Western Edition California Nevada Arizona
VOL. 28 ISSUE 10 OCTOBER 2010
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● Run California’s largest consumer protection agency ● Oversee more than 1,500 insurers with 300,000 workers ● Control a tenth of our largest state’s economy
● Manage 1300 employees with a $200 million budget ● Field 300,000 consumer assistance calls annually ● Handle more than 35,000 consumer complaints ● Issue 170,000 agents and brokers licenses ● Investigate 24,000 suspected fraudulent referrals ● Initiate about 1,000 arrests annually ● Recover more than $48 million per year for consumers
FULL TIME POSITION, LONG HOURS—
● Requires election by voters of California ● Need to know about insurance and collision repair
Who is Assemblyman DAVE JONES and why does he want to be California’s next Insurance Commissioner? INTERVIEW by Ed Attanasio
INSIDE THIS ISSUE
see page 18 for interview
The Collision associations ask the Governor for a veto on two bills: CRA on SB 427 (Crash Parts bill redefines Aftermarket parts)
CAA on AB 519 (Unscrupulous towing)
A Profile of the Evolving Collision Repair Marketplace
CAA opposes Proposed Sales Tax on Services
A Preview of the Keynote Address at NACE/CARS
Change Service Requested
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2 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
REGIONAL AIAM Supports CA Brake Pad Bill . . . . . . . . . . . . 4
AZ’s Sun Devil Opens New Location . . . . . . . . . . 7
CA AG Files Charges Against Recycling Firm . . . . 8 CA Approves ERI’s Glass Recycling System . . . . 4 CA Company Targets Hawaii for Electric Cars. . . . 4 CA DUI and Motorcycle Fatalities Decline . . . . . . . 8
CA Extends Carpool Lane for Fuel-Efficient. . . . . . 7 CA Legislature Sends Smog Check Bill to Gov. . . . 4
CA Tire Pressure Regulation Approved . . . . . . . . . 4 CAA Asks Governor to Veto SB 519 . . . . . . . . . . . 3 CAA Santa Clara Hosts Annual Trade Faire . . . . . 29
CAA Writes to Gov. to Oppose Sales Tax . . . . . . 13 CRA Calls on Gov. to Veto SB 427 . . . . . . . . . . . 42 Completes Plus Opens New Main Warehouse . . 47 Pasadena/Glendale CAA Meeting Gets Heated . . 20 Mercedes-Benz Hiring Plans for Alabama Plant . . 4 OSHA Penalizes AL Parts Manufacturer . . . . . . . . 7 Sonic Auto Opens Buick and GMC shop in AL . . . 5 TN Offers $2,500 Tax Break on Electric Cars . . . . 5 Toyota Settles In Case Over Family Deaths . . . . . 6 Sonic Auto Opens Buick and GMC shop in AL . . . 5 COLUMNS Autoland: Mobile Airbag Co. Relies on Scanners 30 Amaradio - Aftermarket Parts, the Same? . . . . . 55 Chess - Porsche Collision Certification Program. 46 Evans - Finishing the Red Mist Car . . . . . . . . . . 57 Franklin - A Person-to-Person Approach. . . . . . . 26 Gonzo - It Can Still Be A Small World . . . . . . . . 34
Mattei: Over Seventy-five Years of Leadership . . 14 Schroeder - Elite Auto Collision . . . . . . . . . . . . . 16 Williams - Management Training Series . . . . . . . 24
Yoswick - Automaker Announcements . . . . . . . . 54
NATIONAL 2010 Kia Soul and 2011 Sorento Recalled . . . . . 55 A Profile of the Evolving Collision Repair Market . 37 Ameriprise Fined $71K For Discount DRP . . . . . 20
ASRW Says 2011 Event Remains in October . . . 20 August Sales Down vs. C4C . . . . . . . . . . . . . . . 35
CARSTAR Calls for Nationwide Recall System . . 44 CARSTAR Media Conference . . . . . . . . . . . . . . 44
CARSTAR Recognizes its Four Top Stores . . . . . 44 CDC Study Finds Annual Crashes Cost $99B . . . 52 Denny Hecker Pleads Guilty . . . . . . . . . . . . . . . . 56 EPA Postpones Final Decision on Smog Rule . . . 41 Federal Fuel Economy Labels to Come Shortly . . . 7 Jeep Grand Cherokee Being Probed . . . . . . . . . 21 Marchionne Targets Chrysler IPO in Q2 of 2011 . 27 NACE/CARS Offers Array of Speakers . . . . . . . . 12 Progressive’s Round Two Against Coccaro . . . . . 8 TX-Based Service King Plans Expansion . . . . . . 35 Volkswagen Predicts EV 500 Mile Range . . . . . . 34 Volkswagen Predicts EV 500 Mile Range . . . . . . 17 www.autobodynews.com California Insurance Commissioner . . . . . . . . . . . . Lots more News . . . . . . . . . . . . . . . . . . . . . . . . . .
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AEGIS Tools Intl. . . . . . . . . . . . . . . . . . . .48 Audi Wholesale Parts Dealers . . . . . . . .60 Auto Body Guru . . . . . . . . . . . . . . . . . . .17 Autoland Scientech . . . . . . . . . . . . . . . .31 Automotive Equipment Solutions . . . . .40 Automotive ID . . . . . . . . . . . . . . . . . . . . .42 B & B Equipment . . . . . . . . . . . . . . . . . .16 BMW of Riverside . . . . . . . . . . . . . . . . . .52 BMW Wholesale Parts Dealers . . . . . . .43 British Motor Car Distributors . . . . . . . . . .4 Buerge Chrysler-Jeep-Dodge . . . . . . . .13 Chassis Liner . . . . . . . . . . . . . . . . . . . . .37 Classifieds . . . . . . . . . . . . . . . . . . . . . . .63 Completes Plus . . . . . . . . . . . . . . . . . . .47 Crevier BMW . . . . . . . . . . . . . . . . . . . . .51 Downtown Motors of LA (Audi, VW, Porsche) . . . . . . . . . . . . . .50 DuPont . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Enterprise Rent-A-Car . . . . . . . . . . . . . .55 Ford Wholesale Parts Dealers AZ, CA, & NV . . . . . . . . . . . . . . . . . . .19 Galpin Motors . . . . . . . . . . . .27, 32-33, 39 Garmat USA . . . . . . . . . . . . . . . . . . . . . . .8 Global Finishing Solutions . . . . . . . . . . .23 GM Wholesale Parts Dealers . . . . . . . . .56 Harbor Hyundai . . . . . . . . . . . . . . . . . . .22 Honda/Acura Wholesale Parts Dealers .60 Hyundai Wholesale Parts Dealers . . . . .58 Kia Motors Wholesale Parts Dealers . . . .45 LKQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Malco . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
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Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Mattei . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Mazda Wholesale Parts Dealers . . . . . .62 Mitchell International . . . . . . . . . . . . .10-11 Mitsubishi Wholesale Parts Dealers . . . .62 MOPAR Wholesale Parts Dealers . . . . .15 Nissan/Infiniti Wholesale Parts Dealers . . .59 Pacific BMW . . . . . . . . . . . . . . . . . . . . . .54 Performance Radiator . . . . . . . . . . . . . .35 Perry Mazda-Ford . . . . . . . . . . . . . . . . . .28 Power Chrysler-Jeep-Dodge . . . . . . . . . .9 PPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Pro-Spray . . . . . . . . . . . . . . . . . . . . . . . .21 RBL Products . . . . . . . . . . . . . . . . . . . . .38 Replica Plastics . . . . . . . . . . . . . . . . . . .35 Riverside Metro VW-Honda-HyundaiNissan-Mazda . . . . . . . . . . . . . . . . . .20 Robotic Glass Removal . . . . . . . . . . . . .24 SATA . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Scorpion . . . . . . . . . . . . . . . . . . . . . . . . . .6 SCA Appraisal Company . . . . . . . . . . . .46 Sierra Chevrolet-Honda-Mazda-Subaru 36 Spray Net Spray Booths . . . . . . . . . . . .12 Subaru Wholesale Parts Dealers . . . . . .41 Timmons VW-Subaru . . . . . . . . . . . . . . .53 VIM Tools . . . . . . . . . . . . . . . . . . . . . . . .57 Volkswagen Wholesale Parts Dealers . . . .61 Volvo Crash Wholesale Dealers . . . . . . .44 Walcom . . . . . . . . . . . . . . . . . . . . . . . . .49 Weatherford BMW . . . . . . . . . . . . . . . . .25
CAA Asks Governor to Veto SB 519 RE: AB 519 (Solorio)-VETO
Dear Governor Schwarzenegger: On behalf of the California Autobody Association (“CAA”), we are writing to request that you veto AB 519 (Solorio). The CAA is a non-profit statewide association comprised of over 1,000 individual and independent repair businesses within the collision repair industry. AB 519 (Solorio) is intended to regulate unscrupulous towing operators. The CAA has no issue with regulating the towing industry. However, the language in the bill is written in such a way that the burdensome towing notice and invoice regulations will also apply to auto body shops that charge for sublet towing. AB 519 creates unnecessary and burdensome paperwork requirements on auto body shops that do not perform towing, such as: * Requiring shops to have and provide customers with copies of Towing Fees and Access Notice to consumers; * Restricting business hours to Monday through Friday from 8:00 am to 5:00 pm. * Requiring auto body shops to maintain and provide a carrier identification number if they charge for sublet towing; * Providing details of towing service
dispatch time, the service arrival time of the tow truck, and the service completion time; * Requiring shops to explain any additional services that caused the total towing-related service time to exceed one hour between dispatch time and service completion; * Providing details of towing gate fees, the date and time the vehicle was either accessed for the purpose of returning personal property or was released after normal business hours; * Failing to comply with any of these new requirements subjects the auto body shop to new civil and criminal penalties. Auto body shops are regulated by the Bureau of Automotive Repair (BAR) and already required to provide itemization of sublet repairs and towing. More importantly, the invoice requirements of the bill are inconsistent with current BAR laws and regulations, which will create numerous problems for auto repair shops as well as BAR enforcement personnel. Finally, requiring auto body repair shops to provide additional paperwork for sublet towing is unnecessarily burdensome and would increase expenses that could be passed on, with no additional benefit to the consumer. We request that you veto AB 519.
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 3
CA Tire Pressure Regulation Approved The California Tire Pressure Regulation final rules package submitted by the California Air Resources Board (ARB) was recently approved by the Office of Administrative Law (OAL). In addition, the petition for an early effective date of Sept. 1, 2010, was granted. California law now requires all automotive service providers performing automotive maintenance or repair services in the state (including public fleet repair facilities) to properly check and inflate the tires of the light vehicles they are repairing. The purpose of the “Regulation to Reduce Greenhouse Gas Emissions from Vehicles Operating with Underinflated Tires” is to reduce greenhouse gas emissions from vehicles operating with underinflated tires by inflating them to the recommended tire pressure rating. The regulation applies to all automotive service providers performing or offering to perform automotive maintenance or repair services in California. The regulation, which went into effect Sept. 1, details a list of requirements and compliance deadlines to which automotive service providers must adhere.
CA Legislature Sends Smog Check Bill to Gov.
The California State Assembly has agreed to state senate amendments to California Act 787, the “Smog Check: Vehicle Repair and Assistance Program.” The amendments change the requirement to pay the owner of a vehicle that has failed its most recent smog check inspection a minimum amount of money for the retirement of his vehicle. It would also make the repair assistance program available only to specified lowincome individuals. The bill was originally introduced by Assemblyman Jerry Hill and is now awaiting a signature from the governor. The existing law currently provides $1,500 to a vehicle owner with a low-income background who retires his vehicle and $1,000 to all other vehicle owners. It also authorizes additional payments above these amounts based on specified criteria. The new bill would require the department to permit vehicle retirement for any motor vehicle that has been continuously registered in the state for at least two years prior to vehicle retirement and that fails any type of legally required smog check inspection lawfully performed in the state. To view the legislation, visit www.TakingTheHill.com.
All automotive service providers in the state must meet the following requirements:
-Check and inflate each vehicle’s tires to the recommended tire pressure rating with air or nitrogen, as appropriate, at the time of performing any automotive maintenance or repair service; -Indicate on the vehicle service invoice that a tire inflation service was completed and the tire pressure measurements after the services were performed; -Perform the tire pressure service using a tire pressure gauge with a total permissible error no greater than ± 2 pounds per square inch (psi); -Have access to a Tire Inflation Reference that is current within three years of publication; and -Keep a copy of the vehicle service invoice for a minimum of three years, and make the vehicle service invoice available to the ARB or its authorized representative upon request. To view the full text of the requirements and compliance deadlines, along with the full text of the adopted regulations and materials approved by the OAL, visit ASA’s legislative website at www.TakingTheHill.com.
AIAM Supports CA Brake Pad Bill
The Association of International Automobile Manufacturers, Inc. (AIAM) supports passage of a bill by the California legislature to reduce copper dust from vehicle brake pads that can wash into urban watersheds. AIAM members worked closely with California lawmakers, industry organizations, municipal water agencies and environmental groups on SB 346 to find an approach to brake pad reformulation that protects the environment without compromising public safety. “We believe SB 346 provides a balanced approach to achieving California’s environmental goals while maintaining vehicle brake safety,” said Michael J. Stanton, president and CEO of AIAM. “Brake dust” can contain copper and other materials and is created by friction when the brakes are applied. SB 346, authored by Senator Christine Kehoe (D-San Diego), sets limits on the amount of copper used in brake pads starting in 2021. By 2025 there will be a virtual ban of the mineral. Owners of vehicles designed with brake pads containing copper will have access to replacement parts for the life of their cars.
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CA Company Targets Hawaii for Electric Cars
A small automaker based in Southern California is the latest company to announce plans to sell electric vehicles in Hawaii according to reports made by the Honolulu Star-Adviser. Privately-held Coda Automotive said it expects to deliver its first sedan in the third quarter of next year. The company did not disclose a price for the Coda, which is similar to the electric Nissan Leaf in terms of size, range and performance. The Coda’s Lithium-ion battery pack will produce 33.8 kilowatt hours of energy that will the car a range of 90 to 120 miles and a top speed of 80 miles per hour, the company said. “Coda Automotive’s all-electric vehicle is another important addition to Hawaii’s efforts to transition to a clean energy economy,” Gov. Linda Lingle said in a statement. “The state of Hawaii recognizes new electric vehicle technology and the electrification of the transportation sector will play a critical role in helping Hawaii reduce its dependency on the use of fossil fuels and achieving our 70 percent clean energy goall by 2030,” she said. The first electric car in Hawaii will be the Nissan Leaf in January.
CA Approves ERI’s Glass Recycling System
Electronic Recyclers International (ERI), based in Fresno, Calif., has received approval from the state of California to use technology to recycle glass from old televisions, computer monitors and cathode ray tubes. In a statement, ERI says the company is the first North American company to use the cleaning glass technology, which was developed in Europe. It is already in place at ERI’s Fresno location and is being installed at other ERI locations, according to the company. “We’re very excited to be implementing a recycling solution technology for glass right here on site,” says John Shegerian, ERI chairman and CEO, in the release. He adds, “For too long glass has been a challenging part of the electronic recycling puzzle for many, and we are proud to offer our industry a solution that is clean, efficient and fast.” The company says it received the rights to use the technology in the US after researching and evaluating its success in European countries. More information on ERI is available at www.electronicrecyclers.com.
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 5
Toyota Settles In Case Over Family Deaths Related to Unintended Acceleration
Toyota has reached an out-of-court settlement with relatives of the Saylor family who were killed when the Lexus sedan they were driving sped out of control and crashed, , according to reports made by the New York Times and the Los Angeles Times. Investigators attributed the accident to a mismatched floormat, which trapped the accelerator pedal, and put an international spotlight on the sudden acceleration concerns that later prompted the automaker to recall millions of vehicles. Toyota confirmed the settlement September 18 in a statement but did not provide the amount involved or any other details. “Through mutual respect and cooperation we were able to resolve this matter without the need for litigation,” the statement said. The crash, which happened in August 2009 in Santee, CA, was dramatically documentend with cell phone evidence that drew international attention. A backseat passenger called 911 to say that the driver, an off-duty California Highway Patrol officer named Mark Saylor, was unable to stop the 2009 Lexus E350, which went as fast as 120 miles per hour on a freeway before hitting another vehicle, going airborn and landing in a fiery crash in a ravine. Mark Saylor, 45; his wife, Cleofe, 45; and their 13-year-old daughter Mahala died, along with Cleofe Saylor’s brother, Chris Lastrella, 39. It was Lastrella who told the 911 operator that the car’s pedal was stuck and ended the call by saying, “Hold on and pray.” The car was on loan from the nearby Bob Baker Lexus dealership while Saylor’s car was being repaired. The settlement has left out co-defendant Bob Baker Lexus, a move by the automaker that could set the stage for a potentially damaging fight with its own dealers over who is to blame for sudden acceleration incidents. “Toyota has sought to protect only its own interests. They decided to cut out their own dealer,” said Larry Willis, attorney for Bob Baker Lexus. The settlement, according to Toyota’s statement, resolves product liability claims by the Saylor and Lastrella families against Toyota and the dealership. The families have sep-
arate claims against the dealership that were not covered. Two months after the crash, Toyota began a recall that eventually covered 5.4 million vehicles globally in which the automaker said the driverside floormat could trap the accelerator pedal. It later recalled 4.5 million vehicles in which the pedals themselves were determined to be defective. Some vehicles were covered by both recalls, for a total of about eight million vehicles. In February, Toyota’s chief executive, Akio Toyoda, apologized to Congress and to the Saylor family, saying he would “do everything in my
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power to ensure such a tragedy never happens again.” The recalls hurt Toyota’s sales and damaged its reputation for building high-quality, reliable vehicles. Thousands of complaints poured in to federal regulators from drivers who said their Toyota-made vehicles accelerated suddenly. In April, the government fined Toyota a record $16.4 million for waiting too long to initiate a recall. The complaints are tied to at least 93 deaths. Toyota is continuing to defend itself against class-action lawsuits filed by Toyota owners and relatives of people who died in crashes alleged to have resulted from sudden accelera-
tion. The company could face billions of dollars in liabilities if it loses the cases. Preliminary results released in August from the National Highway Traffic Safety Administration’s investigation into the sudden-acceleration complaints revealed that in many of the crashes the vehicles’ on-board data recorders showed no evidence that the drivers had used the brakes. The findings suggest that some drivers were mistakenly pressing on the accelerator pedal instead of the brake. To read previously published articles on this subject go to www.autobodynews.com, search “Saylor.”
Federal Fuel Economy Labels to Come Shortly
All new cars and light-duty trucks sold in the U.S. are required to have a label that displays fuel economy information that is designed to help consumers make easy and well-informed comparisons between vehicles. Most people recognize the current label by the gas tank graphic and city and highway Miles Per Gallon (MPG) information. EPA has provided fuel economy estimates in City and Highway MPG values for more than 30 years. EPA and the National Highway Traffic Safety Administration (NHTSA) are updating this label to provide consumers with simple, straightforward energy and environmental comparisons across all vehicles types, including electric vehicles (EV), plugin hybrid electric vehicles (PHEV), and conventional gasoline/diesel vehicles. The agencies are incorporating new information, such as ratings on fuel economy, greenhouse gas emissions, and other air pollutants, onto the label as required by the Energy Independence and Security Act (EISA) of 2007. For more information on the proposed fuel economy label redesign, please see epa.gov/fueleconomy.
AZ’s Sun Devil Opens New Location in Fountain Hills
On Saturday, August 7 Sun Devil Auto opened the doors to its twenty-first store location in Arizona. Tom Higginbotham, CEO and President for Sun Devil Auto said, “It’s with a lot of pride and excitement that we establish roots in Fountain Hills and offer quality automotive repair and preventative maintenance services to the Fountain Hills community.” Sun Devil Auto is an Arizonagrown family owned & operated complete auto repair business. Owner Joel Higginbotham opened the doors to his first facility back in 1978 and currently celebrates over three decades in business. Upper management is in the field, visiting store teams and working with them daily. They know every employee (nearly 300) by name. Sun Devil Auto prides itself on integrity and a solid reputation. The Sun Devil Auto family upholds those values with pride. They’ve built more than 21 store locations in the Phoenix market, four stores in Nevada and three in Texas. Sun Devil Auto employs ASE Certified technicians who perform only customer-approved work and guarantee all their work in writing. With same-day service and competitive prices, and even in a down economy, Sun Devil Auto is growing.
CA Extends Carpool Lane Use for Fuel-Efficient Vehicles
Gov. Arnold Schwarzenegger signed a measure August 30 allowing tens of thousands more Californians with environmentally friendly cars to drive solo in carpool lanes according to reports made by the LA Times and 10 News San Diego. Lawmakers worked late into the night August 30, the second to last day of the 2009-10 legislative session. Gov. Arnold Schwarzenegger took some action of his own, signing into law a measure expanding the list of environmentally friendly cars that qualify for permits to use carpool lanes. The measure will allow up to 40,000 more California motorists to drive solo in the special lanes. It also extends the lifespan of existing permits for hybrid and electric vehicles. The bill, SB 535 by Sen. Leland Yee (D-San Francisco) and sponsored by General Motors, would provide thousands of permits for new models of fuel-efficient cars. Drivers of hybrid cars who have had access to the carpool lane for the past six years will be able to drive in the lane for an additional six months. Access was originally was set to expire at the end of 2010.
The new law would not only keep the current hybrid vehicle stickers but it would also create a new sticker program for drivers of the next generation of green cars. In the new sticker program, the first 40,000 advanced technology vehicles will gain access to the high occupancy vehicle lane during commuting hours. The new program, which would include all electric cars, hydrogen fuel cell cars and plug-in hybrids, would start in 2012 and go until 2015. In order to qualify for the advanced technology stickers, the vehicle has to be rated as an enh-ATPZEV. The requirements to earn the enh-ATPZEV label are significantly tougher than the standard ATPZEV. The measure was opposed by some lawmakers who say carpool lanes are getting too congested because of all the special permits for solo drivers. But Yee said his bill was needed because new cars are being built with technology that was not available when the state began permitting fuelefficient cars to use carpool lanes. SB 535 doesn’t take effect until January 1, 2012. For more information please visit http://www.dmv.ca.gov/vr/decal.htm.
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Progressive’s Round Two Against Coccaro
On December 6, 2010, the legal team representing Progressive Insurance, headed up by Michael Nelson will once again travel to West Chester County, New York to present their claim of $2,800 in fraud stemming from the $34,000 repair of a one-year old Mercedes in 2005. The case had originally been tried in 2008 when a New York judge found in favor of the shop, North State Custom, and its owner, Greg Coccaro. The judge found that Progressive did not present sufficient and credible evidence to support the insurer’s claims of fraud against Coccaro and dismissed the case before the defense called their first witness. But the case now heads to trial once again after Progressive appealed the decision and won the chance to retry its case. “We are disappointed that the appellate court saw fit to overturn the judge’s decision,” said Coccaro. “I am confident that Judge Smith will see through Progressive’s scheme to discredit me and my company. I appreciate all the support and encouragement. We will see this thing through no matter
what it takes so that consumers know they have a quality repair facility to go to that works for their best interest.” Coccaro’s attorney in the original case, Tony Mamo, had explained that under New York law, if Coccaro wins, he cannot recover his legal expenses, nor can he be awarded any money from Progressive. “If he wins, he just gets to walk away exonerated,” said Mamo. The highly publicized legal battle between Coccaro and Progressive Insurance involves not only Progressive’s charges of fraud in this case set for trial in December, but also involves a multi-million dollar lawsuit filed by Coccaro against Progressive for alleged deceptive business practices and patterns of violations of NY law. The discovery phase of the deceptive business practices case is nearly complete, according to Coccaro, and the depositions have also been completed. Coccaro said he expects that case to go to trial sometime early next year. Anderson Kill & Olick, P.C., a Manhattan-based law firm has agreed to represent Coccaro in his case against Progressive.
CA AG Files Charges Against Recycling Firm
The office of California Attorney General Edmund Brown Jr. has announced the filing of criminal charges against the owner and two managers of Tung Tai Group, San Jose, Calif. Brown claims that Tung Tai submitted $1 million in “fraudulent and fictitious” reimbursement claims for more than 2 million pounds of electronic scrap that the company never recycled. Combined, Joseph Chen, owner, and John Chen and Jason Huang, managers of Tung Tai, face 17 criminal counts for submitting false documents, attempting to defraud the state, forgery and hazardous waste storage and handling violations. If convicted, the men face a maximum of nine years in prison. A release from Attorney General Brown’s office says electronic scrap recyclers in the state process equipment and submit a claim for reimbursement to the Department of Resources Recycling and Recovery. On average, CalRecycle pays 39 cents per pound of material recycled. In late 2008, according to the Attorney General’s office, CalRecycle auditors contacted investigators at the Department of Toxic Substances Control after noticing discrepancies in the claims submitted by Tung Tai and the records kept by Golden State Records
and Recycling, a company that collected and transferred materials to Tung Tai. In July of 2009, agents searched the Tung Tai facility and discovered two separate sets of records, which, the AG’s office says, provided evidence that the company submitted claims to CalRecycle between January and September 2008 that grossly inflated the amount of pounds of material eligible for reimbursement. Additionally, Tung Tai submitted records to CalRecycle listing items that were never delivered to Tung Tai by any approved collector of electronic waste, according to the filing. The state did not make payments on the requests for reimbursement that it considers falsified and inflated, which totaled $1 million. A statement released by Tung Tai Group said, “Tung Tai is confident that the evidence, including financial records signed by the collector and corroborated by weight certificates issued by independent and licensed third party recipients of the recycled materials, will exonerate the company and its members. The company looks forward to having its day in Court and the opportunity to prove that the charges are false.”Arraignment for John Chen and Huang was scheduled for Sept. 9, 2010.
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CA DUI and Motorcycle Fatalities Decline in 2009
For the fourth year in a row, DUI deaths dropped in 2009. At the same time, motorcycle fatalities saw their first drop since 1998, marking the end to an 11-year increase. DUI and motorcycle deaths were just two of the highlights of a statewide decline in total traffic fatalities of 10.3 percent. In figures released by the Federal government, California recorded 950 alcohol-impaired driving fatalities in 2009, a 7.6 percent decline from 1,025 in 2008. The 2009 totals mark a 26.8 percent drop from the 2005 high of 1,298. Motorcycle fatalities dropped by 29.6 percent, from 560 in 2008 to 394 in 2009. Total traffic fatalities from all causes fell from 3,434 in 2008 to 3,081 last year. “Everyone in California should be heartened with these figures,” said Christopher J. Murphy, Director of the California Office of Traffic Safety (OTS). Reasons for the declines are many and varied. The downturn in the economy is one factor among many. Gasoline sales dropped by 4 percent from 2007 to 2008, but have stayed flat since then. Motorcycle registrations have dropped nearly 2 percent. Automobiles have more safety engineered into
them. Increased DUI enforcement and public awareness through such programs as DUI checkpoints, the Avoid DUI Task Forces program and the Report Drunk Drivers — Call 911 campaign have worked. Motorcycle training programs and safety campaigns through the California Highway Patrol (CHP) have trained over 300,000 riders since 2005. “The numbers released this morning are especially good news. They are a direct result of efforts by all motorists, law enforcement officers throughout the state, laws designed to keep people safe on our roads, and technological advances by automobile manufacturers to build safer cars,” said California Highway Patrol Commissioner Joe Farrow. For over three years OTS, CHP, California Department of Transportation, Department of Motor Vehicles, Department of Alcoholic Beverage Control, National Highway Traffic Safety Administration, Federal Highway Administration, county and local governments, as well as numerous advocate groups, businesses, community organizations and individuals have been actively pursuing work on over 150 specific actions contained within the California Strategic Highway Safety Plan.
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NACE/CARS Offers Array of Speakers, Keynote will Focus on Diversity NACE’s 2010 keynote speaker Kelly McDonald—a recognized expert on multicultural marketing and business trends and a former dealership sales executive—will address increasing diversity in the workplace and a changing workforce and customer base during the Opening General Session. Sponsored by DuPont, from 8:30–10 AM on Monday, October 11, followed NACE keynote immediately by the speaker, Kelly opening of the McDonald NACE and CARS show floor. McDonald will address the vast array of differences in the workforce these days and how businesses can work cohesively with their customer base, their employees and their labor force as a whole. “The consumer really has the power of choice,” McDonald told Autobody News. She detailed how consumers have so much choice and information available to them online that businesses really need to cater to
a customers needs, preferences and styles to win their business. For businesses, the bar is set higher than ever and the customer is fully in charge: they have specific expectations about service, convenience and communication. The multilingual needs of our country are more apparent than ever and the businesses that meet those needs will have a significant competitive advantage in the marketplace. McDonald’s presentation will be focused upon key generational segments and the Hispanic consumer. Attendees will learn about the Four Levels of Acculturation and the importance of relating to different cultures. Kelly McDonald is a recognized expert on multicultural marketing and business trends. McDonald also worked in the automotive industry for over 20 years with brands like Toyota, Nissan and Subaru in their sales and advertising department. She has knowledge of parts and services as well as industry terminology. McDonald’s speaking client roster includes: Toyota, Sherwin-Williams,
Harley-Davidson, State Farm Insurance, AAA Travel, BlueCross BlueShield, and dozens of financial organizations and associations. McDonald will not be holding any seminars after her keynote speech titled; “The Changing Face of Your Business—Inside and Out” but will be moderating one of the forums on Sunday, October 10. More information about McDonald’s services can be found at www.mcdonaldmarketing.com. McDonald will be publishing her first book, “How to Market to People who Are Not Like You” in March of 2011. Other speakers that will host some industry seminars are: Angie Kilbourne, Bob Cooper, Tony Passwater, Chris Ortiz and Richard Flint. Chris Ortiz will speak on October 12th from 4:00 PM–5:30 PM on Introduction to Lean Auto Body. The seminar will focus on the 8 Wastes of Lean, Body Shop Performance Metrics, 5S and the Visual Body Shop, Kanban and Material Replenishment and Repair Flow.
Ortiz will also speak on October 13th from 7:30 AM–10:30 AM on 5S and the Visual Shop. This course is a highly detailed curriculum covering the implementation of 5S and the visual workplace. 5S is an aggressive organization and cleanliness philosophy that has a profound impact on productivity and maximizing time. It is the foundational element of LEAN auto body and will be the catalyst for future ongoing improvements. Highly visual with lots of pictures of body shops and non-body shops. This is the most important LEAN auto body course. Chris Ortiz, President Kaizen Assembly, LLC, can be contacted at 360-715-2129 or 360-224-9245 or firstname.lastname@example.org. Visit www.kaizenassembly.com. Bob Cooper will speak on October 10 from 1:30 PM–4:30 PM on THE BEST PAY PROGRAMS ON EARTH!™. Bob Cooper is an expert on keeping employees producing at peak performance. Cooper’s company works with successful shop owners and dealerships around the
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world. He will share some of their best-kept secrets when it comes to compensation programs. Cooper will also speak on October 12 from 7:30 AM – 10:30 AM on STOP DREAMING & START ACHIEVING™. Cooper will share the leadership skills he’s learned from the most successful clients, and then used throughout his own career. Starting off as a technician, Cooper has grown a company that now spans the globe. Nowdays he speaks to many Fortune 500 companies, universities, and to the United States Army. Cooper is the founder and president of Elite; a worldwide company that helps auto shop owners build more profitable, successful businesses. Cooper was one of the first to predict
automobile leasing, the trend toward maintenance, the growth in remanufactured components and the resurgence in dealerships targeting the service business. He also created a website to provide affordable downloadable business building solutions in both English and Spanish. To learn more about Bob and Elite, visit their website at www.EliteWorldwide Store.com or call (800) 204-3548. For additional event information, contact Hanley Wood Exhibitions at P.O. Box 612128, Dallas, Texas 75261-2128 or call 888.529.1641 or 972.536.6444. NACE and CARS run from Oct. 10–13. For more information about NACE and CARS go to nacexpo.com and carsevent.com.
CAA Writes to Gov. to Oppose Tax September 1, 2010 The Honorable Arnold Schwarzenegger Governor State of California State Capitol Sacramento, CA 95814
RE: SALES TAX EXPANSION
Dear Governor Schwarzenegger: On behalf of the California Autobody Association we must respectfully oppose any expansion of the sales tax in California. THERE SHOULD BE NO SALES TAX ON SERVICES The only reason the state has considered this proposal in the past
is to generate revenue, and even a proportionate rate reduction would adversely affect businesses and consumers by placing an unfair tax burden on both. 1. A sales tax is regressive—the burden will bear disproportionately on lower-income households. As is generally true with the sales tax, services may make up a greater percentage of a low-income individual’s wage and therefore be a greater burden than a high-income earner. 2. Businesses and service employees would leave California. A sales tax on services ignores the fact that many services can be performed out of state. For example, a software company can do programming in Colorado; and buildings in Nevada need cleaning, forcing both the company and the employee out of the state. 3. The increased cost to business will affect the bottom line of business in California. Businesses with thin margins will be impacted much more than a small savings to consumers. 4. Small businesses would be at a competitive disadvantage compared with large businesses. A small business is often forced to use outside providers, such as accountants or computer programmers, for many services and would have to pay taxes on these services; a large business can perform these activities in-house and avoid the tax. 5. The incentives and rewards of operating in the underground economy will grow more appealing to unscrupulous service businesses seeking to avoid taxation and gain an advantage over law-abiding competitors. 6. States that have tried significant expansion of a sales tax on services— Florida and Massachusetts—have regretted the proposal and repealed the tax.
ADMINISTRATIVE COSTS In 1995, AB 194 (Murray) proposed increasing the tax on certain services. At that time, the BOE estimated start-up costs of $600,000 and continuing costs of $9 million annually. The costs would have been associated with identifying and registering approximately 42,000 new business entities that would have been required to remit sales taxes on gross receipts. The BOE also estimated additional computer automation costs See Sales Tax Opposition, Page 36
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 13
Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at email@example.com.
Company with Ed Attanasio Connections Mattei: Over Seventy-five Years of Compressor Leadership Italy makes amazing race cars (Ferrari), top-tier watches (Bulgari) and luxurious shoes (Gucci) and they also make some of the finest air compressors on the planet, respected by auto body and mechanical shops throughout the world. Mattei’s General Manager Jay Hedges knows air compressors inside and out after two decades in the industry. He’s been with Mattei for nearly three years, overseeing North American Operations for the company that developed the first rotary vane compressor in 1958. For nearly a century, Mattei’s machines have been in use worldwide for industrial and automotive applica-
veloped the technology, so we’re in a good position. Recent patents generated by our research & development department are evidence of our drive to continually exploit proprietary vane technology and advantages. Collision repair facilities benefit from the performance and efficiencies of our rotary vane compressors versus traditional rotary screw compressor systems. With a focus on both current and future compressor models, Mattei will reduce maintenance and energy costs while delivering ever increasing efficiencies.” Mattei’s compressors are sold in the U.S. exclusively through distributors and a handful of re-sellers, such as Keystone Automotive and a network
Mattei’s General Manager Jay Hedges showing body shop owners the company’s products at their Collision Repair Compressed Air Training Center in Baltimore, Maryland
tions. Body shops throughout North America have embraced the company’s rotary vane compressors because they’re more efficient and durable than comparable products on the market, Hedges said. Mattei was founded in 1919, when a young Italian Army Engineer named Enea Mattei, started exploring the compressed air industry, an industry that hadn’t even been fully born yet. In 1934, he invented the world’s first portable air compressor and after many years of growth and technological advances, his namesake company become a leader in the world of compressed air technology. Hedges cited several reasons for Mattei’s success worldwide: “We de-
of 200 independent distributors throughout the country. Big collision chains that currently use Mattei’s compressors include Caliber Collision and Cook’s Collision, Hedges told us. “Big collision chains are attracted to these rotary vane compressors because they can save a lot of money through the machine’s ability to conserve energy and the low maintenance required. Large companies want a reliable compressor, that when routine maintenance is performed by qualified techs it will not cause unscheduled downtime. Any equipment failure costs you money, but when your compressor is down you are essentially shut down. It’s obviously critical for operational consistency. It’s rare for a
14 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
compressed air user to have 100% back-up air compressors at the ready. Therefore, corporations can’t tolerate a compressor failing. Whether you’re fixing 50 or 500 cars monthly, the compressors in any size shop must be reliable because if they go down, it will obviously affect their production.” Cubic feet per minute (CFM) is the key power rating when it comes to compressors and Mattei’s rotary vane compressors lead the industry in that regard. “More air with less energy; that’s our reputation and we are proud of that. Our machines produce more CFM per horse power than any other rotary or piston compressor on the market. This is one reason why our compressors are great, because they represent a value for body shop owners and that’s why they’ve been a big success in the collision industry as a whole.” Mattei’s rotary vane compressors are more efficient than screw rotary
compressors and deliver 90% mechanical efficiency, according to Hedges. “As the speed decreases, the compressor’s efficiency increases, offering straight-line energy savings,” he said. “And they’re more durable, because our vane compressors are designed for low speeds and long life and backed by a revolutionary 10year warranty. Our vanes are designed for 100,000 hours of service without bearing changes or rebuilding an airend, twice the life of most rotary screw compressors. They just don’t break down, because they feature direct drive and in-line operation, while using fewer moving parts.” Mattei’s Optima Series is ideal for high-volume body shops, according to Hedges. “The variable speed feature is highly coveted by collision repair companies because they will optimize energy savings for collision See Mattei, Page 17
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 15
Erica Schroeder is a writer and editorial assistant for Autobody News in Oceanside, CA. She can be reached at firstname.lastname@example.org.
Elite Auto Collision Repair Center Chooses Vendors Carefully with Erica Schroeder
Elite Auto Collision Repair Center in La Mesa, CA, came under new management 5 years ago and the Assemi family decided to make some changes when it came to the way they ran the business and the vendors they chose. Elite operates out of a 14,000 square-foot facility with 6 full-time employees and a handful of overload help staff. The business sees around 25 to 30 cars per month and grosses about $600,000 annually.
plague,” said Sandra. Elite gained a partnership with Akzo-Nobel in September of 2010. Elite decided to switch to Azko-Nobel not only because of the high standard placed on their products, but also because they were willing to give Elite a hand with the transition from low VOC solvent-based paints to waterborne paint spraying and have good technical support, said Yasmin Assemi, Elite’s Chief Financial Officer. “Price is not the main driver when all is said and done,” said Sandra. “With AzkoNobel we feel the technical support is there.” In the shop Elite has a pre-owned Car-OLiner 3D measurement system that they acquired after researching The front entrance on Baltimore Drive in La Mesa all other options. TechniElite employs 1 body man and 1 cal support for this unit is spotty and head painter, and flexible help for that’s been an issue for the business, overloads. There are 4 employees in according to Sandra. the office-financial, marketing, estiThe facility boasts oversized bays mation and customer service side of that can accomodate limos and up to the of the business. 24 passenger buses. Elite partners Manager Farhad Assemi and Preswith several companies in San Diego ident Sandra Baker-Assemi are the that have fleet vehicles as well as racebackbone of the company while brother cars through Alvaka Motorsports for and sister Yasmin Assemi and Adrian their repairs. Assemi team up to bring in new ideas. Elite Auto Collision has been an “At first we wanted to stick with active part of the community in San the vendors we had when we bought Diego ever since the Assemis took the business, but with experience we over. The business won the Best of La started to look around,” said Sandra. Mesa Auto Body Shop Award in 2008 and 2009 for their community involvement and also won the Talk of the Town Excellence in Customer Service Award in 2010 for their overall customer reviews online. Elite is a business that believes in being part of their community; the business is a part of the San Diego Chamber of Commerce and also helped sponsor State Farm’s Project Ignition at a local high school in 2007. Elite is also hoping to become a location Adrian and Yasmin Assemi at the office entrance for some of I-CAR’s training courses. “We are in talks with I-CAR to Cost drives Elite’s vendor decido some classes,” said Sandra. sions but they also value highly venElite makes it easy for customers dors’ reliability of service and product to keep up with the status of their veand how easy they are to deal with on hicle thanks to an online repair trackthe phone and in person. ing program on their website as well “We avoid re-dos like the black as sending customers pictures and
16 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
texts about their vehicle status. Elite can email claims information to most insurance claims adjusters which helps speed claims along. Elite
Body man Mike Ponce
operates mostly through appointments; Saturday mornings for estimates, pickups and dropoffs. They offer a shuttle service that will take customers to and from their home to the body shop while their car is being worked on. The shop also offers a lifetime warranty on their work which is trans-
ferrable in most cases. Elite also offers the ability to purchase gift cards for their services and is applying for a spot on the city-bycity group coupon site, Groupon.com. Elite is currently offering an apprenticeship for a youth to help with entry level skills. Elite will compensate the apprentice with OJT, I-CAR and ASE classes. To learn more about this position applicants can contact Elite Auto Collision Repair Center at email@example.com. For more information please visit elitecustomauto.com. Elite Auto Collision Repair Center 4949 Baltimore Dr. La Mesa, CA 91942 619-667-3788 EliteAutoCollision@sbcglobal.net
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Continued from Page 14
facilities with varying levels of plant air demand. One of the best things about Mattei’s vane technology is that this machine has no ball or roller type bearings because there is no thrust loading. Thrust bearings are subject to B-10 and L-10 design life considerations and the thrust forces deteriorate those bearings making them the mostcommon parts to fail in rotary screw compressors. This is a big deal.” Dan Wittenberg is the general manager of Keystone Automotive in St. Cloud, Minnesota. He has seen a spike in popularity of Mattei’s rotary compressors within the last few years, and he tells us why: “We’re seeing
more body shops in our region making the transition to using waterborne paint, and these Mattei rotary air com-
Mattei’s AC tank-mounted units like this one are highly respected by body shops worldwide
pressors are ideal for waterborne, because they provide more airflow. Plus, they’re greener overall when compared to piston-type compressors.
They will shut down automatically when demand for air drops so it won’t pump air all the time. A smaller shop requiring intermittent usage is a perfect application for a Mattei rotary compressor. “It’s easy to operate and maintain and the new computer-based rotary vanes are on the technology’s leading edge,” Wittenberg said. “The three major advantages of the Mattei rotary vane compressors over the rotary screws are: 1) They cost less to operate, because the motors will run less. With the cost of electricity, this is a big deal for a body shop watching its bottom line and 2) Durability—the rotary vane compressor will last longer and it can handle any amount of usage you can throw at it. 3) They’re quieter than any other compressor on the market.
You can stand right next to this machine and have a conversation, which is a breath of fresh air, that’s for sure.” Wittenberg and Keystone performed extensive product research while looking for a better air compressor and he discovered that Mattei’s rotary compressor is the best on the market, he said. “We always do our homework before we take on a new product, and the Mattei was a no-brainer. Keystone has been researching products for 85 years in this industry, so we know what our customers want. The Mattei rotary is in the big leagues and the package is very reasonable, so we’re excited to be carrying them.” The extensive support and handson service provided by Mattei is another big plus of working with a leader, Wittenberg said. “The cus-
Mattei’s Stacked ERC compressor is an ideal fit for body shops who value the machine’s durability and energy-saving features
tomer service is exceptional. When we call Mattei for any reason, we get a well-trained individual on the phone and the follow-up is the best we’ve encountered. They won’t leave you on hold and they speak our language. We needed a part recently and they got it to us the very next day.” Will Keystone be selling more Mattei rotary air compressors in the U.S. in the future? Wittenberg agrees enthusiastically. “It’s a beautiful unit and with the easy set-up we’ll definitely be selling a lot more as this region starts changing over to waterborne more aggressively. Once shops find out about these compressors, they will see the value and they’ll want one or more, because it will save them money and last longer. Mattei Compressors Inc. 9635 Liberty Ave., Suite E Randallstown, Maryland 21133 (410) 521-7020 http://www.matteicomp.com/
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 17
Dave Jones INTERVIEW by Ed Attanasio
Assemblyman Dave Jones listening to Rick Gamboa (r), of Gamboa’s Body and Frame in Sacramento, explain the frame repair process. Jones toured the shop with CRA representatives in early 2009.
ABN—Let’s start with some background on the California Department of Insurance (CDI). It’s been estimated that CDI oversees as much as 10% of California’s economy. Given the budgetary and fiscal problems in California, how should the Insurance Commissioner and the Department of Insurance manage their influence on job development and the business environment?
DJ—Ensuring that insurance is available, accessible and affordable is critical to job growth in California. Rising insurance costs are a major cost factor for California businesses. For example, workers compensation insurers are proposing a 29% rate increase that would cripple California businesses. I do not think this is the time to hit California businesses with this massive rate increase. In addition, the unequal bargaining power of insurance companies often raises costs for California businesses. For example, workers compensation insurers have taken to inserting contract language into their contracts that allow them to drag California businesses to far off states to resolve disputes. Businesses have complained to me that they have been forced to fly their managers, staff and lawyers to New York and Delaware to resolve disputes with their workers compensation carriers. I authored AB 2490 to protect California businesses from this practice and to prohibit workers compensation carriers from forcing these clauses on California businesses. After all, if the business is in California, the dispute arose there, and the contract was written there, why should the insurer be allowed to drag the California business to New
York to resolve a dispute? Another opportunity to assist economic development is in the area of the growing green tech and clean tech economy. We need to make sure that innovative green technology and clean energy companies have the insurance they need to cover their operations and grow our economy. Additionally, I have legislation sitting on the Governor’s desk—AB 1011—that enhances the investment opportunities for insurance companies in green technology and clean energy in low and moderate income communities. The Department of Insurance’s budget does not come out of the general fund—the cost of regulating insurance companies is borne by fees on insurers, not taxes collected from taxpayers. In fact, the department’s operations budget has been reduced in recent years from approximately $175 million to $156 million.
ABN—The CDI commissioner used to be appointed by the governor prior to 1991. When the elected position of Insurance Commissioner was created by passage of Prop. 103, the Department’s role was expanded to require property and casualty insurance company rates be pre-approved by the Department before going into effect. Yet the current commissioner, Steve Poizner, has said that California has virtually no power over insurance rates (other than the ability to deny insurers that spend less that 70 percent of premium dollars on medical benefits the license to sell policies in the state). If so, what could a commissioner do to help keep costs of health care and auto insurance affordable?
DJ—Under Proposition 103, the Insurance Commissioner has the ability to approve increases or decreases in auto, property and casualty insurance rates. But the Insurance Commissioner does not have the authority to reject excessive health insurance rate hikes. We need to change the law to give the Insurance Commissioner this authority. I have long fought to give the Insurance Commissioner the right to approve or disapprove health insurance rate increases. I authored AB 2578 this year in the wake of the Anthem Blue Cross rate hike of 39% to rein in ex-
18 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
cessive rate hikes, which are hitting both consumers and businesses alike. Federal health care reform will change the 70% medical loss ratio to 80 or 85%, depending on the nature of the health insurance product. This means that at least 80 cents on each premium dollar has to go into health care. This is a good change. I will use the power of the Insurance Commissioner to enforce these new requirements so that more of the premium dollar goes to pay for actual health care, instead of insurer profits.
ABN—Currently, California suffers from divided bureaucracies. The one that oversees health coverage reports to the governor, while the state insurance commissioner governs other health policies. You’ve said this could be better handled by combining the two functions under the elected post. You also have pledged to serve out two full terms as commissioner and not use the post to run for higher office, as past commissioners have (including Steve Poizner who was a candidate for the Republican Governor’s nomination). Should the commissioner have a direct hand in determining health insurance rates? Should the commissioner distance him or herself from other state offices?
DJ—California is the only state in the nation where managed care plans are overseen by the Department of Managed Health Care while individual and PPO health insurance products are overseen by the Insurance Commissioner. I believe that both offices should be combined. The division in authority is confusing to everyone and it is inefficient. I have long fought to give the Insurance Commissioner and the Department of Managed Health Care the right to approve or disapprove health insurance rate increases. This year, my Assembly Bill 2578 failed to pass the State Senate, but I am committed to continuing this effort as Insurance Commissioner. I plan to serve two full terms as Insurance Commissioner.
ABN—The legislature has little control over health care rates, largely because industry lobbyists have killed efforts to change a rules-free market-
place. You have sponsored Assembly Bills 119 (which stops “gender rating”, i.e,. charging men and women different rates for the same health insurance policies in the individual health insurance market, and 1218 (to slow the recent annual double digit health insurance premium increases, which are now preventing larger numbers of employers and individuals from affording health coverage). These bills were signed into law earlier this year and have influenced the national health care reform debate. You mentioned State Senate appropriations committee voted on your AB 2578 bill (to give the state’s elected insurance commissioner broad powers to approve or deny increases in health coverage premiums.) Can you comment on the future prospects there?
DJ—I have long fought to give the Insurance Commissioner and the Department of Managed Health Care the right to approve or disapprove health insurance rate increases. This year, my Assembly Bill 2578 failed to pass the State Senate, but I am committed to continuing this effort as Commissioner.
ABN—Almost all large U.S. companies cover some of their employees’ health care premiums, compared with less than half of businesses with fewer than 10 employees. Granted that federal health care reform is widely misunderstood (6 million presently uninsured California residents will now be eligible for medical coverage as part of the new federal health care reforms), but most California small businesses do not currently provide health insurance to their employees. What can small businesses like collision repair shops, who do provide coverage, expect from CDI regarding managing health insurance premiums in the future? DJ—A critical part of federal health care reform will be the establishment of a California health benefits exchange. The idea is simple—to pool the buying power of the 6 million Californians without insurance, including employees of small businesses, so that we can get better rates from the health insurers. As Insurance Commissioner, I will work to assist in the design of See Dave Jones Interview, Page 22
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 19
Ameriprise Fined $71K For Discount DRP Incentives The Colorado Division of Insurance (CDI) has levied a fine of $71,100 against Ameriprise Auto & Home Insurance Co. for steering by offering discounts on deductibles for utilizing direct-repair program (DRP) auto repair shops, according to a report from the CDI. According to the report, Ameriprise offered an incentive program between September 2006 and January 2010 in which customers received a $100 discount off their collision deductibles for using one of the insurer’s DRP facilities. A total of 711 consumers participated in the program during that period, and Ameriprise’s $71,100 fine is comprised of $100 for every consumer that received the discount in return for using one of its shops. In addition, the company has been ordered to pay a 10 percent surcharge of $7,100 directly to the CDI. CDI initially received a complaint in January 2010 from an Ameriprise customer who said that he/she was offered the $100 discount for selecting a repair facility on the insurer’s DirectRepair Program (DRP), and an investigation was launched shortly after, according to the final order. “The Division alleges that … the deductible reduction is considered an
inducement by incentive to utilize a repair facility participating in the DRP,” writes CDI in its official report. In addition to the fine, Ameriprise was ordered to cease use of the incentive immediately, and the fine is due within 30 days. “While the repair shops contracted with Ameriprise may have done good work, the anti-steering law ensures that consumers, not insurance carriers, are in the driver’s seat to decide where they want repairs done,” says Marcy Morrison, Colorado insurance commissioner.
ASRW Says 2011 Event Will Remain in October
Automotive Service and Repair Week (ASRW) announced its 2011 event will be held Monday, Oct. 17- Weds., Oct. 19, 2011, at the Mandalay Bay Convention Center in Las Vegas, NV. The 2011 ASRW education program will begin on Sunday, October 16. “In a year filled with changes in the automotive industry, we feel it’s important everyone knows ASRW, NACE and CARS are here to stay,” states Ron Pyle, ASA president, adding “we feel this event deserves its own week.”
Pasadena/Glendale CAA Chapter Meeting Gets Heated on Rulemaking and Fraud by Tom Franklin
This meeting at Brookside Country Club by the Rose Bowl in Pasadena was the last chapter meeting of 2010. With the end of 2010 fast approaching and new rules taking effect, a major focus of the meeting was to help members gain an understanding of what SCAQMD Rule 1147 is all about and how it could affect them. The deadline for Rule 1147 takes effect January 1, 2011, and will have a major financial impact on many body shop owners. One of the speakers on the subject was Wayne Barcikowski, a chemical engineer with 20 years at the AQMD, who wrote the Rule. The major concern for shop owners and managers is how permits required by Rule 1147 will impact them financially. Ms. Van Huong N. Phan, 23year AWMD veteran and senior air quality engineer for the compliance office handled the questions about “Permits.”
Although Rule 1147 originated in 2008, few shop owners and managers have focused much on costs they may incur to comply with the rule after January 1st. The rule states: “The purpose of this rule is to reduce nitrogen oxide emissions from gaseous and liquid fuel fired combustion equipment as defined in this rule.” The equipment at collision repair facilities that fall under this rule include ovens, dryers, dehydrators, heaters, and afterburners. Essentially the age and volume of usage of a unit determine the parts per million (PPM) of NOx emissions limits of the unit, and the date when Rule 1147 will take affect for that unit. For example, spray booth make-up air heaters installed after December 5, 2008 and before January 1, 2011 are exempt until July 1st of the year the unit is 15 years old. There were many questions directed at Ms. Phan about permits, but most were focused on costly meters that must be installed to determine usage and emissions output.
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One shop owner noted that meters for his four spray booths could run into many thousands of dollars. Further complicating the issue is the fact that each booth is rated differently depending on when it was installed, amount of usage, and when Rule 1147 would take effect for each booth. There are further complications resulting from the requirements for whoever does the emission testing. If a test is found to be invalid, the shop owner who thought he or she complied with the rule could be fined for non-compliance. Needless to say, these issues generated many heated exchanges during the meeting. Ms. Phan retained her “cool” and addressed each question carefully in great detail. She also provided a “hot line” number, (909) 396-3393, for those who found the rule confusing. Substantial additional heat was generated by the differing viewpoints of the next two speakers. Auto Club Fraud S.I.U (Special Investigation Unit) speaker Victor Valdez, said to be one of the most educated and informed investigators on fraud,
came up against criminal defense attorney Dyke E. Huish, from Irvine. Huish recently defended some of the collision repair personnel caught up in a “sting” operation in Orange County. Mr. Valdez claimed that his visit to a shop was only to “obtain information and report” and not to incriminate shop personnel. Attorney Huish said CAA members should be very careful when visited by an S.U.I. agent. He stressed the importance of using our constitutional right to “remain silent.” He said that, when asked for specific information, you should never respond immediately. Ask to have the questions in writing, or write them down yourself. Then review the questions when not under any pressure for an immediate answer. Also consider getting professional advice from your accountant or attorney before responding. In fact, he noted, much of the time there is no obligation to respond at all. The meeting was scheduled to end at 9:00 P.M., but continued on until 10:00 P.M. due to many heated
questions and answers. Attorney Huish went on for quite a while, but he added so much humor to his presentation no one objected. He got a great laugh when he said your best defensive tool is to simply, “Shut up!” Linda Holcomb, Co-Chapter President, said a Holiday Mixer is being planned for December 3rd. Sponsors for the meeting were Filice Insurance Agency, specializing in health insurance for collision repair facilities, and Update Promise software designed to keep collision repair customers updated on repair progress. Steve Harriman from Filice Insurance offered some valuable advice on defensive measures that shops can take when the Affordable Care Act (“OmbamaCare”) legislation kicks in. He can be contacted at 909-748-7073. Curt Nixon also spoke briefly about Update Promise. He can be reached at 626-926-3975.
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Jeep Grand Cherokee Being Probed for Fuel-tank Defects
Chrysler Group LLC’s Jeep Grand Cherokees for 1993 to 2004 are being investigated for possible fuel-tank defects after 55 fire-related deaths in crashes, the National Highway Traffic Safety Administration said according to reports made by Bloomberg News. The investigation was requested by the Center for Auto Safety, a Washington group founded by consumer advocate Ralph Nader. The center said the gas-tank placement and lack of shielding led to leaks or ruptures in rear-end collisions, according to the agency’s website. U.S. records show 55 people died in 44 Grand Cherokee crashes since 1992 in which fire was the key event, the agency said. Vehicles struck in the rear, the defect noted by the Nader group, resulted in 10 crashes and 13 deaths, according to the agency. “The existence of these postcrash fires does not, by itself, establish a defect,” the agency said. “Further review and investigation into these incidents is needed.” Chrysler said, “It is important to note that this is an investigation, not a recall.”
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 21
Dave Jones INTERVIEW by Ed Attanasio (cont. from p. 18)
the new health insurance exchange, where small businesses will be able to go to buy affordable health insurance for their employees. Although my proposal to directly regulate health insurance rates has not become law, I will continue to press insurers to make sure that more of the dollars Californians spend for health insurance go towards medical care, and not to insurer administration and profits. And I will continue to champion changes in the law to allow the insurance Commissioner to reject excessive health insurance rate hikes.
ABN—Since 2003, coming up with a fair and accurate process to do a labor rate survey has been an ongoing issue in California. Currently, insurers are only required to get information for the survey that includes the name and address of the auto body repair shop and the total number of shops surveyed, which allows DRP shops to be included in surveys, thereby depressing the effective labor rates. What else should insurers be required to do? Should there be an independent agency conducting the surveys?
DJ—I am concerned about the fairness and reliability of the surveys, including the weight given to DRP rates. As Insurance Commissioner I will work closely with all interested parties to review the survey methodology and who should conduct the survey. I think that we would be better served by having an independent agency, like the Bureau of Automotive Repair, conduct the survey.
ABN—You’ve been called a “consumer champion” and are the only person to receive a 100% rating from the Consumer Federation of California for your 2009 voting record on key consumer rights bills. You have the endorsements of the Orange County Professional Firefighters Association and San Francisco Firefighters Local 798, among many others. You’ve also taken a prominent interest in collision repair issues. Can you tell us why collision repair is of central concern to a consumer advocate like yourself?
DJ—Collision repair is important be-
cause of the safety issues involved. Auto body repair is not a simple transaction. Consumers often pay premiums for years before experiencing a collision. After a collision, the auto body repair shop has an interest in satisfying the consumer by making the car safe and returning it to the condition it was in prior to the collision. The insurer has an interest in driving down the cost of the repair, which puts auto body repair shops in a difficult position. This is a clear case where the government should establish rules that protect consumers and make sure all cars are repaired safely. ABN—What would be the first thing you would do as the new Insurance Commissioner?
DJ—As it relates to the collision repair industry, several things I believe need some immediate attention. One of these is the enforcement of existing prohibitions against steering. This continues to be a problem and one that merits much greater attention. Second, there is the problem presented by the labor rate surveys. Based on conversations I’ve had with leaders and members of the collision repair industry, they feel that the true labor costs that collision repair businesses are facing are significantly understated. I think part of the problem stems from the fact that the labor rate surveys are being done by an entity that has relationships with the insurance industry. I am reminded specifically of a similar problem that occurred in the securities and bonds markets when rating agencies in those markets were allowed to have financial relationships with the very entities that were supposed to rate them. As a result, Moody’s and other rating agencies in the financial markets produced ratings that were much higher than they should have been and investors were given inaccurate information. This strikes me as similar—these financial relationships that exist between the entities that conduct the surveys and the insurance companies are problematic at best, in my opinion. One suggestion that has been made that is certainly worth exploring is to have a requirement that independent entities can conduct these surveys and perhaps have an independent
22 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
surance Commissioner could champion. Third, there’s the issue of non-OEM or aftermarket parts and some of the issues raised by leaders in the industry about the comparability of those parts with OE parts. This is definitely an In April this year State Assemblyman Dave Jones flanked by CRA issue that warrants president Lee Amaradio (left) and I-CAR trainer Toby Chess (right) attention from the announced his plan to take legislative action if Insurance Commisnext Insurance sioner Steve Poizner failed to address the issue of damaged vehicles Commissioner. So, repaired with aftermarket reinforcement bars. Jones said he wants claimants notified if they had their vehicles repaired with an after those are some of market bumper bar and said he wants insurers to stop requiring the the major issues. I use of aftermarket rebars [on all repairs]. think there are agency conduct the surveys, like the many others that are obviously out Bureau of Automotive Repair (BAR). there. But these are simply examples A number of leaders in the collision of things I will turn my attention to repair industry have proposed this that are reflective of a broader set of idea to me and I think it’s certainly problems in the relationship between something that’s worth exploring. It insurance companies and the collision would obviously require legislation, repair industry. but that’s the kind of thing a new InSee Dave Jones Interview, Page 28
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Management Training Series: When Expressions Come True
I write this story as an example of what not to do. I also write this story as a fable, to protect the indignant. Therefore, it starts like this:
Once upon a time, in a far off land, there was a kingLarry Williams dom which had existed for two generations. The business of this kingdom had grown over the years, and the castle was now far too small to fulfill all of the kingdom’s needs. The present king needed to expand his castle. He called in all types of workmen, and they labored together for many weeks in order to enlarge the castle. In the course of their various labors, they attempted to communicate and coordinate with each other. Most of the time things went well, but occasionally there were breakdowns. This is the story of the result of one of those communication errors. Long, long ago, the king’s father had decided to install over his ground floor office, a small apartment with a bath, a bed, and a private stairwell. The present king used it primarily for storage, but valued the privacy of his own bathroom. He was a quiet man, happy at his desk, and few of his subjects cared to disturb him. During the expansion of his castle, there were of course, necessary changes made to the existing infrastructure. Intermittently, the subjects would lose their water, power, and other services, but most of the time there was warning of these events, and they were dealt with as almost routine. This particular day, however, was not routine. Unknown to anyone except for two of the workers, it became necessary to reroute the plumbing from the old apartment area. These pipes were located in the area between the first and second floors of the castle. Here is where the communication breakdown occurred. The workers assumed that the old pipes were seldom used, and that there would be no need to climb down and find the overseer;
post notices, etc. They thought that their repairs would be completed quickly and that no one would notice or even care about their work. They were sadly mistaken. They had completed half of their work, and clean, fresh water was again available to the old apartment. Now it was lunch time. Both men took a well deserved break, as working in the crawl space between floors was extremely difficult. They relaxed and talked to each other, listening to the sounds of the other subjects working below. Those subjects had no idea of their existence, and took no notice of them, even though the work was directly over their heads. Now it came to the king the urge to use his apartment’s facilities. He saw no need, nor had he been informed of any need, to change his normal habits. He climbed the stairs, and sat upon his throne. For many moments there was nothing unusual, and all went well. The king finished his duties, and performed the final gesture, disposing of the evidence. At this point, my story brings fantasy to life. Several gallons of the king’s bounty went down the pipe as usual, until it came to the severed end of the pipe, between the floors. It missed the two men eating their lunch and all would have been well, except for two things. The men naturally shouted in alarm, but their noises did not have the desired effect. Instead of dispersing the subjects below, their shouts drew the attention of all in the vicinity, gathering them to the source of the shouting. The second problem was the force of gravity. This force pulled everything down from the crawl space, through the false ceiling panels, and onto the heads, bodies, and workspace of the subjects below… yes, at that moment every crude joke, tagline, and job description came true. You can understand, no further work was accomplished that day.
Every fable needs to teach a lesson. You might assume this lesson to be
one about communication, planning, or other such items; it is not. The lesson from this fable comes after the event. The king, who must have been informed of the results of his actions, never said a word to his subjects. Without any word from the king, the subjects were free to think the worst. They waited in vain for any sign of his distress, embarrassment or concern. Understand that it was never his intention to initiate this event, it was an accident. But the result of his silence was even worse than the event itself. He was perceived as uncaring and cold. He lost the respect of his entire kingdom. Even the relatives of the subjects working in that department were offended. Construction slowed, permits were delayed, sales slowed; subjects left for better lands. The moral is clear. If you are a manager, at any level, and an employee suffers due to your actions, apologize. An apology costs the giver nothing, and gives the receiver everything. Admitting responsibility for
your actions —even accidental ones—is a sign of moral character. Your employees will know that you care, and will return your consideration with their loyalty. You have the power. Your decision in a crisis can change an event from a catastrophe into a shared joke, or just as easily destroy or enhance your reputation.
See Larry’s previous Parts for Profit articles at www.autobodynews.com. Go to www.autobodynews.com > content > distinctive-dealerships.html Larry Williams is an innovative parts manager with national awards and over 30 years of experience in creating and managing profitable departments. He can be reached for consultation at firstname.lastname@example.org.
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On Creative Marketing
Tom Franklin has been a sales and marketing consultant for forty-five years. He has written numerous books and provides marketing solutions and services for many businesses. He can be reached at (323) 871-6862 or at firstname.lastname@example.org. See Tom’s columns at www.autobodynews.com under Columnists > Franklin
Can a Person-to-Person Approach Bring in Business? with Thomas Franklin
A reporter in Washington D.C. recently reported that Illinois Republican Congressman Timothy V. Johnson makes one hundred or more phone calls to his constituents every day. He calls from home, the office and the airport. He calls while waiting in traffic in his car, while working out on his treadmill, and while walking through the Capitol. He says, “I think a good many of my colleagues spend too much time talking to each other and not enough time talking to the people they represent.” Many years ago I briefly worked with a charitable organization that had every employee who had a few free moments call some prior contributors. Another private school I came in contact with had a similar policy of having idle employees personally call prior and potential students. Both of these organizations attributed a large
degree of their success to these phone calls. In this day of unwelcome “robocalls” and uninvited phone solicitations, can calls like this be effective? The fact that the calls continue already tells you that they must produce results or they wouldn’t be continued. Could a body shop produce similar results if idle employees called prior customers? A shop owner might complain, “I have thousands of prior customers. I couldn’t possibly call them all.” Congressman Johnson has 653,647 constituents. If he called 100 of them every day for four years, he would still only reach 25% of them, but the calls he has made have kept him getting re-elected for years. Obviously for a body shop it would be most effective to call the repeat and most profitable prior cus-
26 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
tomers, but an old sales law says the volume of business coming in is directly proportional to the amount of communication going out. Any calls going out would be better than none at all. So, assuming you decided to try this calling approach, what do your people say when they call? A prior client of mine had a practice I haven’t run across in any other shop. After every repair he told the customer he would be calling in about a month to have him or her bring the vehicle back to buff and polish the repaired area. For one thing, he said this allowed him to make one more check on the quality of the repair and catch any potential problems, plus he could use the opportunity to press for possible referrals to an employer, employees or just family and friends. But when they came in he also suggested they do a complete detail of the entire vehicle,
and he frequently sold the customer on doing it. Even a year after a repair, very few customers would refuse an invitation to come in to have a repair checked for durability and possibly a free buff and polish. The cost of this free service should be more than offset by detail sales. Best of all, these calls can be made by just about any employee since no technical knowledge is needed. The next level of call could be considered to actually be a sales call, but disguised as an information call. Prior customers are called to inform them of new services and technology available at the shop now. If the shop has added or upgraded alignment equipment, the customer can be invited to come in for an alignment at a discount. Since more car owners are now upgrading their existing vehicle rather than buying new, the call could focus on equipment that is now stan-
dard in new vehicles, like GPS systems, back-up lights and systems, and updated cosmetic improvements. Rather than pushing for a sale over the phone, a better approach would be inviting the customer in to come in to see a display of available upgrade equipment. While not as likely to be welcome to every person called, asking for participation in a brief two or three question survey will get the attention of some prior customers. A good place to start would be telling the customer the shop was intending to make some improvements and add some new services. The caller then asks the customer what additional services he or she would like to see offered by the shop. The second question would ask if the customer were planning to upgrade their existing vehicle or to buy a new one. This opens the door to talking about the upgrade options al-
ready available at the shop. Will employees be willing to make these calls? If business is slow, this may be a chance to save their job. Phone solicitation is generally a very tough job. A large percentage of people called simply hang-up or angrily tells the caller not to bother them. Fortunately a shop employee calling a prior customer has the advantage of being able to say this call is from the shop that recently repaired their vehicle and it is simply a follow-up information call. After that is made clear, it is vital to then ask the customer: “Do you have just a few moments to talk now, or would there be a better time to call?” This shows courtesy and concern for the person’s time. That should minimize hang-ups and avoid damaging the shop’s relationship with the customer. And it may also bring the customer back to the shop for those additional services.
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Marchionne Targets Chrysler IPO in Q2 of 2011
Chrysler Group LLC will probably hold an initial public offering in the second half of 2011 as investors approved Fiat SpA’s plan to spin off its industrial business September 16 according to reports made by Bloomberg News. “I don’t think it’s the first part; I think it’s a second part of the year event,” Sergio Marchionne, chief executive officer of both carmakers, told reporters in Turin today when asked when in 2011 a Chrysler share sale would take place. Fiat, which acquired a 20 percent stake in Chrysler in June last year, September 16 announced the approval by shareholders to separate CNH Global NV, Iveco and some industrial and marine operations into a new company called Fiat Industrial SpA, leaving Fiat Auto and luxury brands Ferrari and Maserati in the new Fiat SpA. The separation would allow Marchionne, 58, to focus on carmaking and would give Fiat an entity to facilitate future alliances. The spinoff, the most sweeping corporate reorganization in Fiat’s 111year history, will resolve an issue that’s been a “thorn in the side” for
Italy’s largest carmaker, Marchionne told shareholders today. Fiat Industrial, which will start trading in Milan next January, may be valued at 8.38 euros a share, according to the average projection of five analysts surveyed by Bloomberg News. That’s 49 percent more than the 5.64 euro value estimated by the analysts for the new Fiat SpA, which will include auto-making operations and the Ferrari and Maserati luxury brands. “Fiat Industrial is undervalued by investors and will benefit from a recovery of the capital goods market,” said Gabriele Gambarova of Banca Akros SpA, who is ranked No. 1 among Fiat analysts tracked by Bloomberg and based on relative returns of the stocks they covered in the past year. “Investors will be more cautious on Fiat auto, which will have to invest to complete its commercial offer.” Before today, Fiat had risen 34 percent since the Chrysler deal and was down 1.6 percent since the spinoff announcement on April 21. Fiat auto may double its trading profit to 1.2 billion euros, according to the business plan presented in April.
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Dave Jones INTERVIEW by Ed Attanasio (cont. from p. 22)
ABN—Please tell us in brief your history of involvement with auto repair and specifically the auto body repair industry.
DJ—My background and training as a legal aid lawyer, which is what I did for 5–6 years after graduating from Harvard Law School. During this time, I provided free legal assistance for low-income families, and in doing so, I did a lot of consumer protection work, and that’s been a big part of my career. After that, I was a senior aide to U.S. Attorney General Janet Reno. Then I served as a city council member, and currently I’m an assembly member. In each capacity, I’ve worked a lot around consumer protection in a wide range of capacities at many different levels. And one of the biggest consumer protection issues out there right now revolves around consumers whose cars are damaged and who have insurance and who are trying to get the best possible and safest repair they possibly can. But oftentimes they’re encouraged by their insurers to move into a direction that may result in an unsafe repair of poor quality. That’s why issues like steering and the quality of aftermarket parts are just some examples of this problem. I began to become familiar with these issues as a council member representing a portion of my town that contained several members of the collision repair industry, and I learned a lot about the issues they were facing, and the issues their customers were also facing. Then we started working on these issues in the Assembly, specifically as a member of the State Assembly. I authored Assembly Bill 1179, which expands the disclosures required by automotive insurance companies following an accident. And that’s important, because many people don’t realize that they have the right to get an independent repair estimate or negotiate with their insurance company about the value of the estimate offered by the insurance company. Last year I was one of the few in the Assembly who opposed Assembly Bill 1200, which, unfortunately, did pass. [Search autobodynews.com] This bill undermines existing law which prohibits insurers from requiring that a automobile be repaired at a
specific automotive repair facility, but I played a role in trying to stop bills like this one, that roll back consumer protections as well.
ABN—Do you think the contentious issues that exist between the insurance companies and body shops will ever dissipate or disappear completely?
DJ—As long as you have a situation where the insurance companies make more money by driving their costs down, as a result of reducing what they pay to auto body shops for safe repairs, there will always be this tension. And so it’s important that we have an Insurance Commissioner who is strongly oriented towards consumers who have had the opportunity to work with the collision repair industry to make sure that we provide a level playing field. You have insurance companies that have enormous economic power and they have the ability to impede or cut off the livelihoods of small business owners who own collision repair shops by essentially denying them referrals. Insurers have to be careful about that, because there are laws prohibiting steering, but we know it happens anyway in many instances. As long as there is this huge economic inequity between body shops and insurance companies, we’re going to need an Insurance Commissioner who is focused on addressing this imbalance.
ulations from those states with the weakest form of regulation. There would be uniformity, but it would be weak and it would really disadvantage California consumers and collision repair facilities here in California. I am opposed to federalization of insurance regulation, because it’s a lot better to have a state regulator who is closer to the ground and makes adjustments based on what’s happening here, as opposed to being driven by events in Mississippi, Louisiana or Georgia.
in your opinion?
DJ—I consistently refuse to accept donations from insurance companies or anyone associated with the insurance industry. I think it’s important that there’s not a conflict of interest, so I’m not soliciting or accepting contributions from the insurance industry.
ABN—Where do you think the collision repair industry will be in 5–10 years?
ABN—How will you continue to be a consumer advocate without becoming beholden to the insurance companies?
ABN—Has the bailout for the American car manufacturers been a success
28 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
DJ—We were faced with a total collapse of that industry and I think that the federal government was correct to intervene. It was a terrible situation where a lot of people lost their jobs and their businesses, but if the government hadn’t intervened, it would have been a lot worse. So, while it’s not perfect, it is good news, because these companies are showing profitability again and it looks like the government will get repaid and we’ve protected an important part of what remains of our dwindling manufacturing base.
DJ—My hope is that we’ll continue to have an independent collision repair industry in this country. I think the industry feels under assault and rightly so. One of my main goals as See Dave Jones Interview, Page 36
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ABN—Will federal insurance reform have any impact on the collision repair industry in the near future?
DJ—There have been some suggestions made in the Federal Administration and in Congress to federalize insurance regulation. I’m not just talking about health care reform legislation, which I supported, but more broadly all aspects of insurance regulation would be federalized. I feel that this would be a big mistake for Californians and for the collision repair industry, because we already have fairly robust regulations that protect consumers here in California as opposed to other states. If that authority was taken away from us and taken over by the Federal government, there’s every likelihood that it would be a race to the bottom. In other words, the Federal government would adopt the reg-
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CAA Santa Clara Hosts Annual Trade Faire by Ed Attanasio
Every year the CAA Trade Faire provides an opportunity for CAA members, vendors, body shop and dealership personnel to network, learn
Inn Airport in San Jose, Calif., an event that is more than 20 years old and unique to this CAA chapter in the Bay Area. Dave Mello, the lifetime treasurer for the CAA Santa Clara’s chapter,
The CAA Santa Clara County’s annual Trade Faire was well-attended on Sept. 15 in San Jose
more about the industry and re-connect with old friends. On September 15, the CAA Santa Clara chapter’s Trade Faire was held at the Holiday
was very pleased to see a good turnout for this year’s faire. “We had more than 160 members and associates and 38 vendors on hand to make it a great
Trade Faire once again,” said Mello, owner of Andersen Behl Body Shop in Santa Clara said. “It’s a great night, because body shop professionals and vendors alike can network free-form, as opposed to
Vendors featuring computers, software, frame equipment, paint, clips and hardware, legal aid, welders, infrared lamps, paint gun cleaners, car rentals, first aid supplies, radiators and more displayed their products and/or
More than $5,000 in prizes was raffled off during the CAA Trade Faire
sitting at a dinner and listening to a speaker. This way, people can interact in their own way in an environment without a schedule or an agenda.”
services at the CAA Santa Clara Trade Faire. More than $5,000 in prizes was raffled off during the event, Mello said.
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 29
Service, Service, Diagnostic Di Diagnostic gnostic and an nd d Mechanical M e chanical ch aniccal al NEWS Mec echanical Mech ech ec hanical ca
Mobile Airbag Company Relies on Autoland Scanners Western Edition
by Ed Attanasio
An essential piece of equipment can make or break any company. If a body shop has problems with a lift or a
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works for require either troubleshooting or diagnostics to re-set airbag lights before they can complete the repair and return the vehicle to the customer, he said. Car dealers and
Rod Salas relies on his iSCAN II to run Airbag Tech, his LA County-based mobile airbag repair and service company
paint gun, it can slow down their production significantly. That’s why Rod Salas, owner of an airbag mobile service company in Southern California, knows that his scanners have to work on every service call or he’ll lose time and of course, money. That’s also why he said he’s happy to use scanners made by Autoland Scientech, a worldwide leader in diagnostic tools since 1990. Salas, 46, has been working in the airbag industry since 2000, and in 2003 he started Airbag Tech in Downey, CA, servicing all of Los Angeles County. It’s a small company with two vans and several on-call part-time employees, including his son Rod Jr., 20, but the company is busy even in a recession, he told Autobody News. Half of Airbag Tech’s clients are collision repair companies and most of the time the body shops Salas
individuals who find him on the Internet make up the remainder of his business, Salas said. In the beginning, body shops in L.A. weren’t getting involved with installing airbag systems, Salas said. “They would call me and say can we do an installation or come in to see what this vehicle needs. We would give them a list and they would buy the parts, so they could make some money. And then we’d come back and do the work. Now, to make more money, body shops are doing their own installations themselves, but sometimes they make mistakes. That’s when they call me and I’ll either service the airbag, perform troubleshooting and/or do the diagnostics to find the problem and clear the light.” It’s always about the light, Salas explained.” 99% of the time the light is on and they don’t know why. Most
30 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
of the time it’s the last thing they’ve done and they’re in a rush to get the vehicle ready for the customer. So, I get down there as fast as possible, half-hour to 45 minutes most of the time, to check those codes and do whatever I need to do to get the job done. That’s why I have the Autoland scanners, because they work well for almost all of the cars we encounter.” Salas was initially introduced to Autoland’s scanners a decade ago, he said. “When I started working for an airbag company ten years ago, I began to use one of Autoland’s scanners and I learned how to use it very quickly. The technology was a lot different back then and it was a little black scanner that would just read the codes. We had to look up the codes and figure out what the problem was. “So, when I started my own business, I invested in all Autoland scanners,” Salas said “First I had the iSCAN and then later I got the iSCAN II. Ease-of-use and great coverage—those are probably the best
use the iSCAN II for pretty much all the cars I diagnose. When it comes to Honda, Mercedes-Benz, Audi, Volvo and BMW, the iSCAN II is the only one I will bring with me to the customer’s shop.” Was his investment in his Autoland scanners a good one, we asked Salas. “They’ve paid for themselves many times over by now, definitely. It cost us roughly $6,000 for the iSCAN and the package that comes with it, but it also includes a great warranty and software updates as long as we have the device.” Salas is obviously enamored with his iSCAN scanner, a tool that he can use to make money on a daily basis, but he also values the thorough support that Autoland offers him, so that he can make sure his device will work well even under heavy usage, he said. “They can train you how to use these scanners over the phone. One of my part-time guys learned how to operate the scanners in less than one day. It was a very simple step-by-
The software in with Autoland Scientech’s iSCANII system supports 40 OEM manufacturers
things about these scanners. I have some other companies’ scanners, but they’re only for backup purposes. I
step process and they make it very easy to understand. Also, I can get my iSCAN II updates downloaded
directly over the phone every 3-4 months free for three years. The support offered by Autoland is very good and we’re never worried about getting stuck out in the field without one. Richard Zenteno, the Marketing Director for the Americas for Autoland Scientech U.S.A., said he has recently seen a movement throughout the country in which body shops are using companies such as Airbag Tech to clearing codes and servicing their airbags. And many shops are also buying Autoland scanners themselves to do all their diagnostics in-house, he said, to retain more control of the repair and capture more revenue in the process. Autoland Scientech was founded 20 years ago, developing engine analyzers initially, Zenteno said. “We’ve been doing something right in this business for two decades to be around this long. We’re leaders in this area and our excellent reputation is the result of hard work.” Zenteno has seen body shops thrive in the world of diagnostics by embracing his company’s line of scanners, he said. “The iSCAN II is a
multi make scan tool that offers comprehensive coverage ranging from engine, transmission, ABS and most importantly airbags. In the body shop, it is essential to have a low cycle time and this tool helps lower the cycle time plus keep the profits in house. With our tool you’ll be able to read the current fault codes on many systems allowing you to quickly understand the problems the vehicle.” Autoland’s scanners are designed for ease-of-use and to be easily understood, Zenteno said. “The iSCAN II is a very intuitive scan tool that is fast and easy to learn. We have online step-by-step instructions to perform certain procedures and various visual guides to enable the customer to quickly get up to speed with how to connect. I believe this is one of the most feared obstacles to overcome however scanning and erasing a vehicle is very easy. You simply must connect to the vehicle, select the make and model and the system that you want to diagnose the select the function like reading or clearing codes and you are on to the next vehicle. This can be done in less than
five minutes and you can charge one hour for diagnosis and save the time to send two people to the dealer and wait for the vehicle to be ready.” Buy a iSCAN II and you can forget about your scanners for a long time, Zenteno said. “Autoland designs products that are very durable and most of our customers have had our tools for 10-15 years. When you invest in a machine of any type in a body shop, you don’t want to have to questions as to whether it will perform each time you use it and that’s why we’ve built these scanners to hold up in any environment.” By using Autoland scanners, can body shops build their business and improve their reputation for doing everything in-house, including diagnostics? “Like I mentioned before, cycle times is a critical compo-
nent of the operation if you want to keep a good a stable relationship with the insurance carriers,” Zenteno said. “The other critical component for the business is profitability. With our scanning equipment you are attacking both subjects simultaneously.” Does Salas think he’ll be using the Autoland scanners in 10-15 years? “The technology will change, but diagnostics and airbags will be around for a long time,” he said. “I am sold on the quality, support and coverage of my ISCAN II, so I will be using these products as long as I can. Autoland Scientech USA 1001 Cypress Creek Rd. Ste 101 Cedar Park TX 78613 (512) 336-5152 www.autolandscientechusa.com www.autotechforum.net
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This is a new story by Scott “Gonzo” Weaver as posted on his website, www.gonzostoolbox.com. 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
Even in a Big City It Can Still Be A Small World with Gonzo Weaver
I’ve been in private business long enough to gain quite a following from all over the city and surrounding areas. Most of it good, I hope… and then there are some of my customers that once they get to know me they’ll bring just about anything into the shop for me to repair. Just the other day I had one of my regulars bring in a huge lawnmower for me to look at. It has a Caterpillar diesel engine on this huge grass cutting machine the likes of which I’ve never seen before. But as with anything mechanical/electrical if given the right tools and the proper information I’ll take on the challenge. It wouldn’t start; the first thing I could tell about it was the starter bendix was out of it. It would hit the flywheel spin a quarter turn and then nothing. The bendix would stay engaged and the starter motor was spinning like mad but the bendix never moved. Each time I would turn the key the same thing would happen. The engine would spin just a bit and then the bendix would just stop turning. I took the starter off and gave him a call. Since his place of business was just around the corner it didn’t take him long to show up. “I’ll go get it rebuilt,” he said, as he grabbed the starter and headed out the door.
A few hours later he was back, but the starter wasn’t repaired. He had taken it to two different starter overhaul shops and both said it was Ok… I thought that was a little strange… this thing was in dire need of a bendix. I muscled the engine over with a pry bar just to make sure there was no issues there, it was fine. I was very certain the bendix was at fault, there was no mistake about it. But, if the overhaul repair shops have as good a reputation for their work as I have, I’ll have to take another look at this whole thing and be sure I’m not diagnosing it wrong. I stuck the starter back on and as I expected the same thing was happening to the starter. I decided to skip this little problem and try to determine if anything else was wrong… because according to the owner the starter probably wasn’t the only problem wrong with it. He had already tried a new ignition switch but when that didn’t do the trick he brought it to me. After checking the wiring diagram it was clear that one wire was on the wrong post on the replacement ignition switch. I asked the owner if he made sure he put the wires back correctly when he changed the switch, he not only was extremely sure that he had them in the same place, he also took a photo of the old switch wiring
so that there was no mistake about where each of the wires went. With that information it had to mean only one thing… the ignition switch had to have been wired wrong from either a previous repair attempt or from the factory. Because, the way it was hooked up the starter solenoid was engaged the whole time the engine was running. I went ahead and moved the wires to the right spots and gave it one more try. When, I could get the starter to stay engaged long enough to spin the engine, there still wasn’t any voltage at the fuel cutoff solenoid. Something else had to be wrong with it. Time to consult the wiring diagrams again. Now it was only a matter of following the road map of a wires and trace out how all the individual safety cutoff switches played a part in the starting and running of this beast. Sure enough, one of the fail safe switches was faulty. It should start now, that is, if you could get the crazy starter to engage long enough to throw the engine over top dead and create enough compression to keep itself going. It took several attempts of flicking the key on and off to get it to happen but it did finally start. Once it started I knew why no one noticed the starter bendix was still stuck out against the flywheel… you couldn’t hear a thing
dicted that within the next 10 years electric vehicles will have a range of 500 miles or more. He went on to explain that at the point the further development of fast charging infrastructure will be unnecessary as most drivers rarely drive more than 500 miles in a day. Volkswagen plans to sell 300,000 electric vehicles a year by 2018, which would translate to 3% of all sales. VW’s hybrid ambitions could lead it to overtake Toyota as the world’s largest automaker within eight years. Key details of Volkswagen’s strategy include introducing the company’s first hybrid electric vehicle the Toureg 2010, and in 2013 three EVs,
likely to be versions of the Jetta, Golf, and the Up. At ERL, Eberhard’s main focus is the development of the lithiumion battery packs for the Golf bluee-motion and E-Up all-electric vehicles—both of which are destined for trials and eventual sale in the U.S. The batteries being developed at ERL are the 18650-type lithium-ion cells commonly found in laptops and they will also be used for the more premium Audi e-tron electric vehicles as well. Eberhard explained that the common 18650-type battery is at the forefront of electrical storage technology. There’s also a cost factor; the
with this huge motor blaring away (ear protection is in order) Now, the owner only had one more task to do. Take the starter back one more time to the rebuild shop and get a new bendix installed. I offered to install a new bendix for him, but he insisted on going back to the overhaul shop and tell them about it. He said there was something about “putting a board in the bendix” which seemed to be the way both places checked to see if the bendix was any good. I’ll bet it would hold a board… but I don’t think a little old piece of wood jammed into the starter nose cone was any match for this big diesel motor. I just hope my reputation has gotten to that end of the city, because he planned on telling them who said the bendix was bad. Even though the starter overhaul shop was convinced it wasn’t the bendix… he was going to insist on having one replaced. A day later he had a new bendix and the big old grass munching beast was as good as new. Sometimes, all it takes is experience and a reputation to get your point across. Just make sure you can back it up with clear evidence and good diagnostic skills. It’s an excellent way of gaining a good reputation, even in the big city or the small world we live in…
Volkswagen Predicts EV Success, 500 Mile Range By 2020
Volkswagen is intent on becoming the world’s leading automaker by 2018 and that means being the top dog in every segment, including hybrid and electric vehicles according to reports made by Autocar and the Huffington Post. In fact, the automaker is so serious about its electric car efforts that it recently announced plans to start building its own electric powertrains, and enlisted the help of Tesla co-founder Martin Eberhard. Eberhard is the electric vehicle engineering director at Volkswagen’s Electronics Research Laboratory (ERL) in Palo Alto, California, and speaking recently with Autocar he pre-
34 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
18650-type battery, for example, costs about half of that used by the Nissan Leaf. Incidentally, in addition to electric drive systems, the engineers at ERL are also working on new driver assistance systems and human-machine interface technologies, as well as improving the multimedia functionality and connectivity for the different Volkswagen Group brands. Some of its latest developments, for example, are the autonomous Audis that competed in the DARPA Challenge as well as the Google Earth functionality for the sat-nav systems featured in the new Audi A8 and A7 models.
TX-Based Service King Plans National Expansion Dallas-based Service King plans to embark on an ambitious national expansion led by new president Cathy Bonner that could double revenue over the next five years according to reports in the Dallas Morning News. The chain of collision-repair centers, founded in 1976 by company chairman Eddie Lennox, recently opened seven shops in Houston and the success of those centers—some were profitable after three months— prompted Lennox to consider the leap outside Texas. Most of Service King’s 31 shops and 1,000 employees are in the Dallas area. The privately held company, which says it has a 20 percent market share in the area, expects to repair about 70,000 vehicles and earn $150 million in revenue this year. “We were able to experiment with a lot of things in Houston that might work for us nationally,” said Lennox, 57, a former body-repair man who started Service King in a threebay tin building in West Dallas. Bonner, a Dallas native, has no experience with auto repair. But she served as executive director of the Texas De-
partment of Commerce from 1991 to 1994, founded The Women’s Museum in Dallas and has started and managed three marketing and communications firms. She also is Lennox’s sister-in-law so she knows the Service King culture, Lennox said. Bonner’s primary responsibility will be to develop a strategic plan for growth, determining which markets Service King should enter and overseeing that plan. “This relates to growth and getting someone who can help us achieve it — and not ex-technicians like myself,” Lennox said. He believes that planning for major growth requires knowledge that he and his managers don’t have. “Eddie approached me and convinced me I don’t need to know how to fix a car,” said Bonner, 60, a finalist in 2007 for The Dallas Morning News’ “Texan of the Year” award for her work to pass legislation creating the Cancer Prevention and Research Institute of Texas. “I just get to build on their success.” Bonner said she intends to have a growth strategy plan completed by the
first of the year. “I had a lot of experience identifying new markets and bringing in corporations when I was with the state,” said Bonner, who was part of a team of officials in the early 1990s that helped convince General Motors Corp. to not close its assembly plant in Arlington. Service King offers several programs that Lennox says are unique— including a computer program developed by vice president Jeff McFadden that allows insurers to monitor and audit the entire repair process. “We also have some operations programs that [vice president] Danny McKinley put into place that no one else does, and those products really made me more bullish on growth,” Lennox said. Despite its moves to get larger, Service King has no interest in going public, said Lennox, who holds 80 percent of Service King’s stock along with his wife. Managers throughout the company own the remaining 20 percent. “We’re well capitalized, and we have good banking relationships,” he said. “We envision doubling our revenue in three to five years.”
August Sales Down vs. C4C
Automakers struggled through another disappointing month in August, as weak housing and other economic data discouraged consumers from making big purchases. Auto sales tumbled from prior-year levels, as expected. Compared with August 2009, when the government’s “cash for clunkers” program fueled a surge in demand, last month’s sales were down 21 percent. But the selling pace also slowed from the previous month, slipping to 11.47 million cars and light trucks, on an annual basis, from 11.54 million in July. The selling rate last August was 14.17 million vehicles, with cars accounting for 57.6 percent, according to Autodata Corp. This August, as gas prices held steady in a sluggish economy, light truck sales accounted for 49.7 percent of the total, up from 42.4 percent a year ago. Chrysler Group LLC, Hyundai Motor Co. and Ford Motor Co. fared best in a difficult market. Chrysler was the only major automaker to report a sales increase last month, a jump of 6.9 percent, because automaker hardly benefited from the “cash for clunkers” program last summer.
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Dave Jones INTERVIEW by Ed Attanasio (cont. from p. 28)
the Insurance Commissioner is to make sure that consumers have choices within an independent collision repair industry and the insurance industry isn’t pushed to make profits that sacrifice safety and quality.
ABN—Are you truly going to enforce laws that are already on the books?
DJ—I’m going to support the existing laws while always looking for ways to strengthen and improve them. There’s no question that sufficient enforcement hasn’t existed in a number of areas and I intend to push for full enforcement. Continued from Page 13
Sales Tax Opposition
of $436,000. The administration of a tax on services could be complicated for the following reasons: 1. In order for businesses to comply with a new tax, the BOE has to be able to audit the tax to ensure accurate
ABN—How will you be able to stand up to the insurance companies?
DJ—I have a history of standing up to the insurance industry. If you look at my legislative history, I’ve been successful in passing a number of bills that were opposed by the insurance companies, and I not only got them passed but got them signed into law. I’ve been very independent and consumer-oriented, and am very willing to take on these fights. Taking no money from the insurance industry will make sure that I can and will remain independent.
remittance and compliance, if the BOE does not have an adequate auditing system, there would be little incentive for businesses to voluntarily comply. 2. In order to administer the tax, the definitions of services and everything included in the service would have to be well defined and specific. Absent clear definitions, administration would be costly and difficult. 3. Identifying and registering new
ABN—The current commissioner was often faulted because he appeared to want the insurance comissioner’s job as a stepping stone to higher office. How will you be different than your predecessor?
DJ—I have a stronger background and record for success in consumer protection and I think that I have demonstrated time and again that I can be effective and successful in protecting consumers and small businesses. One of the biggest differences between me and other people who’ve held this position, is that I am not using this office
businesses would be a significant administrative burden. There would be tens of thousands of businesses in California that would have to comply with the new tax; not only would there be costs associated with greater volume of tax returns but also significant costs associated with notifying businesses about the new requirements. 4. The administrative costs (collection and audit) for the tax would
as a stepping stone. My plan is to be the best possible Insurance Commissioner and to focus on the job at hand, as opposed to the next job. I’ve always found that if you do a good job at something, opportunities will present themselves and if I can continue in public service, that would be fine, but if the last thing I do is to be the best Insurance Commissioner I’ll be very proud and happy with that. ABN—Thank you very much. I think a lot of our readers will wish you great success in the election. Post comments at autobodynews.com.
proportionately increase depending on how broad the base of the sales tax is. Thank you for considering our views. Sincerely,
David McClune, Executive Director
cc: Members, California State Senate Members, California State Assembly.
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A Profile of the Evolving Collision Repair Marketplace by Vincent Romans, the Romans Group
Our fourth annual white paper tracking collision repair organizations that generate $20 million or greater annually in collision repair revenue comes on the heels of a slow to moderate recovering economy with an increasing chance of a double‐dip recession, or at least a much slower recovery than forecasted for 2010. In 2009 this economy has adversely impacted many of the auto physical damage aftermarket segments, including independent and dealership collision repairers, and is reflected throughout our findings and analysis in this paper. Our profile of $20 million multiple‐location collision repair operators (MLOs) continues to include: ● Independent, dealership and insurance company owned and managed collision repair operators ● Operators with one or more locations in single or multiple geographic markets within the United States ● Professionally‐managed operators providing performance‐based, brand‐recognized and competitively‐differentiated collision repair services ● Companies focused on achieving top‐tier performance results, high customer satisfaction and consistent quality repairs ● Businesses that tend to pursue multiple customer
segments for collision repair revenue including property and casualty insurance, automotive dealer, accident management, rental car, and direct pay consumers We recognize that there are many collision repair businesses of significant size processing under $20 million annually throughout the United States today. Our focus continues to have a minimum annual revenue baseline of $20 million within the independent and dealership collision repair segments. We believe that the $20 million‐plus segment will continue to grow its share relatively faster than other segments of the collision repair market. This growth will be driven by a number of variables. ● The segment’s local and multi‐market footprint which offers greater consumer and insurance company choice ● Multi‐level selling and marketing for first choice preference and access to insurance company direct repair claims ● Ongoing operational improvement resulting in increased vehicle repair quality, daily throughput and reduced cycle time ● Business differentiation through expanded service offerings ● Market leadership through competitive performance results ● Expanded hours of operation including multiple daily shifts and weekends
● Access to capital for expansion and development ● An integrated approach to capturing consumer, insurance and fleet business through brand recognition, reputation, performance, and multi‐level insurance company focused selling and marketing ● Mergers and acquisitions A recent 2010 example of this type of accelerated growth is Boyd Group’s mid‐ year acquisition of True2Form’s multiple‐location, multi‐market business which had 37 locations and $71.0 M in annual revenue at the time of acquisition. With this acquisition, Boyd’s U.S. business, Gerber Collision, received an immediate lift in its number of locations to 92 locations in 11 states. This expanded Boyd/Gerber’s network reach and operating platform which is seen as advantageous by many insurance companies. These types of acquisitions and mergers will continue to influence the consolidation and right‐sizing of the collision repair industry as well as MLO market share in the U.S. The $20 million MLO collision repair profile used for this analysis excludes repair facilities that focus exclusively or primarily on expedited paint and cosmollision, small dent, glass repair only, mechanical only, and collision repair related primarily to auction vehicles. We do recognize that within this segment some companies continue to be in various stages of strategic growth, transformation and transition to business models approaching that of an in-
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 37
surance company DRP wholesale or diversified customer segment platform which may cause us to include them in the future. Consequently, we created a segment that includes collision repair conversion and multi‐segment customer‐focused and capable franchisors which we refer to as multiple‐location networks (MLN). These MLNs have included Maaco, CARSTAR and ABRA. This year we have added and are highlighting within this growing segment Fix Auto, an actively‐marketed, growth‐oriented brand banner network. These organizations represent a significant market segment of the collision repair industry that we believe warrants further tracking and monitoring. Some of our 2009 discovery, key research and analysis include: ● There are approximately 39,500 collision repair locations in the U.S. ● There were approximately 2,000 dealership and independent collision repairers who left the industry through business failure or exit strategy, dealership closings, mergers, or acquisitions ● From 2006 through 2009 there has been an estimated reduction of 12 percent or 5,500 independent and dealership collision repair facilities in the U.S. ● There are 54 $20 million MLO organizations which is 3 fewer than in 2006 ● These MLOs processed $3.1 billion in annual revenue which is $404 million more than they processed in 2006 ● Within the top ten $20 million MLOs, five are independent and five are dealer groups. These ten organizations account for 47.6 percent of all $20 million MLO production locations and 53.3 percent of all $20 million MLO revenue ● MLO market share grew to 10.3 percent versus 9.1 percent in 2006 ● Multiple location networks (MLN), comprised of conversion franchise, multi‐segmented franchisors and brand banner networks, reflect a market share of $1.3 billion or 4.3 percent of the U.S. collision repair market ● Combined MLO and MLN total revenue processed is $4.4 billion or 14.6 percent of the U.S. collision repair market ● In 2009, the number of collision repairers utilizing collision damage estimating software and shop management systems increased by 1,000 locations respectively ● MLOs have 2.4 percent of the locations and 10.3 percent of the revenue ● MLOs with MLNs added have 4.7 percent of locations and 14.6 percent of the revenue ● The National Automobile Dealers Association, NADA, estimates that 6,461 dealers processed $6.6 billion in repair revenue in 2009 versus $7.3 billion in 2008, a decline of nearly 10 percent or $0.7 billion ● Over the past three years, there has been a reduction of 2,231 dealer collision repair operators, 25.7 percent fewer than the 8,692 operating in 2006 ● Independent collision repairers process $23.7 billion in approximately 33,039 locations ● On average, the $20 million MLOs process $3.1 million per location, nearly five times more than the
average annual revenue for non‐MLO repairers of $697,542. ● Revenue for the top ten MLOs was $1.7 billion, an increase of $367 million over 2006’s revenue of $1.3 billion Based on our longitudinal research and analysis involving published third‐party industry sources, primary and secondary sources, and industry experts, we continue to ascertain that there is no one certain number that is universally recognized or accepted as being the “correct” number of collision repairers in the U.S. today; rather, there continues to be a wide range of opinions and uncertainty around determining a meaningful and relevant collision repair market size. This is especially true in light of the current recession and macro‐economic conditions which accelerated the loss of both dealership and independent collision repair operators in 2009.
U.S. Collision Repair Market Size
Source: The Romans Group LLC
Our estimated U.S. market size for the number of collision repairers through year end 2009 is 39,500. This estimate continues to reflect the long‐term decline which began in the late 1980s. As seen in the chart below, the number of independent and dealership collision repair facilities in the U.S. has declined by 51 percent over the past 29 years. Since 2006, we see a reduction of 5,500 collision repair facilities within the United States, a 12 percent decline in four years. The contraction we have seen in the industry during the past few years is expected to continue into the foreseeable future. Over the next decade, greater market share will continue to shift to the MLOs and other growth‐oriented collision repairer segments which deliver high‐quality and consistent repair performance, have strong insurance and consumer
38 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
brand recognition and reputation, and adapt quickly to market, consumer, and insurance needs through innovative solutions and services. This market share shift will move the industry toward a less fragmented and capacity‐normalized model.
Our best‐efforts approach in sizing the collision repair insurance and consumer‐paid claims market involved reviewing and analyzing numerous information sources as well as collaborating with insurance industry experts to finalize a macro industry size. Insurance‐paid repairable claims expenditures for 2009 remain relatively stable at approximately $27.7 billion. Consumer‐paid claims have increased slightly to $2.6 over 2008. We estimate that the combined insurance and consumer‐paid claims for repairable vehicles for 2009 was approximately $30.3 billion. Utilizing the traditional data point of the total number of collision repairers within the United States continues to have value for calculating market share. However, repairers who employ collision
Source: The Romans Group LLC
damage estimating and shop management software while leveraging other claims processing and management technology will be the collision repair providers last standing and preferred by insurance
companies. These insurers will co‐manage with repairers the majority of their insured’s collision repairs. Innovative, risk‐taking repairers will move toward a self‐managed vehicle repair model which will require less insurance company oversight, involvement and disintermediation. One analysis of MLO production location market share relating to transaction processing software includes three primary market definitions: ● The traditional total number of collision repairer locations ● Locations utilizing collision damage estimating software ● Locations utilizing shop management software
Values for these market size data points are represented in the following chart.
U. S. Collision Repair Facility & Transaction Processing Software Profile Independent and Dealer
Traditional Collision Repair Market Size 39,500
Total Locations with a Minimum of One Collision Damage Estimating Software Installation1 30,000
Total Locations Utilizing Management Systems2 10,000
May be more than one installation per location. Includes both communicating and non-communicating systems. Assumes one per location
Our findings concluded that in 2009 there were 54 independent and dealership collision repair $20 million MLOs processing over $3.1 billion annually through 943 production locations. We attempted to identify non‐production estimating and drop‐off locations and base our market share on production locations only. While these $20 million MLOs represent 2.4 percent of the estimated 39,500 collision repair facilities nationally, they process 10.3 percent of the $30.3 billion in insurance and customer‐pay collision repair revenue. In other words, MLOs have 2.4 percent of the doors and 10.3 percent of the revenue. The National Automobile Dealers Association, NADA, estimates that 6,461 dealers processed $6.6 billion in repair revenue in 2009 versus $7.3 billion in 2008, a decline of nearly 10 percent. The balance of $23.7 billion is being processed by approximately 33,039 independent collision repair locations. On average, the $20 million MLOs process $3.1 million per location, nearly five times more than the average annual revenue for non‐MLO repairers of $697,542. There are many smaller independent and dealer non‐MLO repairers that achieve greater than the industry average annual revenue, especially those who represent and operate in the $10.0 million to $20.0 million segment. While this paper is focused on independent and dealership multiple‐location operators, we think it is important to recognize the continued interest in other collision repair models which we identify as multi-
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U. S. Collision Repair Market - Dollars in Millions Total Collision Repair Locations Total Collision Repair Revenue
2006 45,000 $30,000
3-Year Change -5,500 $300
Total Number of $20M MLOs
$20M MLO Locations Total MLO Locations Total MLO Production Locations % of MLO Production Locations to 39,500 Collision Repair Locations % of MLO Production Locations to 30,000 Estimating Locations % of MLO Production Locations to 10,000 Management Locations
MLO Revenue Total $20M MLO Revenue $20M MLO Share of Total Collision Repair Revenue
ple‐location networks, MLNs. These MLNs are growing competitively with their service offerings, insurance‐preferred value proposition, and market influence. When combined, their market share for vehicle repairs processed and their local, regional and national footprint both become significant every year. We included two of these types of models over the last three years. Two companies, CARSTAR and ABRA, reflect conversion franchise networks pro-
2009 39,500 $30,300
viding full‐service collision repair within multiple markets. ABRA not only offers its collision repair conversion model, but also continues to be one of the largest independent collision repair multiple‐location operators in the country. The other previously introduced model is Maaco, a division of Driven Brands, an auto‐related franchisor. Maaco offers a multi‐segment approach to consumer, insurance and fleet markets through its
40 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
multi‐line production paint, cosmollision and DRP capabilities. This emerging model historically has been focused on cash‐pay customers and fleets seeking primarily production paint and smaller repair options. This model is receiving increased interest from both consumer and wholesale buying segments as consumers shift to more price and service options including cash pay and deferred and partial collision repairs. Additionally, a growing number of Maaco franchisees are participating in insurance company DRP programs and have, as an extension of their service options, expanded their capabilities to offer full‐service, performance‐based insurance DRP‐centric collision repairs. We have included Fix Auto USA as part of our multiple‐location network segment for 2009. Fix Auto identifies, qualifies and contracts with high‐performing, independently‐owned collision repair businesses to create a network of repairers who work together as a multi‐region, multi‐store operation. Fix and its operators hold them accountable to an unparalleled commitment to excellence. Fix’s proprietary performance management tools provide transparent, real‐time performance feedback to the organization and to its operating partners. Fix Auto USA’s commitment to excellence is measured, documented, and guaranteed. Fix Auto USA currently has over 170 locations operating in 17 states representing 25 metro markets. These multiple‐location networks, MLNs, plan to build on their market position, brand names and See Profile of Evolving Market, Page 49
EPA Postpones Final Decision on Smog Rule Until Late October
The U.S. Environmental Protection Agency (EPA) announced recently that it had postponed final rule on the National Ambient Air Quality Standard (NAAQS) to late October. The agency had originally planned to finalize rules on the ozone standard by the end of August, but it decided on late October because it wanted to spend more time reviewing public comments on the proposal. In January of this year, the EPA proposed revisions to the Bush administration’s 2008 ozone standard.
The EPA advocates that its proposal would enhance the eight-hour standard created to protect citizens’ health, shifting the requirement from 0.075 parts per million (ppm) to a range of 0.060 to 0.070 ppm, as well as create an all-new secondary standard designed to protect environmental resources. The EPA, environmentalists, states and industry went to court over the Bush administration’s rejection of these proposals in March of 2008. The litigation,
State of Mississippi v. EPA, is currently before the U.S. Court of Appeals for the District of Columbia Circuit, awaiting the Obama administration’s final revisions. The proposed restrictions and tightening of the ozone standard has received some opposition from a bipartisan group of seven senators, who urged the EPA not to tighten the ozone standard. In a recent letter to Lisa Jackson, administrator of the EPA, the senators said they “believe that
changing the rules at this time will have a significant negative impact on our states’ workers and families and will compound the hardship that many are now facing in these difficult economic times.” Supporters of the EPA’s proposal are concerned about delay of the final rule, and they believe that postponing the agency’s final decision could dilute the final rule. To view the seven senators’ letter to the administrator visit www.TakingTheHill.com.
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 41
CRA Calls on Gov. to Veto SB 427, Rejects Redefining ‘Aftermarket Parts’ California’s legislative session concluded last week after approving a new measure that, if signed by the governor, would increase the penalties for repair shops that fail to properly restore an airbag that has been deployed in a crash. Senate Bill 427 (Negrete McLeod D-Chino) would impose a fine of $5,000 or up to one year in prison, or both, for any automotive repair dealer that “prepares a written estimate for repairs that includes replacement of a deployed airbag and who fails to repair and fully restore the airbag to original operating condition.” In addition, the bill adds exterior lighting to the definition of crash parts. This change would add lighting parts to the list of items on an estimate whose source must be disclosed as to whether they are OEM or non-OEM crash parts. “After years of extensive lobbying efforts, the California Autobody Association (CAA) is pleased that Senator Negrete McLeod finally deleted all references that would have required auto body shops to place 12-point print disclosure on the first page of the invoice stating that charging for parts that are not installed on the vehicle or parts switching is fraud”, stated David McClune, Executive Director. “SB427 now adds exterior lighting to the crash parts definition and increases penalties for those unscrupulous shops that charge customers for air bags but do not restore or replace them.” CRA has released the following statement in opposition to the bill
Recently the Legislature passed Senate Bill 427 and it is now on the Governor’s desk for signature. In a recent industry news article the CAA announced how pleased it was with the outcome of this bill. [Ed—CAA has said it is neutral on the bill.] The CRA and the California New Car Dealers Association remain opposed to the bill and are asking the Governor for a veto. The CRA is concerned that the prior article omitted aspects of the bill that should be of concern to the industry. The bill amends definitions contained in Section 9875 of the Business and Professions Code. Prior to this bill’s changes, this Section of the Business and Professions Code only applied to insurers, not auto repair dealers. The existing terminology and definitions failed to track with requirements for estimates or invoices prepared by automotive repair dealers. However since it only pertained to insurer documents it was of no consequence to auto repair
dealers. Not so now! SB427 amended the language in 9875 of the Business and Professions Code and incorporated by reference those changes into Definitions contained in Section 9880.1 of the Business and Professions Code, that apply to Automotive Repair. They did not stop there but went on to modify Section 9884.8 B&P that deals with auto repair invoices and Section 9884.9 B&P that deals with auto repair estimates. The poorly drafted changes make the sections confusing and in fact contradictory. Specifically the proposed language creates a new definition “Aftermarket crash part” means a replacement for any crash part. This new definition conflicts with existing definitions of parts contained in Section 3303 of the California Code of Regulations and even the bills proposed changes. By this definition any crash part regardless of origin is now considered aftermarket. The bill also retained the definition of “NonOriginal Equipment Manufacture aftermarket crash part” or “non-OEM aftermarket crash part,” meaning an aftermarket crash part not made for or by the manufacturer of the motor vehicle. Additionally, in a poorly drafted fashion, the bill by reference incorporates definitions in 9875 to definitions in section 9880.1 of the B&P Code, definitions required to be used by automotive repair dealers. An example of this is; B&P Section 9880.1(k) Crash Part” shall have the same meaning as Section 9875. They failed to specify that the reference to 9875 applies to the Business and Professions Code. The definitions added to 9875 and then incorporated into 9880.1 are already defined and required per Section 3303 C.C.R. with the exception of the new Aftermarket Crash Part definition and the inclusion of exterior lighting in the crash part definition. The newly created 9875 Section of the B&P Code contains a statement that nothing in this section shall be construed to apply to the installation of light bulbs in a motor vehicle. This exemption seems to conflict with the inclusion of lighting equipment in the crash part definition, that is incorporated by reference into 9880.1 B&P as previously noted. Does this mean that light bulbs are not crash parts and do not have to be invoiced or estimated? It seems that this exemption only applies to the 9875 B&P Section that applies to insurers. The language is so poorly drafted how can one tell? This is not the only ambiguity contained in the document. If compliance
42 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
is expected the statute must be clear and concise otherwise it can be open for very wide interpretation, a process we feel is not healthy for the industry. These drafting errors are a basis for opposition to and veto of the bill. The bill makes what might appear to be subtle changes to the invoice requirements within Section 9884.8 of the B&P Code to read as follows; (the proposed modifications are in bold and underlined) All work done by an automotive repair dealer, including all warranty work, shall be recorded on an invoice and shall describe all service work done and parts supplied, and crash parts installed. Service work and parts shall be listed separately on the repair invoice, which shall also state separately the subtotal prices for service work and for parts, not including sales tax, and shall state separately the sales tax, if any, applicable to each. This adds a requirement to list all crash parts installed (but possibly not light bulbs). This is redundant and unnecessary as crash parts are parts and the statute clearly requires all parts supplied to be listed. The bill however adds a reference to an undefined document a repair invoice and limits the require-
ments of subtotaling to this document. This requirement conflicts with current requirements and definitions and the proposed language creates confusion as to its intent. Section 3352 C.C.R. defines invoice as a document given to the customer. Is this new undefined reference to another document other than the invoice, possibly a document generated during the repair and possibly different than the defined invoice that is given to the customer. We find this language to be contradictory to existing statute and regulation and confusing at best. Another basis for opposition. Section 9884.9 has been changed to read; “No charge shall be made for work done or parts installed in excess of the estimated price without the oral or written consent of the customer that shall be obtained at some time after it is determined that the estimated price is insufficient and before the work not estimated is done or the parts not estimated are installed. The word supplied is removed and replaced by installed. This language presumes that all parts estimated are installed on the vehicle. During the repair process there are items utilized to accomplish the repair that are not installed on the vehicle. See CRA Calls for Veto, Page 52
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 43
CARSTAR Media Conference Outlines Changes and Forecasts for 2010 CARSTAR held their 2010 National Media Conferences on Tuesday, September 14, to discuss the changes the company is making in order to better compete in the current economy. Chairman and CEO Dick Cross began the conference call by outlining CARSTAR’s forecast for the coming year. He said that the successful shops are going to need to not only provide extraordinary performance, but also be able to document it and be prepared to show it to customers. “We think our collision industry is going to change,” said Cross. Dan Bailey, President and COO for CARSTAR, also discussed some of the trends facing the collision repair industry in this economy, including several of the mergers going on between companies and the consolidation of multi-location networks. Both Bailey and Cross talked about how although CARSTAR has lost some stores in the last few months, that a lot of the stores lost were not participating as much as they could have been in the CARSTAR system. They also mentioned how a lot of stores had been defeated by their
balance sheet; that some stores couldn’t balance their debt with the loss of value that a lot of things had after the economic downturn. Cross and Bailey acknowledged that about eight of its franchises have closed in recent months but they said others have doubled their revenue or acquired struggling or closing shops as additional locations. Bailey and Cross also fielded questions about steering; both felt that shops needed to hold their ethics about customer choice. “We’re on the sidelines with that issue. We promote that every customer has the right to choose where to have their repairs done but we are not on one side or the other on this issue,” said Bailey. But Cross also mentioned that stores that have DRPs are likely to get a bigger piece of the repair work available, if the customer does not speak up about a preferred shop they would like to use. Cross and Bailey both stressed that body shops are entering an era where shops are compared through objective performance-based competition. There is a smaller body of
CARSTAR Calls for Nationwide Recall System for A/M Parts
CARSTAR has announced its position on aftermarket parts. CEO Dick Cross said that CARSTAR is willing to use aftermarket parts so long as they meet standards. “We have a long way to go before we’re 100 percent satisfied with putting aftermarket parts on the cars we repair,” said Cross. “There’s no recall process to take them out of the marketplace if there is an issue.” Cross reiterated CARSTAR’s point of view by saying that CARSTAR will take the position on behalf of consumers and consumer safety on the
work to compete for and shops need to excel in order to receive business. CARSTAR has confirmed that going green can make economic sense these days, Bailey and Cross said that CARSTAR has two shops that are green certified and 35 stores that are spraying waterborne paint. Cross wrapped up the conference by saying that CARSTAR is attempt-
issue of aftermarket parts. Bailey and Cross continue to express concern over shortfalls in fit, form and function from aftermarket parts, calling for a nationwide recall system. “I don’t care if Betty Crocker makes it, if it’s of like, kind and quality,” says Bailey, lamenting a lack of overall accountability regarding faulty aftermarket components. “There’s no recall process to take them out of the marketplace. We track them to try to get them out of the marketplace with some success, but not as much as I’d like.”
ing to get all of their shops on a similar store software. CARSTAR has been working on this for over a year and is now in talks with Mitchell for an appropriate program. “We still have some road to go before we can launch,” said Cross, adding that CARSTAR is shooting for Q1 of 2011 to launch the program. For more information please visit carstar.com.
CARSTAR Recognizes its Four Top Stores
CARSTAR celebrated its 21st anniversary and honored its top performing stores and representatives across the United States.at the annual awards ceremony held at the Homestead in Hot Springs, VA. CARSTAR CEO Dick Cross and President Dan Bailey toasted each winner on stage and presented their award. In the category for overall operations, technical excellence, office performance and facility performance, four CARSTAR stores were honored, with one store taking home two top awards. The winners included:
Franchisee of the Year Franchisees of the Year were Kurt and Terri Mueller, owners of Kurt’s CARSTAR in Maryville, Ill. Franchisee of the Year is the highest award given in the CARSTAR system. This year’s winner was chosen on criteria including using all vendors possible, attending conference , being image compliant, submitting reports on time online, and delivering consistently high CSI in the Top Ten for the month and quarter periods. His past five quarters of CSI have been: 98.7%, 99.2%, 99.1%, 99.5% and 99.4%. Kurt’s CARSTAR was also the recipient of the Extraordinary Individual
Contribution to the Make-WishFoundation. Kurt joined CARSTAR in October of 1993 as a member of the St Louis Business Group.
Rookie of the Year The Rookie of the Year in the CARSTAR family was Marshall’s Autobody CARSTAR owned by James and Dawn Marshall in Billerica, MA.This award is given in recognition of the newest CARSTAR franchisees as they get “up and running” with CARSTAR. To qualify for the award, a franchisee must have been with CARSTAR less than three years, be well underway of achieving Tier 1 compliance and enthusiastically embrace the CARSTAR culture with active participation.
Outstanding Facility Performance Outstanding Facility Performance went to Exhibition CARSTAR owned by Jeff and LaVada Middleton in Kent, WA. The award is for consistently high ratings in Sales, Gross Profits, CSI, COS, Tier compliance and active involvement both in the community and within CARSTAR. Exhibition CARSTAR also is very active in the community, providing enormous support for Make-A-Wish
44 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 45
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
Attending the Porsche Collision Certification Program with Toby Chess
Hey Toby—We are repairing at 2007 Porsche Cayman and the insurance company wants us to recon the wheel. Do you know if Porsche has a position statement on reconditioned wheels? —Mick from Marina Del Rey.
is equipped with the TPM System, then a special valve system must be used. Next the group looked at the rear spoiler on the Boxter and Cayman models.
4). There is no adjustment for the part, so how does tech know the proper angle of the hole before securing the rear body panel. Porsche has a special jig that aligns the part in its proper position (Fig 5). The jig secures the rear body panel with eight different location bolts and pins. After the jig and part has been installed, the part is tack welded before the final welding operation. Speaking of spoilers, the group
California Autobody Association
Hey Mick—I didwith not know the answer David McClune when you e-mailed me, so I called Mike Kukavica from Porsche Cars of North America (PCNA), and he said that Porsche only allows refinishing of their wheels, but nothing else. He invited me to attend the introducFigure 2 tory course for Porsche collision certification program, which I accepted. After attending the week long program, there are a couple of other items that you need to with know about replacing John Yoswick wheels and tires on Porsches.
Year in Quotes
Figure 3 shows the rear body panel of a Cayman set in place. The position and angle of the rear body panel is critical to the correct operation of the rear spoiler. Without the knowledge
had to remove the rear spoiler from a new Turbo. Mike Kukavica demonstrated the operation and explained the correct removal of the rear spoiler (Fig 6). Porsche has a special tool the fits in to inner and outer mounting rings.
Sean Vlaszof of DC Autocraft in Burbank, CA, reinstalling the rear spoiler on the Turbo (Fig 8). One afternoon session was the reSee Hey Toby!, Page 48
Collision Repair Association of CA. Figure 1
with Richard Steffen
First, all production tires need to be passed by Porsche’s engineering department for handling, hydroplaning and high speed durability requirements. Only after passing the test, the specific tire will get an “N” designation. You can purchase a Michelin Pilot Sport with and without the “N” designation. You may have to purFigure 4 with John Yoswick chase another tire if there is more 30 percent difference in the wear. and angle setting tool, the rear body Porsche states that mixing tires is not panel can be placed in a position that permissible and will affect vehicle the spoiler will not operate correctly. performance, safety and can affect the The hole is used to secure the hyvehicle’s warranty. Another item that draulic piston for the rear spoiler (Fig you need to be aware of is the Tire Pressure Monitoring System, which was available since the end of 2005. The system continuously monitors the air pressure on all 4 tires. When you Karyn Hendricks change a wheel,with the system needs to recalibrate itself which is done by test driving the vehicle and checking the display unit for proper function. Finally, Porsche wants new valve stems Figure 5 when replacing a wheel. If the vehicle
46 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
with David M. Brown
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Erica Schroeder is a writer and editorial assistant for Autobody News in Oceanside, CA. She can be reached at email@example.com.
Completes Plus Opens New Main Warehouse Location in LA This summer, Completes Plus, a fullline wholesale parts distributor based in Los Angeles, CA, moved their main warehouse and office space to a larger warehouse just a short distance from the original location. Completes services around 200 collision centers per month out their new main warehouse and three 10,000
gaining 15,000 square-feet in warehouse space, the company also added Denso First Time Fit radiators to their suppliers list. Completes Plus started out in the radiator business 27 years ago. At that time, having a complete, drop-in radiator was still a new concept. President Jack R. Hubka started the business concentrating on just cooling and air conditioning, but it has since evolved into a multi-warehouse, multi-supplier full-line parts distributor with products ranging from cooling to undercar to underJack Hubka, Cindy Shillito and Jim Hubka (l to r) at the new warehouse hood to tune-up, servicing both the square-foot satellite warehouses with installer and collision center markets. In 2008, Cindy Shillito came to about 100 employees total. Along with
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Completes Plus and brought with her experience working directly with body shops through her family’s business, Imperial Radiator Inc. “We’re
Completes believes in supplying customers with OE quality products; according to Hubka, the market has focused on price only and has lost quality to inferior parts. “Customers can expect quality products, exceptional service and competitive pricing from Completes Plus,” he said. “It actually costs more money to use inferior products,” said Hubka. “It’s a lot to do on our part to maintain our OE lines, but it’s worth it for the customer satisfaction. We’ve been successful letting shops know that you can save money while still using qualAn expanded product line at the new location ity parts,” he added. not just radiators or condensors,” said Completes helped to introduce Cindy, “we’re a full-line warehouse.” Denso radiators into the US market in “Moving to the larger location alJune of this year. They have seen imlowed us to combine our main offices mediate success with the line and are with our main warehouse,” said Jack proud to add another O.E.S. line to Hubka, “and also allowed Completes their cooling offering. to make an in-house training center inCompletes also offers a limited side.” lifetime warranty on all the radiators Completes will offer training and condensors they supply. The stipcourses from parts manufacturers that ulations to qualify are that the part not be neglected, abused or misused. supply to them. So far, Completes anticipates hybrid technology and air “One good thing about Completes conditioning to be their first training is that they go out and find the right afcourses at the new location. Manufactermarket radiators, the ones that are returers send out a trainer to work with ally close to OEM,” said Greg Gunter, owner of Greg’s Auto Body in Whittier Completes’ customers. Completes also hosts some of their own seminars that and Santa Fe Springs, CA. “They find explains the brands they carry. the ones that will fit properly.” Gunter, who orders from Completes once or twice per week for his two shops, was also impressed with Completes Plus’ activity in the California Autobody Association. “They’re really active in the CAA, they Customer Service Representative Dennis Glass, Jim Hubka, give back and I like peoCindy Shillito, Jack Hubka and Customer ple that give back,” said Service Representative Mike Baird Gunter. Completes Plus will host an open Completes Plus also offers free house at the end of October to showcase overnight delivery in California and ofthe new location. It will include a full fers free shipping should a part need to booth show with suppliers and manube returned. For more facturers as well as a catered dinner, 15information please visit www.comminute “quick” seminars, entertainment pletesplus.com. and a customer raffle. Customers wishing to attend either the open house or Completes Plus - Airport Instructional Clinics on OE quality 10425 S. La Cienega Blvd. parts can email Cindy Shillito directly Los Angeles, CA 90045 PH: 888-500-6557 at firstname.lastname@example.org. www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 47
surfaces. Furthermore, all sealant must be applied over primed surfaces. In other words, no direct to bare metal sealants. Finally, when installing an outer panel over 2 interior panels (quarter panel, for example) that have been weld bonded, Porsche recommends
Continued from Page 46
moval and installation of the front windshield.
Scott Cramer-Bornemann of DC Autocraft repositioning the removal tool. (Before anyone emails me a cautionary about safety, I had the guys remove their safety glasses for the shot. Porsche policy is to wear safety glasses when working on their vehicles.) The windshield was test-fitted and itâ€™s location marked prior to the final installation. Porsche sells its own windshield adhesive kit.
Porsche procedure is to weld bond the two sections together. A specific structural adhesive is spelled out in the repair manual. George Pedroza from Estorgas Collision Center, Long Beach, CA is applying the specified Porsche adhesive to the inner mating surface of the
frame rail (Fig 12). Prior to the installation of the adhesive, a special adhesion promoter is applied to the bare metal surface. Porsche also recommends weld-thru primer to all bare metal mating surfaces that are to be
One last item on the windshield. Part of the Porsche certification program is to have a tool to set the proper angle of the wiper blades (Fig 11). Improper blade angle will cause the wiper blades to chatter. We spent time on lighting and the rear tail have an adjusting screw to adjust the flushness of the light to the correct position. Another whole afternoon was devoted to structural repairs. The group assembled a front lower frame rail. Two complete rails were used.
welded (except when weld bonding). MIG spot welds are made through a 7 mm diameter hole. Agasee Bagoumyan from DC Autocraft welded the frame rail utilizing a Porsche approved resistance spot welder (Fig 13). Porsche recommends only an open butt joint (no butt weld with backers). Porsche also wants epoxy primer applied to all bare metal
48 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
spot welding over existing spots welds. Porsche does not want welding through cured adhesive. Note the three weld bonded panels on the Cayman. Some notes on Ultra High Strength Steels in Porsche vehicles. No straightening or reshaping UHSS parts. UHSS parts are replaced in their entirety. Rivet bonding is also permitted as outlined in the repair manuals. Another afternoon was devoted to the Panamera. The group had to remove the inner door cassette.
Stephen Hurt from Park Place Bodywerks, Dallas Texas, removing the driverâ€™s side trim panel on the 2011 Panamera (Fig 15). There are four alu-
See Hey Toby!, Page 50
Continued from Page 40
Profile of Evolving Market
growth plans. Together they represent a total of 901 locations repairing approximately $1.3 billion in vehicle revenue. We see continued interest on the part of collision repairers, especially in light of the recession, macro economic conditions and decreasing accident and claims frequency, to investigate and
consider the benefits of multiple‐location networks. The independent‐brand model, historically believed by many repairers to be the most desirable way to successfully maintain and grow their business, may now be seen by a growing number of collision repair providers as possibly more risky than being associated with an MLO or MLN, especially in light of current macroeconomic, market and competitive conditions. Some repairers see the opportunity to adopt and inte-
U. S. Collision Repair Market - 2009
Including Conversion Franchise, Multi-Segment and Branded Network (CFMSBN) - Dollars in Millions
Total Collision Repair Locations
Total Collision Repair Revenue
Production Locations Total Conversion Franchise, Multi-Segment and Branded Network (CFMSBN) Total $20M MLO Production Locations Including CFMSBN
Share of $20M MLO Production Locations, Including CFMSBN, to 39,500 Collision Repair Locations
Share of $20M MLO Production Locations, Including CFMSBN, to 30,000 Estimating Software Locations
Share of $20M MLO Production Locations, Including CFMSBN, to 10,000 Management System Installations
2009 Market Share and Change versus 2006
4.7% 6.1% 18.4%
Revenue Total Conversion Franchise, Production Paint and Branded Network (CFMSBN)
Share of $20M MLO Including CFMSBN to Total Collision Repair Revenue
Total $20M MLO Including CFMSBN
grate MLN member benefits as a potentially better way to sustain and grow their business through: ● Leveraging the MLN value proposition, brand association, multi‐segment customer reach, multi‐level sales and marketing, and insurance company business affiliation ● Franchisee performance tools for business and customer analysis, benchmarking and peer ranking ● Personnel, operational and general business training and development ● Standardized processes and procedures ● Utilization and integration of a technology platform ● DRP insurance relationships and business considerations not previously available as an independent operator ● Expense reduction through large‐scale supply chain management and procurement
See Profile of Evolving Market, Page 53
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 49
Stephen Hurt reinstalling the front bumper on the 2011 Panamera (Fig 21). The front bumper to hood is checked with a 1mm gauge. The front bumper is suppose to be flush with the
Continued from Page 48
minum bolts the secure the cassette. These bolts need to be replaced and torqued to 10 Newton meters. The side air bag sensor is located in the door trim panel. It is a pressure sensitive sensor (Fig 17). It is imperative that the cassette is totally sealed. The pressure builds between the outer shell and trim panel on a side impact, which sets off the side air bags.
hood, but 1 mm higher. The week-long class looked at the entire Porsche Automobile line. The front rails on the Panamera are aluminum and the replacement requires special tools, materials and techniques. This will be the next class for the techs.
The graduating class of week of September 17th. Front row (l to r) Agasse Bayoumyan, Ricardo Sandoval and George Pedroza. Second Row: Moses Mora, Sean Vlaszof, Scott Cramer-Bornemann, Stephen Hurt, Sergio Barba and Mike Kukavica
(Ed—We’re not sure, but we don’t believe the author drove away in this car.)
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Sergio Barba from Estorgas Collision Center and Moses Mora from European Auto Body, Escondido, CA, holding the driver’s side door cassette (Fig 18). The group removed door handles that required special tools and techniques from Cayman, Cayenne and Panamera. The group removed the front and rear bumpers from a new Cayenne and Panamera.
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Six Top Consumer Insurance Myths Debunked
Insurance.com has published the following ‘Insurance myths’ to educate consumers about auto insurance.
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rate—especially if the car is red. But the belief that drivers of red cars pay higher car insurance premiums is a myth. Insurance companies will likely not even ask the color of your car when they’re calculating your auto insurance quote. “The idea that the color of a car enters into what you’re going to pay for insurance is a myth that’s been around for a long time,” says Jeff McCollum, spokesperson for State Farm Insurance. “I wouldn’t be surprised if it came from the fact that people with red sports cars have the image of being wild and reckless, but it certainly isn’t based on any type of reality.”
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Car insurance companies are interested in the year, make, model, body type, engine size and age of your vehicle. The color may be important to you, but it really doesn’t matter to your insurance company. Myth: Thieves prefer to steal new cars Fact: It’s the other way around. Statistics show that thieves actually prefer to steal older cars. According to a 2009 National Insurance Crime Bureau (NICB) report, the top 10 most-stolen vehicles reported in 2008 were the ‘94 Honda Accord, ‘95 Honda Civic, ‘89 Toyota Camry, ‘97 Ford F-150 pickup, ‘04 Dodge Ram pickup, ‘00 Dodge Cara-
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van, ‘96 Jeep Cherokee/Grand Cherokee, ‘94 Acura Integra, ‘99 Ford Taurus and ‘02 Ford Explorer. “The reason we see so many older vehicles on the list is because they are easier to steal,” says Frank Scafidi, spokesperson for the NICB. “Also, people are keeping their cars longer (in the faltering economy). That creates a good market for used parts. A lot of times, when they are stolen, they don’t make it back on the street intact.” If you have an older vehicle and have dropped comprehensive coverage to save money, you are not covered for theft and do not qualify for rental car coverage. NICB’s report reveals that thieves have different preferences from state to state. Crooks in California and Florida prefer imports like Hondas and Toyotas. Texas crooks select pickup trucks. Criminals in Illinois, Indiana and Michigan have a thing for domestics (Dodges and Fords). Myth: My insurance will cover me if my car is stolen, vandalized or damaged from hail or fire. Fact: Unless you have comprehensive coverage, you are not covered for any of these things. A bare-bones policy in most states only requires you to buy liability coverage. This pays only for damage you cause to others. You need to purchase both collision and comprehensive coverage in order to fully protect your vehicle from all types of damage situations. Comprehensive coverage covers pays for damages to your car that are not the result of a car accident. That includes theft, vandalism, hail, fires and accidents involving animals. Collision coverage pays for damage to your vehicle from a car accident. Myth: If my car is totaled, my insurance will pay off what I owe on my loan or lease. Fact: When your car is totaled, your policy does not promise to pay off what you owe. It will pay you the actual cash value of your car, minus your deductible. Actual cash value is the amount your car was worth before the accident, factoring in depreciation. You are still responsible for any amount outstanding on the loan or car lease. The only way to cover the difference between the car’s cash value and the amount you owe on a loan is to purchase gap insurance. Available to
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 51
cover both auto leases and loans, gap insurance covers you if your car is totaled before you’ve paid off the loan, or before the lease term expires. Here’s how to save yourself some grief: buy gap coverage. Your insurer will decide if your car is “totaled.” Generally a total loss is declared when the repair costs exceed a certain threshold of the car’s value, generally 70 percent. At that point, the insurance company will tow the car to the salvage yard and offer you the actual cash value of your car. Myth: My insurance company will pay for a rental car if my car is stolen or damaged in an accident. Fact: Even if you have comprehensive and collision coverage, it may not include a rental car. Rental car reimbursement is not automatically included in most car insurance policies, but you can add it at an affordable cost. According to the Insurance Information Institute, rental reimbursement coverage is available for $1 to $2 a month with most insurers. Even if you have this coverage, it won’t necessarily last until your stolen car is recovered or your damaged car is fixed. There’s a limit on how much your insurance company will reimburse you per day, plus a cap for a maximum amount per accident. For example, GEICO charges $20 per year for a maximum $750 in rental reimbursement, with no deductible to pay. In this case, GEICO would reim-
burse you up to $25 per day but no more than $750 per accident. Myth: Drivers of sports cars get more tickets and thus pay higher insurance premiums. Fact: That’s not necessarily the case. According to a study released in 2009 by Quality Planning Corp., leading the pack with the most violations are drivers of the Hummer H2 and H3. Hummer drivers have almost five times the number of violations compared to the average. Drivers of three different Scion models (tC, XB Station, XA) also made the Top 10 list. Others on the list include drivers of two models of the Mercedes-Benz (CLK63 AMG, CLS63 AMG), two Toyotas (Solara, Matrix) and the Subaru Outback Station Wagon and Audi A4. At the other end of the spectrum, the study also includes a “well-behaved vehicle list.” Topping that list are drivers of the Jaguar XJ, followed by the Chevrolet Suburban, Chevrolet Tahoe, Chevrolet C/K-3500/2500, Buick Park Avenue, Mazda6, Buick Rainier, Oldsmobile Silhouette, Buick Lucerne and GMC Sierra C1500 pickup truck. While insurers don’t base their car insurance rates on this study, the insurance loss history for the model you drive and your own driving history factor into how much you will pay for car insurance. Here’s how your car drives your insurance premium.
CDC Study Finds Annual Crashes Cost $99B
In a one-year period, the cost of medical care and productivity losses associated with injuries from motor vehicle crashes exceeded $99 billion—with the cost of direct medical care accounting for $17 billion, according to a study by the Centers for Disease Control and Prevention. The total annual cost amounts to nearly $500 for each licensed driver in the United States, said the study in the journal Traffic Injury Prevention. The one-year costs of fatal and non-fatal crash-related injuries totaled $70 billion (71 percent of total costs) for people riding in motor vehicles, such as cars and light trucks, $12 billion for motorcyclists, $10 billion for pedestrians, and $5 billion for bicyclists, the study said. CDC researchers used 2005 data because, at the study time, it provided the most current source of national fatal and non-fatal injury and cost data from multiple sources. “Every 10 seconds, someone in the United States is treated in an emer-
gency department for crash-related injuries, and nearly 40,000 people die from these injuries each year. This study highlights the magnitude of the problem of crash-related injuries from a cost perspective, and the numbers are staggering,” said Dr. Grant Baldwin, director of CDC’s Division of Unintentional Injury Prevention, National Center for Injury Prevention and Control. The study also found: ● Costs related to fatal motor vehiclerelated injuries totaled $58 billion. The cost of non-fatal injuries resulting in hospitalization amounted to $28 billion, and the cost of injuries to people treated in emergency departments and released was $14 billion. ● More men were killed (70 percent) and injured (52 percent) in motor vehicle crashes than women. Injuries and deaths among men represented 74 percent ($74 billion) of all costs. ● Teens and young adults made up 28 percent of all fatal and nonfatal motor vehicle injuries and 31% of the costs ($31 billion).
52 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
Continued from Page 42
CRA Calls for Veto
These items include but are not limited to abrasives, chemicals, covers as well as items such as certificates of compliance. This estimating language conflicts with invoicing requirements and restricts the revision of an estimate and possibly original estimates to only items actually installed on a vehicle. It is our position that a repair facility is entitled to be compensated for all items utilized during the course of the repair as currently is allowed. This also is a change upon which we base our opposition. The CRA informed the author and sponsor that we would support the airbag portion of this bill however the other provisions were unacceptable. This bill only serves to create confusion where clarity previously existed and create language that impairs the consumers ability to understand the manner in which their vehicle is being repaired. We support the consumer’s right to be afforded the ability to make an informed choice. The changes contained within this legislation are prohibitive to that process. We also support the concept that the repair facility is entitled to charge for all items utilized during the repair process as afforded
under current statutes. For the repair industry to be encumbered by these unclear, confusing and nonessential changes is unconscionable. If enacted who knows how such poorly worded requirements will be interpreted or applied by the regulator. We find it hard to comprehend how anyone associated with the repair industry could support such a ill-drafted legislative undertaking. It would appear that the need to support the position of a benefactor outweighed the willingness to support the interest of the member industry. It is hoped that the repair industry now will see that there is more to this bill than disclosure and headlights. We have heard these changes characterized as minor technicalities we view them otherwise. The devil is in the details and it is important to be aware of the total aspect of the issue. It would appear that the only entities to benefit from this legislation are those parties that promote the usage of aftermarket crash parts. The collision industry operates in a highly regulated environment and it is important to insure that compliance can be achieved and requirements are clear and concise. The CRA continues to stand up for the interests of the repair industry and California consumers. Contact the Governor’s Office and ask him to veto SB 427.
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Continued from Page 49
Profile of Evolving Market
Our regional location representation for these $20 million MLOs is highest in the Southeast at 26.2 percent. In 2008 the West was the dominant region with a 25.4 percent share; it now represents 23.9 percent of the market. The lowest $20 million MLO representation continues to be in the Northeast at 6.1 percent which is down 4 percentage points from their 2006 share of 10.1 percent. Another way to view regional representation is to assess the geographic reach of the $20 million MLO organizations. Do they tend to contain themselves in a relatively small area or do they expand their influence across many states? ● Of the 54 $20 million MLO organizations, 27 do business in only one state. Of those 27, 21 are independents and 6 are dealers. ● Within the top ten rankings, only two independent and two dealer MLO organizations strategically position themselves in only one state. The West has the highest number of MLOs with at least one location in that region – 26 MLOs are represented which represents 48.1 percent of MLOs. The companies represented within the top ten MLO organizations have not changed since 2006 and have only lost one member for a time, Group 1, which has returned to the top ten in 2009. While their share of all collision repair locations has been
$20M Multiple Location Operator Regional Representation Number of $20M MLO Repairer Organizations Represented in Region % of Repairer Organizations Represented in Region
relatively constant, revenue among this group had been increasing year over year in total as well as per location. However, 2009 saw a decline in revenue within this group of 3.1 percent versus 2008; which brought it near 2007 levels. Within the top ten $20 million MLOs, five are independent and five are dealer groups. These ten organizations account for 47.6 percent of all $20 million MLO production locations and 53.3 percent of all $20 million MLO revenue. These top ten MLOs display trends similar to the total $20 million MLO group; higher revenue produced through fewer production locations. Smaller and non‐MLO repairers, those with total collision repair revenue below $20 million annually, vary widely in claims processed per location. For the top ten independent $20 million MLOs, the average repair revenue per location significantly surpasses that of their smaller and non‐MLO counterparts at $3.1 million versus $662,825, nearly five times more average revenue per location. Top ten dealer $20 million MLO performance also exceeds their smaller and
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non‐MLO counterparts at a repairs‐processed average of $3.4 million per location versus $881,190 per location for smaller and non‐MLO dealer repairers; four times more revenue per location. Comparing the top ten independent and dealer group $20 million MLOs, the independents have
Dealer‐‐Operated Collison Repair Facilities
Source: NADA, The Romans Group LLC
74 percent more locations producing 33 percent more revenue than dealer repair organizations. See Profile of Evolving Market, Page 58
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3940 Cherry Ave., Long Beach, CA 90807 www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 53
John Yoswick is a freelance writer based in Portland, Oregon, who 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). He can be contacted by email at jyoswick@SpiritOne.com.
Automaker Announcements Carry Implications For Repairers with John Yoswick
A number of automakers in recent gram more popular with dealers, who weeks have issued bulletins, launched have found any money the customer programs or made announcements that has to pay out just decreases their could impact with collision repairers down-payment on the next vehicle. Ed Attanasio —whether at dealerships or independent shops. Here’s a wrap-up of Volkswagen Volkswagen of America has launched this recent news from the OEMs. a certified collision repair facility program for its dealers and independent Mercedes body shops. The automaker says the The slight rebound in vehicle leasing national launch follows a pilot program in the last few years is seen as good news for collision repairers because with 15 shops. Certification under the program requires nomination by a consumers tend to have damage on dealer, specific technician training, use leased vehicles repaired. But Mercedes-Benz now offers a new lease of VW-approved equipment, and an onsite inspection. Certified shops will protection product that waives up to $7,500 in wear-and-tear charges and be listed on VW’s website and will have access to vehicle-specific training up to $200 in missing parts on a vehicle being returned at the end of a lease. on a dedicated program website. VolkUnlike other lease protection plans, swagen will also provide customers with free 24-hour towing of vehicles this waiver doesn’t require the consumer to wait to get reimbursed for the under warranty to its certified shops. Dealers can nominate a shop (or indewear-and-tear charges they pay out of pendent shops can request more inforpocket. That’s likely to make the pro-
mation) by contacting Volkswagen at VWcollisionparts@VW.com.
Ford Ford’s latest findings regarding nonOEM structural parts have been widely reported. But while non-OEM part advocates are quick to point out that Ford’s testing involved only “computer-simulated” crash testing, Ford hasn’t ruled out doing some actual crash testing. In discussing such testing, Paul Massie, collision product marketing manager for Ford, said he recognizes there is ample competition within the company for the research time and funds that would require. “Our engineers, our resources, our safety department are all dedicated to building the next generation of Ford vehicles,” Massie said. “There aren’t extra resources to stop what they’re doing and look backwards, so [looking at it] shows you the importance of this issue.”
Honda American Honda is urging collision repair shops to check for any applicable safety recalls when repairing a Honda or Acura vehicle. The automaker attempts to notify the current registered owner of any vehicle being recalled, but said not all owners receive such notices. Recall information from Honda is available by VIN at www.recalls.honda.com or www.recalls.acura. com. Recall information for all makes of vehicles also is available through the Big Three estimating systems or through the NHTSA (www-odi.nhtsa. gov/cars/problems/recalls/recallsearch.cfm). Positions on Parts Honda, Hyundai, Toyota and Nissan are among the automakers to recently issue bulletins or position statements regarding the use of crash parts used in the repair of their vehicles.
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Action Counts with Lee Amaradio Jr.
Lee Amaradio, Jr. is the president and owner of “Faith” Quality Auto Body Inc. in Murrieta, California. Lee is president of the CRA as well as an advocate for many other industry groups. He can be contacted at firstname.lastname@example.org
Aftermarket Parts: Are they the Same? Are they Safe? Is there a Problem? and I am compelled to speak out. I What gives me the right to comment on any of the above issues and why have ten years of documented proof with Amaradio Jr. with photos and invoices to would I want to bite Lee the hand that along prove that what I am saying is true. feeds me? If there were no problems with aftermarket crash parts why Aftermarket crash parts are NOT the would I even care? same as OEM unless they are made on I am in business to make money, the same assembly line to the same and to stay in business I need to treat exacting standards. my customers fairly and honestly. Part with Sheila Loftus Recently (last week) I had a 2010 Toyota Tacoma come in for a repair. of being in business responsibly is serving my customers by giving them The estimate listed all A/M parts, even good and honest value for their for the front impact bar. This customer money. If there were no problem with did not even know that there was an these parts I would embrace them and A/M parts clause in his policy. The difference out of his pocket was $400 present them to my customers as an withbeSheila Loftusplus a deductible. He contacted his inadded value. I would an advocate, surance company, but to no avail. He not a critic, of the aftermarket part. Some readers have wondered was told, in effect, “too bad.” This is why I am able to speak out as I do on the type of policy you bought—but the industry with boldness and confi- they will guarantee the parts specified as long as he owns his vehicle. dence. Because I know that I speak the He asked us if the parts were the truth and its hard to argue with that. withwith Janet Chaney same and we had to tell the truth. We I am concerned the diminished value of my customer’s vehicles told him ‘no, they were not the same.’
Action Counts Your Turn Your Turn
Shop Showcase Shop Showcase with Janet Chaney
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Industry Overview with Janet Chaney
Industry Insight with John Yoswick
Industry Insight with John Yoswick
Industry Interview with Janet Chaney
If we answered any other way then we would be liable because the Toyota dealer will depreciate this 2010 Tacoma upon trade in. I have a big problem with this deceit when I am the one expected to do the deceiving. There is a big difference between allowing a well-informed discerning customer to make this decision and one who is not informed, but the former is almost never the case. Normally I am expected to be the one to convince my customer that these parts will make their car as good as new. The problem is that it’s just not true. It’s a problem for me when the customer is trusting me and my name and reputation is going on the repair. Do you really think I will keep this Toyota Tacoma owner as a customer if he realizes one day that I lied to him? What about when trade-in time comes, and he and his wife go to the dealer to pick out their new car and find out that their 2010 Tacoma can’t be traded in without a substantial loss? I wonder if he would blame his insurance policy, or care about the guarantee of these parts then, or would he just be upset with me, the guy who put the parts on his truck? The problem with aftermarket parts is more in the deceit that must accompany them rather than with the part itself. Because NO ONE, and I mean NO ONE, would choose these over OEM parts if cost were not a factor. The problem is that the use of
these parts have far have superseded proper business ethics and the manufacturers want the collision industry to become a party to what are deceitful marketing and sales tactics. Safety is the issue, but many in the aftermarket crash part industry are bold enough to say this is all fabricated and blown out of proportion. I have been around long enough to say that collision repairs are really not investigated, so to say there is no safety issues at this point is risky foolishness not unlike marketing cigarette smoking. People were getting cancer from cigarettes years long before anyone was able to prove smoking was responsible. Either way, safety is not the only issue. There is substantial diminished value, and the parts are not the same, as many of our state laws require. When will the truth about these crash parts reach the public and when will the insurers properly inform their policyholders of the facts? When will use of these parts be banned from late model vehicles? Since when did fit and finish mean nothing in a collision repair? When will the major insurers realize that using aftermarket crash parts will eventually cost them their customers? Why is the collision industry still held liable for the repair when we really don’t control the decisions in the repair process? When will we quit being the advocates of deceit and tell the whole truth and nothing but the truth.
2010 Kia Soul and 2011 Sorento Recalled Kia is recalling their 2010 Soul and 2011 Sorento for soldering issues with the vehicles’ wiring harnesses. In the Soul the wiring harnesses were used for the vehicle’s advanced lighting speakers in the front door trim panels and for the Sorento’s interior accent illumination in the front and rear door trim panels. Kia reported this recall on August 31 and it applies only to models manufactured from September 7, 2009 through July 30, 2010. This recall is expected to affect over 35,000 units.
The wiring harnesses were supplied by JCI. This soldering issue could cause an electrical short that may result in a fire when the lights are illuminated under certain conditions. Dealers will replace the wiring harnesses for both vehicles free of charge. The safety recall is expected to begin during September 2010. Kia’s safety recall campaign number is SC083. Owners can contact Kia’s Customer Assistance Center at 1-800333-4542 or NHTSA at: 1-888-327-4236 or visit safecar.gov.
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 55
Denny Hecker Pleads Guilty to Conspiracy and Bankruptcy Fraud, Could Get Ten Years in Prison Former auto dealer Denny Hecker pleaded guilty to conspiracy and bankruptcy fraud in Minneapolis in a deal with prosecutors that dropped most of the charges against him. He could face up to 10 years in prison. The deal ends suspense about what might happen at a trial set to start in mid-October. “Denny feels this is acceptable,” his attorney, Brian Toder, said after the hearing. “On the one hand Denny wanted to fight this. But the
risk of what could have happened was an unacceptable risk.” When Hecker was asked if he was pleased with his attorneys, he said: “They’ve explained this is the best case I can get.” In court, Hecker admitted having committed all of the other crimes laid out in an earlier indictment, including bankruptcy fraud. He was originally charged with multiple counts that could have put him behind bars for decades. U.S. prosecutors said that
Hecker’s attorney came to them on Friday asking to reach a plea deal. They worked out an agreement over the weekend. “What this says is that the rules apply to everyone,” said Nicole Engisch, the lead prosecutor in the case. “And if you’re going to use our bankruptcy system you have to play by the rules.” Prosecutors had asked last week that Hecker be jailed for failing to abide by the conditions of his release that were set when he was in-
Our parts in the trained hands of a professional.
dicted in February. The deal calls for Hecker, 58, to be on house arrest until after Christmas, when he would report to federal prison, May said. Those details would need to be approved by U.S. District Court Judge Joan Ericksen. A date for his sentencing has not yet been scheduled. One of his court-appointed lawyers, Barbara May, said, “Denny wants me to say that this is a business deal gone bad,” referring to the charges against him.
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Rich Evans is the owner of Huntington Beach Bodyworks and an award winning painter and fabricator. He offers workshops in repair and customization at his facility to share his unique talents. For contacts and design samples visit www.huntingtonbeachbodyworks.com
Finishing the Red Mist Car from the Movie Kick-Ass with Rich Evans
Soft-Sanders™ blocks. I conCustom Corner tinue to use the same blocks,
with my color sand system. I’m going to cut it down with 800, then cut with 1000 followed by 1200, then 1500, 2000, and finally 2500 sand paper. I come over it with the with Thomas Franklin 6 inch DA on the areas I can reach with 3000. That just makes my buffing system a lot easier. So after 3000 (with the help of the 3M five step sysThis column is part three, continued tem that they call Perfect Finish. The with2010 Thomas Franklin from our September issue titled 3000 grit sand paper is usually on a Building a numbered car exactly like hook back, so I’m using a foam disk the Red Mist in the movie “Kick-Ass.” with the p3000 (PN02085, without the To read the previous parts to the foam backing is PN02075). column go to www.autobodynews.com After that we’re ready for buff> columns > Rich Evans. ing. The first step is going to be the As with lastwith month’sDick (part two) arcompound, this will buff to remove Strom ticle I’m going to go into some detail sand scratches completely and this on the finishing of Woody’s Red Mist. system is for a faster cut and less heat, We left off with sanding with the use 3M Super Buff 3 wool pad
with Rich Evans
On Creative Marketing On Creative Marketing
Opinions Count Opinions Count with Dick Strom
Action Counts with Lee Amaradio Jr.
Action Counts with Lee Amaradio Jr.
Your Turn with Sheila Loftus
Your Turn with Sheila Loftus
Shop Showcase with Janet Chaney
(PN05703). I like to use the 3 wool compounding pad, (PN05719). You want to wheel it up until you get your gloss back and then we’re going to move to step 4 which is the perfect machine polish (PN06064 or 06065) to remove compound swirl marks. The pad that you’re going to use is a perfect plus foam polishing pad (PN05738), using medium pressure. Suggested buffing speed is in the range of 1200 to 2000 rpm. Then you want to come back and wipe with a yellow 3M perfect detail cloth (PN06016), then we’re ready for step five, ultrafine machine polishing (PN06068 or 06069) to eliminate fine swirl marks, even on dark-colored vehicles. Polish with a medium pressure, ultimate foam polishing pad (PN05733) and then we’ve got a completed project. As always I want to tell you about new products that I’ve come across recently which I’ve job tested and really like. I found a universal pad washer which reduces scratches. It is phenomenal, made by Grit Guard. I learned about this at the Auto Geeks show in Florida. If you don’t have one of these pad washers you have got to get one. It saves money and time washing out your pads and cleaning them, and it also improves your finish. This does everything for you and doesn’t make a mess. Go to gritguard.com and see all the different things they offer you. It’s guys like these that are saving us time and money and always just going to that extent of how we can make it easier for the end user (that’s us). How we can make our jobs go faster and better is by using quality product that solves problems. I’ve been using it for over 5 months now and it’s a great product. You need it in your shop. So our pads are staying clean, and we’ve got a buffed vehicle. Now 3M’s got a perfect clean and shine (PN06084) with which I clean up all the compounds on the edges so we’re not applying scratches. After the car is buffed is I’m putting the graphics on to match
the graphics in the movie Kick-Ass car. They want this car to look just like it so basically I used my vinyl plotter, get the measurements, and I asked Larry White come by and set them up in the computer. All we have to do then is push a button. We get our graphics laid out where I want them. I use a masking paper, then transfer paper to transfer it to the car. Just like applying stickers. So now we’ve got our design laid out, I gave Sims a call for their hot rod flat, my buddy Gabe over there supplied us with the product. I’m just going to apply two wet coats and with those flats you really want to lay it downwet on wet, otherwise you’ll get zebra stripes in it. That’s the key to shooting the single stage flats. I applied two wet coats and when you unmask it, you’ve got your graphics. I’m ready to add the yellow letter “M”, surrounded by yellow. So we put a white base down, mask everything up. I use a 3M fine line, and I number my pull strings because after I put the white down then the yellow, I
put one coat of clear on it, because we’re not burying these graphics under the clear. They are pretty much sitting on top of the paint. You’re See Finish the Red Mist Car, Page 62
www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 57
Continued from Page 53
Profile of Evolving Market
However, in 2009 the top ten dealer repairers manage $3.4 million in average revenue per location
versus $3.1 million per location for independent organizations. Within the top ten independent $20 million MLO group, the ranking has remained unchanged over the past three years. The total number of production loca-
Top 10 $20M Multiple Location Operators - Dollars in Millions
MLO Caliber Collision AutoNation ABRA Sterling Auto Body Boyd/Gerber U.S. Van Tuyl Penske Service King Sonic Group 1
2009 Rank 1 2 3 4 5 6 7 8 9 10
Production Locations Top 10 % of All Collision Repair Locations % of All $20M MLO Prod. Locations Revenue Top 10 % of All Collision Repair Revenue % of All $20M MLO Revenue Average Revenue per Prod. Location Top 10 All Collision Repairers All $20M MLOs
2006 Rank 1 3 2 4 8 5 9 11 6 7
449 1.1% 47.6%
$1,659 5.5% 53.0%
$3.7 $0.8 $3.1
461 1.0% 51.6%
Type Independent Dealer Independent Independent/Insurance Independent Dealer Dealer Independent Dealer Dealer 3-Year Change -12 0.1 -4.0
$367 1.2 5.6
$1,292 4.3% 47.4%
$0.9 $0.1 $0.0
$2.8 $0.7 $3.1
tions has increased along with their representative share of all $20 million MLO locations to 42.7 percent from 40.5 percent in 2006. This group’s share of all $20 million MLO revenue has increased to 39.3 percent, up 5.3 percentage points from 34.0 percent in 2006. The trend in the number of dealerships operating collision repair facilities has continued to decline since 2006 when 41 percent had repair locations down to 35 percent in 2009. In 2009, 35 percent of dealerships operated collision repair facilities versus 36 percent in 2008 and 37 percent in 2006. Both the number of new car dealerships and the number of dealers operating collision repair facilities declined significantly in 2009; however, in recent months this decline has slowed as manufacturers have, for the most part, ceased their efforts to reduce or freeze their dealership points. In some cases, dealerships have been reinstated by manufacturers. Using NADA’s reported total of 18,460 dealers at the end of 2009, this represents an estimated 6,461 dealer‐operated collision repair facilities, a decline of 25.7 percent or 2,231 fewer dealer collision repair operators from 2006 when there were 8,692 dealers operating collision repair facilities. As can be seen in the following chart, the number of dealerships operating on‐site body shops since 1994 has dropped dramatically from a high of 52 percent to a low of 35 percent in 2009.
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DO THE RIGHT THING ENOUGH TIMES, AND PEOPLE BEGIN TO NOTICE. Hyundai Sales Up More than 14% (year on year). In 2008 Hyundai became the world's fifth-largest automaker, with 7% market share in the United States. 58 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
800-469-9731 858-300-3331 Fax Mon-Fri 7am - 6pm Sat 8am - 5pm firstname.lastname@example.org www.kearnymesahyundai.com
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702-565-9643 702-564-7756 Fax Mon-Fri 7am - 6pm Sat 7am - 4pm firstname.lastname@example.org www.hendersonhyundai.com
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800-462-2231 559-436-6041 559-436-0743 Fax Mon-Fri 7am - 6pm Sat 8am - 1pm email@example.com
Dealerships Operating On‐‐Site Body Shops Percent of total dealership population
Rank 1 2 3 4 5 6 7 8 9 10
Source: NADA Industry Analysis Division
Looking at the dealership share of the collision repair marketplace, and according to NADA, revenue derived from collision repair work performed Dealer‐‐Operated Collison Repair Facility Revenue Dollars in Millions
Top 10 Independent $20M MLOs - Dollars in Millions 2009 Caliber Collision ABRA Sterling Auto Body Boyd/Gerber (US) Service King True2Form Cars CollisionRevision Cook’s Collision Kadels 2009
Production Locations Top 10 % of All Collision Repair Locations % of All Independent Locations % of All $20M MLO Locations Revenue Top 10 % of All Collision Repair Revenue % of All Independents % of All $20M MLO Revenue Average Revenue per Location Top 10 Independent All Collision Repair All Independents All $20M MLO
3-Year Change 15 0.1 0.1 2.2
$331 1.1 -0.9 5.3
$927 3.1% 6.3% 34.0%
$1,258 4.2% 5.4% 39.3%
by dealerships declined significantly over the past year to $6.6 billion, down 8.3 percent from $7.2 bil-
Source: NADA, The Romans Group LLC
388 0.9% 1.1% 40.5%
403 1.0% 1.2% 42.7%
$3.1 $0.8 $0.7 $3.3
2006 Caliber Collision ABRA Sterling Auto Body Boyd/Gerber (US) Service King True2Form Cars CollisionRevision Cook’s Collision Kadels
$0.7 $0.1 $0.2 $0.7
$2.4 $0.7 $0.5 $2.6
lion in 2008, with body labor declining 9.4 percent and body parts down 6.8 percent.
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 59
Total Dealership Body Shop Sales Billions of Dollars
Source: NADA Industry Analysis Division
During the past 20 years, dealerships had seen their collision repair revenue increase steadily until around 2005 when sales dollars began to decline to what are now levels equal to 1998. We continue to expect original equipment manufacturers to support and influence dealership‐owned and operated collision repair facilities through the further development and expansion of collision repair certification programs. We believe that OEMs and dealerships with a collision repair presence are committed to expanding their influence and involvement in the collision repair industry, especially in light of the recent macroeconomic conditions. Dealers are
focusing on developing revenue alternatives through collision repair and parts sales, while maintaining repair quality and customer satisfaction. There was a 7.7 percent decline in the number of new car dealerships from year‐end 2008 to year‐end 2009, along with a 10.3 percent decline in the number of dealerships offering collision repair services. The significant decline in the number of dealerships in 2009 shows signs of slowing in 2010. About 260 dealerships closed in the first half of this year, leaving the dealership count at 18,220, a drop of 1.4 percent so far this year. The decline in the second half of the year will bring that rate to about 3 percent for the year, as predicted by Detroit‐based Urban Science. This decline is higher than is typical but down from last year’s 7.7 percent plunge when 1,550 dealerships closed. Within the top ten dealer group, there has been some minor shifting. For those dealers continuing to offer collision repair, average revenue per location has declined $300,000 over the last year although it remains $100,000 better than in 2006. We continue to believe that the collision repair industry will evolve and change at an accelerated pace over the next five years; more so than it did over the last ten. We expect that the evolving landscape will be the result of a number of industry‐specific and macro‐economic conditions likely impacting an increase in collision repairers exiting
the business, business failures, MLO mergers and acquisitions, expansion and growth, and new innovative partnerships and strategic alliances. Some of the prevailing conditions include: ● Insurance companies working with a more limited number of single and multiple‐location operators ♦ DRP utilization is expected to increase over the next five years ♦ Performance management results will drive utilization and influence to top‐tier performers ♦ DRPs and preferred provider programs are influencing larger repair volumes to emerging end‐game winners ♦ Insurance companies increased adoption of the multiple‐operator business model ♦ Declining accidents and the number of repairable claims due to: ♦ Consumers driving less and spending less on repairing collision‐damaged vehicles due to the recent social and economic conditions influencing changes in spending and saving behavior ♦ Proliferation and adoption of accident avoidance and safety systems ♦ Insurance company safe driving programs and car policy safe driving incentives ● The negative impact of the current macroeconomic and business conditions and their influence on collision repairers remaining in business or deciding to exit their business ● Acceleration of aggressive repairer selling, marketing and branding of their competitive value
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213-747-7248 213-222-1261 Fax
800-340-4132 949-218-5042 Fax
800-794-7955 562-597-2854 Fax
Ask for Carlos or Fausto
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Ask for Dave or Pete
60 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
Acura & Honda of the Desert
760-770-0828 Honda 760-321-2700 Acura 760-328-2489 Shared Fax M-F 7-6 Honda/Acura Sat 7-5 Honda
Rank 1 2 3 4 5 6 7 8 9 10
Top 10 Dealer $20M MLOs - Dollars in Millions 2009 Auto Nation Van Tuyl Penske Sonic Group 1 Asbury MileOne Carl Sewell Group Faulkner DarCars
Production Locations Top 10 % of All Collision Repair Locations % of All Dealer Locations % of All $20M MLO Prod. Locations Revenue Top 10 % of All Collision Repair Revenue % of All Dealers % of All $20M MLO Revenue Average Revenue per Location Top 10 Dealer All Collision Repair All Dealers All $20M MLO
2006 Auto Nation Van Tuyl Sonic Group 1 Penske Asbury Carl Sewell Group Bill Heard Lithia DarCars
232 0.6% 3.6% 24.6%
253 0.6% 3.0% 28.4%
$3.4 $0.8 $1.0 $3.3
$3.4 $0.7 $1.2 $2.6
$947 3.1% 14.3% 30.2%
propositions and performance to current and prospective wholesale and consumer segments
$851 2.8% 6.8% 31.2%
-21 0.0 0.6 -3.8
$96 0.3 7.5 -1.0
$0.0 $0.1 -$0.2 $0.7
not have the ability or the inclination to pursue with their customer base ● Lean production and its business benefits leading to competitive advantage and long‐term business sustainability for some repairers compared to their competition ● Hybrid claims management and process models that not all repairers are willing or able to accept, adopt or maintain ● Potential U.S. market entry of foreign collision repair and accident management operating models The good news is that there is still much opportunity within the collision repair industry for those who adapt to the changing conditions and leverage their business, market, financial, and strategic competencies and capabilities for growth and future success. This information will be updated periodically, tracking and trending any changes to repairer organizations and to the collision repair revenue they are processing. For further information, contact Vincent J. Romans or Mary Jane Kurowski of The Romans Group at vincent@romans‐group.com, maryjane@romans‐group.com or visit www.romans‐group.com.
● Development, marketing and implementation of new and innovative services that many repairers will
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 61
Continued from Page 57
Finishing the Red Mist
going to want to pull the lines so that clear doesn’t make such a big dry edge. Let it meld itself in there. To number the fine line, I use quarter inch on this and number them sequentially so you know which one to pull first and avoid a mess. Now we’ve got the “M” painted, it’s assembly time. It took me about 8 hours to assemble this car, give it a full detail, go back over it, judge myself. Obviously we painted some wheels for this vehicle as well to match the vehicle in the movie. I added my little touches to it. I put red caliper covers on (MPG Rich Evans caliper covers from mgpcalipercovers.com, or you can just go to calipercovers.com and visit Mike Barland). My website can link straight to them. I’ve got the car ready, judged it, everything looks good, ready for shipping. I got a super charger for it. The owner, Woody Frees and his two sons, 13 and 15, are installing that, along with other finishing items. They took delivery of this car on the 25th of August.
I’m excited to see the car get delivered and have one of my cars being seen in Florida. This car is number 7, (93 more to go), and we’ve got two more in the works now. I thought this one was pretty special. I really liked
We’re moving closer to SEMA, I’ve got six vehicles going and I can’t wait to show off some of the new cars I’m doing. Go to Mopar.com, to follow my build on a custom Challenger. I’m teaming with Mopar to bring some
Grit Guard (call 866-592-5925, or see their demo at the 2010 SEMA Show in Las Vegas, Booth #12645 and #12639), and Soft-Sanders™. Thanks to Woody and his family for giving me the opportunity to do a
the story behind it: a father and sons project. It’s a great bonding project and it’s something that they’ll remember for the rest of their lives. They’ll have a scrap book of 799 photos that shows me doing every step prior to them getting the car. As a builder that means everything to me. I’m excited to see another one done, and always waiting for the next one.
product so you can trick out your own car. It’s a lot easier than these Mustangs. The parts I’m creating for the Challenger can be bolted on within two hours. You can fully change the look of your Challenger, not that they aren’t cool already, but cooler is always better. We’re supposed to be done with that October 1. I’d like to thank my sponsors on this project, Sherwin-Williams, 3M,
great project. Alright, see you guys at SEMA next month. You can follow progress at my websites, huntingtonbeachbodyworks.com and Richevansdesigns.com.
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(650) 340-6108 Fax M-F 7:30 am - 5:00 pm Sat 8:00 am - 5:00 pm email@example.com www.veracom.com
62 OCTOBER 2010 AUTOBODY NEWS | www.autobodynews.com
Order your Genuine Mazda Parts from one of these trained crash parts specialists in your area:
Neftin Westlake Mazda
Mon - Fri 7:30-6 firstname.lastname@example.org www.neftin.com
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“Hyundai Motor America does not support the use of aftermarket, imitation or recycled collision repair parts,” the company’s statement reads. “The use of such parts or other nonoriginal Hyundai equipment for the repair of any collision-damaged vehicle may negatively affect crashworthiness and occupant safety during a collision therefore is not supported by Hyundai. Additionally, Hyundai does not support the use or re-use of components removed or recycled from an existing collision-damaged vehicle.
Like the Hyundai statement, the Nissan memo to its dealership parts managers states warns that the parts of the vehicle are designed to work together as a system and integrating non-OEM parts into these systems can change the crash performance in a future collision. Nissan said this is particularly true “with regard to safety and structural components. American Honda earlier this year issued a position statement, similar to one from Toyota late last year, that it does not support the use of non-OEM or used structural parts or supplemental restraint system parts in the repair of its vehicles. But in August, Honda also issued a bulletin more broadly cautioning
against the use of “aftermarket, counterfeit or gray-market” parts in the repair of Honda or Acura vehicles. That prompted the Automotive Aftermarket Industry Association (AAIA) to complain to the Federal Trade Commission (FTC). The AAIA says Honda’s statements violate the Magnuson-Moss Warranty Act by saying failure to use Honda replacement parts will cause consumers to lose warranty coverage on their vehicle. Honda’s position statements do not say the use of non-OEM or salvage parts void the vehicle’s warranty. They say Honda’s warranty does not cover any part not purchased from an author-
ized Honda dealer, and that Honda is not responsible for “any subsequent repair costs associated with vehicle or part failures caused by the use of parts other than Honda parts purchased from an authorized Honda dealer.” But Kathleen Schmatz of AAIA is asking the FTC to force Honda to retract the statements, saying they are using unsubstantiated warnings. “To our knowledge, Honda has provided no specific evidence to support their claim that there are problems with use of nonHonda aftermarket parts for their vehicles, or that use of such parts creates warranty-related issues for their customers,” Schmatz said.
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www.autobodynews.com | OCTOBER 2010 AUTOBODY NEWS 63