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Collision Repair
Recycled parts can aid in DRP favor and profitability, NACE speakers say
by Michael Anderson
New Orleans—Multiple DRP
requirements, coupled with the demands
of operating in a lean environment, have
created a slim margin of error for many
collision repairers. However, using
recycled parts can help owners meet their
bottom line and at the same time gain
favor with insurance partners.
That was the key message of Dave
Damon and Jeff Schroder, of Carpart.com,
at a seminar, “Using Recycled
Parts in a Lean Environment,” held
during the International Autobody
Congress & Exposition (NACE) at the
New Orleans Convention Center on Oct.
11.
“In a lean environment, things have to
happen and you expect them to happen,”
Damon told an audience of collision
industry professionals. “Cycle time is a
driving force in the business today.”
DRP expectations
Insurers are under great pressure to
confirm part availability, said Damon,
who has extensive experience with
insurance companies. So owners need to
show evidence of “shopping” for a mix of
Original.
Genuine Mazda Parts
are made from the
same blueprint as the
original parts and
guarantees the same
fit, performance, and
durability as the day
the vehicle was built.
Genuine Parts
Jeff Schroder of Car-part.com points to a panel damage chart that aids recyclers in
communicating with collision repair shop personnel on damage location.
OEM, recycled, and aftermarket parts for
each job, he said.
“Insurers asks themselves: Is ‘my’ shop
spending my money as wisely as possible?”
Damon said, referring to parts procurement.
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“Meet the insurance companies’
expectations and you don’t fall under a
watchful eye so often,” he said.
Alternative parts usage is a measuring
stick or key performance indicator (KPI)
that can vary greatly by shop type, he
said. BMW specialists, for example, may
have only 15- percent alternative parts
usage, he said,
because there
aren’t many
choices in collision
parts.
Other KPIs that
alternative parts
usage may impact
are repair vs.
replace ratios and labor hours per
estimate, he said. Another frequently
scrutinized item is refinish times, he said,
noting that insurers think they should be
one-third of overall labor hours.
“The trend with insurance companies is
to direct more work through ‘their’
shops,” he said. “If you meet their KPIs,
you’ll likely get more work.”
How much damage?
“If a part arrives and requires
significant work, it could cause
problems,” Damon said, adding that good
communication with a recycler who
adheres to grading systems helps limit
such problems.
“Some people look for parts with no
damage,” Schroder said. “But you can
make some money fixing (recycled)
parts. The fit is as good as the OE part.”
“Meet the insurance
companies’ expectations and
you don’t fall under a watchful
eye so often.”
When ordering parts, Schroder
recommended using VIN decoding,
which takes some of the guesswork out of
the process.
To determine extent of damage, many
recyclers use the credit-card method of
measurement, Schroder said, adding that
this can be applied to the length of a
scratch, for example. A credit-card length
is referred to as a unit of damage, and
some recyclers even break it down into
one-fourth of a unit, he said.
Two-thirds of recycled body parts sold
use the Automotive Recyclers
Association (ARA) grading system, he
said, pointing out that “000” means no
damage, and “A” indicates three units of
damage or less, “B” six or less, and “C”
more than six. The ARA damage codes
indicate the amount and location of
damage, he added.
Damon said that damaged panels will
often work in the repair process because
only a portion of the sheet metal may be
needed to fix the car.
Greater profitability
If a shop is being paid on markup, it
has a chance to make additional money,
he said, not to mention that the insurer
can be charged for the additional labor.
For example, if a front clip is
purchased, the cost
for the total unit can
save time and
money. In some
cases, he said, using
recycled parts can
save a car from
being totaled, and
make sure the shop
gets paid for the estimate it wrote.
“If you’re buying a door, the question
is: What comes with that door?” Schroder
said. ARA standards dictate that the
mirror isn’t included on the door. The
technology found in mirrors has
drastically increased their price, he said,
so “if you’re getting it, it’s a bonus.”
With damage, 80 percent of recyclers
use actual pricing for parts, while the
remaining 20 percent use “undamaged”
pricing. If a recycler doesn’t pay for
cleanup time, that has to be accounted for
on an estimate, he said.
For example, if a recycled $500 door is
on the estimate, and $100 is required for
cleanup, the insurance company must be
billed $600. Other recyclers will
negotiate price for damage at the time of
purchase, he said. n
Page 14 December 2012 Parts & People www.partsandpeople.com