finished 2nd in www.autobodynews.com the Mutt Division, which was a nice performance by this 14-year-old deaf and toothless rescue mutt.
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Here’s the winner–a dog named Yoda from Sacramento, California. PHOTO CREDIT: Simone Alexander
ABN reporter Ed Attanasio displayed Ratdog at the 23rd annual World’s Ugliest Dog Contest on June 24th at the Sonoma-Marin Fair in Petaluma, California. PHOTO CREDIT: Simone Alexander
Pictures of Ed and his dog appeared in newspapers worldwide and were interviewed for television news organizations from the U.S., Germany, Israel, Japan and the UK, among others.
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 25
arm. This is the reason that by the year 2013, all vehicles sold in the US will have side curtain air bags. Note the great amount of damage
Continued from Page 19
Ten Years Old?
(Front and rear passenger side airbags and the front passenger belt pre-tensioner) were correctly deployed but the passenger side curtain airbag failed to operate.â€? To make clear the differences be-
Crash Test 1
Crash Test 2
Crash Test 1
tween the two tests, we compared photographs, sequences of high speed crash-movies and electronic measurement of the car body. With the help of the time analysis in the high-speed crash-movies we can for instance compare the time of highest intrusion. The analysis clearly shows higher intrusion at the same moment in time in the second crash test. Note that the side curtain de-
Crash Test 1
ployed in the first crash test, but failed in the second one. I have video showing the effectiveness of side curtains on vehicle occupant safety. In the first 2009 Prius, the side curtain was deployed and measurements of the crash dummies were taken. The result was minor injury to the front and rear pas-
Crash Test 2
sengers. In the second scenario, the side curtains was disabled and another side crash test was conducted at 35 mph. The result was horrific. The driverâ€™s head was struck by the crashing barrier, which would result in a death. The rear dummy sustained major injuries to the neck, shoulder and left
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Crash Test 2
to the rocker and B-pillar in the second crash test. This is very evident by the next set of pictures showing the damage to the passenger seat in the second
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crash test. “After removing all the seats and
As I stated in the beginning of the
Crash Test 1
Crash Test 2
necessary trim, the deformation of the transmission tunnel after the second test was clear to see. The cross-member which supported the front seat had pushed into the transmission tunnel, distorting it severely. In comparison, there were no measurable changes at the transmission tunnel during the first attempt.”
article, the complete test results can be found at the web sites. I strongly urge you (repair owners and managers) to print out the OEM’s recommended repair procedures and give them to your techs and estimators. The liability is too high not to follow OEM procedures. Think about the safety of your customers and what it may mean in a second collision.
J.D. Power Survey Ranks Ford 23rd out of 32 Auto Brands, of US Manufacturers Only Cadillac Makes the Top Ten For the first time since Ford CEO Alan Mulally took charge of the automaker, its initial quality scores have fallen below the industry average. The J.D. Power & Associates 2011 Initial Quality Rankings put Ford in 23rd place among 32 auto brands ranked by consumers. Ford fell 18 spots from #5 last year, with the latest survey showing Ford registering 116 problems per 100 cars. The industry average (107 problems per 100 vehicles) improved slightly from last year’s IQS rankings with Lexus topping the list this year with 73 problems per 100. The top 10 in the J.D. Power IQS Rankings. #1 Lexus, #2 Honda, #3 Acura, #4 Mercedes-Benz, #5 Mazda, #6 Porsche, #7 Toyota, #8 Infiniti, #9 Cadillac, #10 GMC The other American brands all came in below the industry average. #14 Chevrolet, #16 Chrysler, #17 Lincoln, #20 Buick, #22 Ram, #23 Ford, #32 Dodge With Ford, car and truck buyers have been complaining of technical and electronic features not working as
they should. In January, Consumer Reports called the new MyFord and MyLincoln Touch systems a distraction, summarizing the frustration some new Ford buyers are feeling. There have been reports of Ford buyers complaining the system struggles to respond to voice commands or that it’s simply too confusing. For Ford, this latest ranking shows the downside of trying to ride the tech advantage it’s had for last couple of years with the Sync system. Sync was a game changer that not only helped drive sales with higher transaction prices, it changed the image of Ford. MyFord Touch was supposed to be the next generation that would extend Fords lead when it comes to incar technology and communications. Overall, Ford is still doing very well, and the quality of its new cars and trucks are much better than a few years ago.
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This article first appeared in the I-CAR Advantage Online, which is published and distributed free of charge. I-CAR, the Inter-Industry Conference on Auto Collision Repair, is a not-for-profit international training organization that researches and develops quality technical education programs related to collision repair. To learn more about I-CAR, and to subscribe to the free publication, visit http://www.i-car.com.
Thin-Film Technology Comes to Collision Repair If you were asked for a short descrippolymer resin-based, and a solventtion for anti-corrosion compound, the based cleaner. material that is sprayed onto the backside of panels and inside rails after re- Thin-Film Anti-Corrosion Compound pairs, it is likely that “thin film” and Most anti-corrosion compounds are “fine mist” would not be included in wax-based, and even though applied the wording. However, that is exactly as a fog spray, can quickly build up a the description given to a new type of heavy coating with the consistency of anti-corrosion compound now availhoney. The thin-film technology prodable that uses what is collectively ucts start out thin, and the resulting Lee Amaradio Jr. is thin. This allows the matecalled thin-film with technology. coating Thin-film technology products rial to not only coat the interior surare polymer resin-based, anything faces, but also wick out between the more descriptive than that is propri- welded flanges from the inside. There etary. They're a completely aerosol is a dedicated wand that fits onto the system being distributed by at least aerosol spray can nozzle with a 360° fan pattern tip on the other end (see Figure 2). Like other anti-corrosion compound systems, the wand is for inserting into existing holes or into rails to apply the material onto areas that cannot be easily reached.
the thin film penetrates between the flanges from the outside, wicking around the welds to replace the weld-
Amaradio Explains CRA
Figure 1 - The thin-film technology corrosion protection products are all aerosol
two product makers, Bonding Solutions with their Like90 Corrosion ProFigure 2 - The dedicated spray wand for the tection System, and Sherwin Williams anti-corrosion compound is stiff, but flexible to with their Shield Corrosion Protection allow a 360° spray pattern to reach all areas System (see Figure 1). of a cavity The two systems actually come from the same source that has its oriThe thin-film nature of the matewith industry. Dan Espersen gins in the aerospace The rial, combined with its creeping capasame material that's being recom- bility, allows applying it to joint edges mended for spraying inside rails and after welding. On panel applications panel cavities has been used for years where there are no cavities, such as a on aluminum welds and sealing welded radiator core support, the same joints on aircraft. Besides an anti-corcavity compound can be applied to the rosion compound, the line also in- outside of the joints (see Figure 3). cludes a weld-through primer, also Just like it does from the inside,
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If the car was at an idle the A/C The Right doing. Cause was off, rev the engine just slightly
Continued from Page 21
HVAC Diagnostics with Mike Causey and the compressor would turn on and
with new parts bolted in because the last place that had it read a code and assumed that meant replace the part. A perfect example of this was a 2002 VW Beetle that came in with a brand new compressor and fan controller on it. There was a code stored for poor compressor performance at idle, which was exactly what it was
work perfectly. Bring it back to an idle and the compressor would shut back off. Checking into it a little further, I found the real culprit to be the charging system. At an idle the alternator couldn’t develop enough output to maintain all the systems in the car. The PCM would shut down the A/C trying to maintain a voltage level that was ac-
Figure 3 - On welded joints, the anti-corrosion compound can be sprayed on the outside of the joint after welding to allow it to wick into the joint
through primer that burned away. Excess material is cleaned off with the solvent-based remover, since it is not a good base for painting. There are two anti-corrosion compounds in each system. With the Shield system, there is a clear and a black compound, both identical except for the color. With the Like90 system, there's a dry film compound for sealing the joints after welding. The compound for cavity protection is a wet film that's self healing, similar to conventional anti-corrosion compounds. Product specialists say it’s perfectly OK to apply more coats of the cavity compound inside cavities, and even apply another brand of conventional wax-based anti-corrosion compound over the thin-film technology product, but it's not necessary. Weldable Weld-Through Primer The thin-film technology weldthrough primer differs from other weld-through primers available in that it is not zinc- or copper-based, so it’s ceptable but never got to the point of causing the charge indicator to come on during this whole process (Cars are getting too smart these days). The best thing I can tell you about diagnosing HVAC systems is to consider the year and make of the car, find out whether or not a scanner can code, read values, and or give you some information on the condition of the components before you start changing things. If there isn’t an access by way of a scanner, then I would suggest a
Automaker Actions and Announcements
28 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
with Janet Chaney
not conductive. This allows the thinfilm technology weld-through primer to be welded through. Our experience showed no problems with porosity when welding GMA (MIG) plug welds without cleaning the material. The instructions say to apply a very light coating on both mating surfaces and wait ten minutes before welding. The primer is still tacky at that point. Any weld-through primer on surfaces that will be refinished is cleaned off with the solvent remover. Future Collision Repair Applications Thin-film technology is also being considered for spraybooth masking and liquid masking applications. Liquid masking was actually the first collision repair application for the technology some years ago. The new plans are to improve that product. The product makers are also showcasing the benefits of thinfilm technology to vehicle makers, though there are no specific recommendations or endorsements as of yet. Thin-film technology products are one of the new offerings for automotive corrosion protection. The polymer resin-based aerosols are being offered as a thin anti-corrosion compound and weld-through primer with some unique qualities. To learn more about different types of corrosion protection materials, repair considerations, and manufacturer processes attend I-CAR’s instructor-led (live) Corrosion Protection (CPS01) course. For information about the Advantage Online, please contact I-CAR at email@example.com. wiring diagram and a description page that will inform you of how each component works in that given system. If you keep your cool I’m sure you can get it diagnosed and repaired before your customer gets too hot.
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Devil in the Details: Measuring Metrics Properly by Greg Horn, VP Industry Relations, Mitchell International
The Q2 2011 Mitchell Industry Trends Report (ITR) contained a feature I wrote about how repairable estimates can best be executed, “Are You Measuring Your Auto Insurance Claims Metrics Properly?” I argued (persuasively, I hope) that defined metrics and a clear plan can help make your business great, achieving measurably better auto insurance claims processing outcomes in the process. The key is to understand who your competitors are and if you can replicate their performance. Only then can you have an achievable performance improvement goal that allows you to focus on the person, part and process that can be improved. Determining what is great estimating performance, and whether this great performance can be replicated, requires a large sample size to allow for a statistically significant evaluation. In addition, the ability to drill down and segregate vehicles by type, age and country of origin as well as
factoring in the geography of the repair estimates are all necessary in order to truly have an accurate comparison. Comparing your performance against the industry average by identifying the best performers isn’t a simple, mindless process, and nor is analyzing the data and setting performance benchmarks. Adding to the complexity is the constantly changing mix of vehicles coming through the repair process. As an example of how specific metrics need to be in order to be meaningful, consider this—there can be more than an hour difference in labor time in Removing and Replacing a used bumper assembly vs. overhauling an existing damaged bumper system. That hour difference can be important in an area with extremely high labor rates. To measure metrics properly, looking at the distribution of the claims by inspection type (sometimes called appraisal channel) can help you let the data help your business. It is quite revealing in terms of
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distribution of claims severity. Removing the lower dollar estimates alters the overall average paid severity (not sending independent appraisers out on small hits and relying on claimants to fax in estimates for example), reducing repair vs. replace, paint hours metrics and part use when comparing estimates to appraisal channels that routinely see those smaller hits. Similarly, Direct Repair average paid severity is actually a measure of the completed repair orders and not the average of an appraisal written by a staff appraiser. Why is that? Because some claimants will make a claim and not repair the vehicle, so any hidden damage or price changes would not be reflected in these appraisal totals. Again, no easy task to ensure the data is as close as possible for comparison, and next up is measurement scale: do you want to measure your company performance against the average or the best in class? Both are advisable; measuring merely against the industry average only provides a comparison to the middle, and not the best that can be achieved. Rather, you need to find where the best performers are in your given data subsets, those in the 75th percentile and above. Establishing a bestin-class goal that is achievable because it considers the types of businesses (standard vs. non-standard insurer, vehicle mix, etc.) you are indicating are your closest competitors along with other factors, such as geography, is a worthy goal – one that will help you meet your particular performance goals. All the data means something. The key is identifying what the data means to your business performance. And this brings us to the importance of understanding what to measure. Many industry measurements and metrics are somewhat flawed, and need to be revisited, or refined with a second measurement, in the name of proper measurement and dependable metrics. In addition, many best-inclass metrics are a moving target. There are multiple factors in flux that keep the definition of best performance ever-changing: Americans are moving towards smaller and more fuel-efficient cars, so the repair vs. replacement of panels performance metric will change. Smaller cars, thinner gauge metals, changing metallurgy,
and the low cost of alternate parts will reduce repair opportunities. On the topic of changing metrics, currently we see OEMs and their price-matching programs having an interesting impact on market share assessments. OEMs’ price-matching programs help them sell more parts. But lowered OEM parts prices make it look as though OEMs are losing market share to aftermarket and used parts, at a faster rate than measuring the number of OEM parts specified on the average repair. In fact, today the percentage of alternate parts use on estimates is overstated when using the industry standard metric of ‘percentage of parts dollars’. When measuring the number of parts by part type, we see that used parts have remained fairly steady at a little under 1 part per estimate, and aftermarket parts at bit over 1 part per estimate. Looking at parts use in this way gives us another important measure of parts performance and provides better visibility into the performance metrics that matter to your business. The industry needs more complete picture of parts use. I suggest keeping the existing metric and industry standard and then for true insight, add the number of parts on the estimate by parts type. This approach does go against the prevailing wisdom, but understanding the real metric here is important—because by supplying the majority of parts on a Repair Order, the OEMs are the pivotal parties of cycle time, and shops need to maintain good communication with all of their parts vendors and understand what is in stock and when the delivery will be made. Starting in the third quarter of 2011, the next Mitchell Industry Trends Report will include this new metric, in a bid to help tame the devil in the details and help the industry measure metrics properly. Statements and opinions expressed in this article are solely those of the author. They are not offered as and do not constitute legal advice or opinion of Mitchell International, Inc.
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Hands Repair Network that the company says are designed to positively impact customer service and cycle time. The announcement comes in the form of a video released by the company featuring Tracy Tramm, Allstate Claim Service Manager for the Good Hands® Repair Network. In the video directed at the DRP
shops, Tramm says “As you know, reducing auto cycle time is a key component in improving customer satisfaction for Allstate and your facility... as you continue to deliver priority service to our mutual customers. “It goes without saying, that the quicker you reach out to the customer, the sooner they know, they’re in our good hands. I also want to remind you of four key messages and process changes to the network program in early 2011.
“Compliance with these items remains a core requirement for your participation in Allstate’s direct repair program. “First and foremost, your shop will give priority service to Allstate customers having their vehicles repaired by you. Estimates must be completed and uploaded within 24 hours of your receipt of the vehicle. Third, your facility will be required to commit to a guaranteed completion date for all vehicles repaired under the Network program. Your shop will be
Allstate Shakes Up President’s Position, Shares Drop on the News Joseph P. Lacher Jr., president of Allstate Protection, is leaving effective immediately, Allstate Corp. announced July 18. Shares dropped significantly (@5%) on the news. Various presidents as well as claims and product operations executives of the various Allstate Protection units will report directly to Thomas J. Wilson, Allstate’s chief executive. Lacher, who led all of Allstate’s property and casualty offerings as president of Allstate Protection, no longer appears on a list of executives on Allstate’s website. Lacher joined Allstate
in November 2009 after having worked at Travelers for more than a decade, eventually becoming chief executive officer of Personal Insurance and executive vice president at the competing insurance firm. At Allstate, Lacher succeeded George Ruebenson, an executive who retired after almost 40 years. Last month, at an investor conference, Lacher outlined a business plan to grow Allstate’s P&C segments with a new distribution model. The National Association of Professional Allstate Agents did not look upon the plan favorably.
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Lacher told investors Allstate will be increasing homeowners’ rates and tightening underwriting standards in an effort to achieve a combine ratio in the low 60s, excluding catastrophes, by 2013. In auto, Lacher said Allstate is primarily concentrating on New York and Florida, which account for 20 percent of the carrier’s business. Allstate plans to buy online auto insurer Esurance and independent insurance agency Answer Financial from White Mountains Insurance Group Ltd. for about $1 billion. The transaction is supposed to close this fall.
responsible for any and all costs caused by a failure to meet the guaranteed completion date. And finally, at the customer’s reasonable request, your shop will provide extended hours of operation. Contact your local performance manager to answer questions. You are why it works. Thank you.” The video can be viewed at www.autobodynews.com by searching this story under the “Insurer Actions and Announcements” section.
Fiat, Chrysler to Unite Management
Chrysler Group will have a single management structure soon, Sergio Marchionne, CEO of both companies, said July 13, as he takes another step toward merging the two automakers. Marchionne plans to announce a unified structure “in terms of leadership pretty quickly,” the executive told Automotive News reporters. Marchionne plans to merge the carmakers to reduce costs and achieve a target of more than $140 billion in combined revenue by 2014. Fiat consolidated Chrysler's financial results starting at the end of May, a sign of the rapid integration of the two automakers since the U.S. manufacturer exited bankruptcy in June 2009.
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Groupon Offers First New Car Deal With Detroit Auto Dealership Groupon Inc offered its first car coupon on July 12, a sign the largest online daily deal company is expanding into bigger-ticket items, according to reports made by Reuters. Groupon offered a $199 deal good for $500 off the purchase or lease of a new or pre-owned vehicle at LaFontaine Auto dealership in Detroit. Unfortunately for the companies involved, only four consumers agreed to pay $200 for the $500 discount voucher. Groupon and LaFontaine had set 10 as the minimum required for the vouchers to be issued. In an effort to turn things around, the dealership and Groupon extended the offer from the original two days to four and considered lowering the number of consumers needed. But the lukewarm response showed that the online coupon craze isn’t a natural fit with auto retailing. Groupon, the group-oriented coupon site that specializes in daily deals, has more than 80 million members, usually offers discounts on
smaller items—such as restaurants and spa visits. The company typically takes 50 percent of revenue generated by deals. Branching out into bigger purchases means that 50 percent cut will be bigger in dollar terms. “The prospect of opening up markets like new cars and leases is attractive,” said Ben Edelman, an associate professor at Harvard Business School who has been critical of Groupon. “To the extent they can still take 50 percent revenue share that’s more money.” Groupon has done some other big-ticket deals recently, such as $500 off closing costs for real estate purchases, Edelman noted. The car offering may be more problematic, he added. “This voucher is for a very small portion of the cost of a car or lease, so it’s basically an agreement to buy or lease a car from LaFontaine,” Edelman said. “That’s poor negotiating because the dealer could take advantage of that by offering the same car for more money.”
In many Groupon offers, like restaurants and spas, prices are posted already, so customers know what they are getting, Edelman noted. In the case of the car voucher, it may not be clear what the discount will be applied to, he explained. “They need to fix that before this part of the model can take off,” Edelman said. Groupon filed to sell shares to the public last month, saying it hoped to raise at least $750 million. The company has been called into question by critics who say its business—essentially a coupon service—can be easily replicated both by startups and existing Web powerhouses. Google Inc has already begun such a service and Amazon.com Inc started a similar effort called AmazonLocal this month. The company has also garnered a lot of criticism for the percentage of profits they take from a businesses’ sales made through deals on their website.
Hyundai and Kia Both Raise 2011 Sales Forecasts
Hyundai Motor Co. raised its 2011 U.S. sales forecast to 624,000 units, representing a 16 percent gain from last year, the Korean automaker said June 30. Last year, the Hyundai brand's U.S. sales rose 24 percent to a record 538,228. Sales through May are up 29 percent to 263,588 vehicles. Reuters reported June 29 that Kia Motors Corp. also hiked its 2011 U.S. sales forecast to 433,000 units. That would be a 21.5 percent increase from the 356,268 vehicles the brand sold in the United States last year. Through May, Kia's sales are up 45 percent to 200,060 units from the year-ago period. Hyundai credited robust demand for current and upcoming vehicles for the higher sales target. Recent vehicle debuts include the redesigned Elantra compact, the 2012 Accent subcompact and a freshened 2012 Genesis luxury sedan. The new 2012 Veloster sports coupe and an updated Equus full-sized luxury car will debut by year end. In January, Hyundai Motor America said production constraints would limit U.S. sales to around 600,000.
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