A New Frontier
Scott Biggs remembers what it was like stepping into dealership collision repair shops in the early 1990s. They were neglected, underperforming and often “seen as a necessary evil” to many dealership operators, he says.
During those days, Biggs was a consultant for CCC Information Services, and getting dealerships to invest in improvements to collision operations was a tough sell.
But, today, that’s all changing.
“It’s a totally different world now,” says Biggs, now the CEO of Assured Performance, which aside from its business consultancy services, handles the collision repair OEM certification and recognition programs for a number of the largest automakers, including General Motors, Ford, Nissan, Fiat Chrysler, and Hyundai. Biggs’ business serves as an example of all that’s changed.
It starts with the rapid advancements in vehicle design (exotic and advanced structural materials) and technology (new, sophisticated, onboard computer systems), and it’s led to OEMs reach into the collision repair process like never before. The majority of automakers now have certification or recognition programs in which they require specific equipment, tools, training and facility features in order to repair their vehicles correctly. Many have issued position statements on pre- and post-repair scanning of a vehicle’s electrical diagnostic codes. And there are a number of automakers that have released consumer-facing mobile applications and marketing tools to direct vehicle owners to certified repairers.
Let’s repeat that last part, as it’s important here: Automakers have begun a push to direct consumers to their own certified body shops.
This is where everything starts to change, and even though it affects the entirety of the collision repair industry, Biggs says the dealership body shop now finds itself in a unique position: As the greater collision repair industry contracts, dealerships have an opportunity to position themselves against collision repair’s largest multiple-shop operations (MSOs) by differentiating their collective approach. The largest MSOs, Biggs points out, are insurance-work focused; direct repair programs are their lifeblood. The recent wave of OEM involvement—the very same OEMs whose logos adorn your shop walls—is an avenue for dealerships to connect with the owners of its vehicles.
“The last 15 years have been dominated by insurers,” Biggs says. “Now, it’s shifting to OEMs. Dealerships often have the funds, reach and branding to take full advantage of this. It can become an enormous profit center for dealerships. It’s a huge shift, and they can be at the front of it.”
Biggs adds: “Now is the time for dealership shops to thrive.”
According to Scott Biggs of Assured Performance, more and more automakers are beginning to look at the collision repair center as a key piece in customer retention. And, looking at the numbers, it makes sense.
The J.D. Power 2016 U.S. Initial Quality Study (IQS) stated that 49 percent of vehicle owners list “expected reliability” as the No. 1 reason for choosing an automaker. Now, when a vehicle owner experiences no issues with the vehicle within the first 90 days of ownership, 54 percent stay with that automaker for their next vehicle purchases. If there’s one vehicle problem? That loyalty rate drops to 50 percent. Three or more problems? It’s down to 45 percent.
“There is a direct correlation between vehicle issues and brand loyalty,” says Renee Stephens, J.D. Power’s vice president of U.S. automotive quality.
Shift to Certifications
Brian Eve is more focused on repairing vehicles the right way, ensuring quality and safety on every job. That was the original reason for his interest in OEM certifications.
Eve has managed the collision repair departments at Georgia’s Hendrick Auto Group since September of 2010. Since then, he’s helped the company expand to three locations, and turn its flagship collision center at Gwinnett Place Honda into a $21.6 million-per-year behemoth. (The facility did just under $7 million per year when he took over.) There are a number of operational improvements that Eve implemented during the last six years, but a focus on quality was always at the heart of it.
In 2012, the Gwinnett Place facility became Honda ProFirst certified. Eve’s team has added FCA, Nissan, Infiniti, and Acura since then.
“Certifications are very important, and not just the certification itself, but the information that we’re obtaining from the OEM on how the vehicle is to be repaired,” he says. “It’s not as simple as writing up an estimate and fixing a car anymore. And this allows us to make sure we’re ready for every vehicle that comes in the door.”
Assured Performance has nearly 750 dealerships certified through its various programs, which don’t account for high-end manufacturers like Mercedes-Benz, BMW, Audi and Jaguar/Range Rover, which all run their programs individually. Dealership shops, Biggs says, make up roughly 25–33 percent of all shops certified through the network.
Adding in the high-end dealers, it’s a substantial number that are certified.
Often, it’s consumer perception that dealership shops are already certified, Biggs says, which demonstrates where the advantage lies: “[Dealership collision centers] already have the brand attachment and recognition,” he says. “This is a chance to really protect that brand that the dealership pays so much for. You can keep that customer through the entire lifecycle of the vehicle, instead of letting them walk down the street.”
Eve stresses that quality protects the brand above all else—and the only way to ensure quality is to be certified.
“We want to be in the best possible position to repair that vehicle safely,” he says. “Everything we do should focus on that.”
In actuality, the cost of an OEM certification program is nominal, says Brian Eve, collision director for Hendrick Auto Group. Each certification costs just a few thousand dollars each year (costs vary depending on the OEM and whether or not the certifications are packaged together through one provider). The actual return is met within one or two structural repair jobs.
“What costs money is getting the proper equipment and training to meet the requirements,” Eve says.
For instance, a resistance welder needed for one program may cost $30,000. Because of the size of his operation (his Gwinnett Place Honda facility generates more than $20 million in annual sales), he needed to buy four of them.
“But it’s all in the way you look at it,” he explains. “I need to meet those requirements to repair the vehicles correctly. Period. If I don’t have those, I can’t repair it correctly. We’re in business to meet those standards whether we want a certification or not.”
Solving the Scanning Situation
Eve sat in a presentation from collision repair industry consultant Mike Anderson a little more than a year ago. Anderson, speaking on the topic of diagnostic scanning, explained to the audience of body shop operators the complexity of today’s vehicles, and how they simply can’t be deemed safe to drive until diagnostic scans are performed before and after the repair.
“Then he asks if anyone in the audience recently had their vehicles repaired,” Eve recalls. “A couple people raised their hands, and we went out and scanned their vehicles. There were fault codes on all of them—a lot of codes.
High-end vehicles in 2015 averaged more than 100 million lines of software code per car, according to data research firm Information is Beautiful. To put that in perspective, a Boeing 787, for example, has about 14 million. An F-35 fighter jet has less than 25 million lines of code. Facebook uses just over 60 million, and Apple’s operating system, Mac OS X “Tiger,” has a little more than 80 million. And much of this data is what automakers refer to as “mission critical”—lines of software code that control and enable functionality in crucial safety features, from complex systems like adaptive cruise control and automatic braking to the most basic, life-saving components like airbags and seat belts. These systems all need to be checked, diagnosed, and calibrated following the repair.
Now, many automakers have issued position statements that require shops to perform pre- and post-repair scans on all structural repairs.
And Eve’s shops perform these scans without fail.
As a Honda dealership, 45 percent of the Gwinnett Place facility’s work mix is made up of Hondas. The shop utilizes the automaker’s factory scan tool for those jobs. For the other 55 percent, Eve says the shop relies on a Collision Diagnostic Services (CDS) asTech2 device—a universal scanner that transmits codes to a CDS facility that employs OEM-trained technicians to read and diagnose the codes; they send back the faults to the shop’s technician. CDS charges for the scanner itself (roughly $2,500) and then a fee for every use. (Fees vary depending volume and frequency.)
“It’s dramatically changed the way we operate,” Eve says.
Gwinnett Place employs four, full-time mechanical technicians in the collision shop, and Eve says those are the techs that perform the scans. The pre-repair scan is performed during the disassembly and blueprinting process, and a post-repair scan is performed after job completion and prior to the final QC check.
“Without doing this, there’s no way to confirm that the vehicle is safe,” Eve says. “It’s really that simple.”
Scott Biggs of Assured Performance says that many dealership body shops have a distinct advantage over their independent competitors when it comes to diagnostic scanning: “Most of their connected service centers will have the factory tools they need,” he says. “They have the training and capabilities already. It’s a huge head start.”
Eve of Hendrick Auto Group in Georgia says to analyze your work mix when determining the right scan tools for your shop. Identify the most common makes and models, and see if it’s a large enough segment to require a factory tool. Then, fill in the rest with other options. For example, in Eve’s Gwinnett Place Honda collision facility, 45 percent of all work is done on Hondas, so the shop has the Honda factory tool. All other work is done through the CDS asTech2.
Push Toward the Future
It’s not by coincidence that OEM involvement in collision repair has ramped up in recent years, Biggs says. The push for lightweighting vehicles to meet the revised CAFE standards on fuel efficiency ignited a trend of exotic material use in vehicle design. Aluminum structural features had been present in high-end vehicles for years, but the 2016 Ford F-150 took aluminum mainstream.
“Aluminum really offered up a new realization about the importance of repairability from automakers,” Biggs says. “That mentality bled into everything else to bring us to where we are today.”
Even for those capable of performing the work, aluminum structural repairs aren’t exactly flooding shops. Eve’s facility is aluminum capable. He says it was roughly a $40,000 investment in addition to upgrades and training already made for the certification programs.
“We knew that we wouldn’t get a lot of [aluminum] jobs right away,” Eve says. “That’s not what it’s about. It really comes down to being ready for the future, and not scrambling when these cars do start coming in. We’ll be ready.”
“It’s a great time to be in this industry,” he adds. “We have a chance, as dealership shops, to really position ourselves at the front of this and get ahead of it. It’s really our time.”
Pre- and post-repair diagnostic scanning requires labor time, Eve points out, and your shop needs to be reimbursed accordingly. At the Hendrick Auto Group collision facilities he manages in Georgia, Eve says his team charges $159 in labor time for the scans, $125 of which will go toward the fees when the asTech2 device is used.