It's time for the industry to flex its muscle - - ABRN (Automotive Body Repair News)
It's time for the industry to flex its muscle

Source: Automotive Body Repair News

For as long as I can remember, we have used a simple but antiquated estimating method that employs a "rate factor" for calculating paint and materials pricing. This system, based on the total refinishing units for the repair job, is not an accurate or fair depiction of what we need on a specific job. It doesn't reflect actual usage requirements or variables in the products needed. It's a "one rate fits all" method that recently has been scrutinized by government agencies in states like California. They too agree that this system is not accurate and results in consumers not being invoiced properly.

The continuing use of the rate factor system is especially ridiculous in light of the fact that as an industry we recognize its inaccuracies. All of us – repairers, insurers and other service providers - know that the cost of the paint for different colors differs for most paint systems. We know that prices differ from brand to brand and within product lines. We all understand (or should) that the amount of preparation time needed for different paints will differ based on factors such as the type of part used (aftermarket, reconditioned or used), the extent of damages requiring repair and the original condition of the panels.

In the last five years, our industry has made great strides working together to improve the accuracy of the information we use to repair cars and do our jobs. More than ever, the complexity of new vehicle technology demands we use accurate repair information. We are learning that the accuracy of the initial estimate is absolutely critical to improving both efficiency and part procurement.

So why is agreeing upon and using the most accurate information when it comes to pricing paint and materials so difficult?

Answer: I compare it to a poker game. When you know you don't have the winning hand, you have two options. The first is to fold. The second is to bluff and raise the stakes in an attempt to get your opponent to fold.

In the poker game we play in our industry, insurers bluff and raise, and shops too often simply fold, even though they hold the winning hand - the winning hand, in this case, being accuracy and the fact that shops, if they would stick together, could dictate pricing and a whole lot more.

We're familiar with the notion that "If every shop in a market would decide to use 'it,' insurers would have to honor it, and it would become the standard, the prevailing practice." However, when a shop decides to implement such a practice, it is typically met with the insurer responses: "I am sorry we don't accept this because it is not a prevailing practice" or "You are the only one that seems to have a problem with the current system." The shop often just gives in.

It's time for us to raise the stakes. We don't have to bluff since we have the better hand. This is not about raising materials rates. It's about being able to accurately invoice for what we are doing.

For a number of years there have been alternative options available for material and paint pricing. These options have been brought up in national forums and meetings for at least a decade. I have spent time reviewing them and have come to the conclusion that our best option is ensuring that the providers of these methods/systems must be unbiased and accurate beyond approach.

We must scrutinize and hold companies that are, or soon will be, providing information to the highest ethical standards. If the provider cannot be an independent resource – if it has demonstrated or ever demonstrates that it can be influenced by an individual or industry segment – we must not rely on them. The stakes are too high in this game to allow this to happen.

I hope you will support this movement to replace the method we are using today with a far more accurate system that reflects what is performed on each individual vehicle. No one should have any grounds to dispute accuracy. Accuracy should be neutral. Bluffing should never be an acceptable option.

Comments from our Readers
 Posted 2009-11-03 19:50:37.0
Tony- where is the software from Audatex, Mitchell and CCC that can be purchased to automatically calculate this cost?As a shop we need intergrated solutions from these vendors , we know the issues but we need a good estimate system,bottom line.
 Posted 2009-11-04 06:54:41.0
Tomy We cannot rely on the estimating providers that we have now to take on this challenge. They have proven through there actions that they can be swayed. We as an industry have to get some one like our paint system vendors or some other third party to come up with a system that is fair to everyone. There will be a lot of different ideas as to who would be best for this job and there will be many who will weigh in on this debate but lets not get side tracked by the details like we always do. Lets get this done once and for all.
 Posted 2009-11-04 11:08:20.0
Tony, I couldn't agree more. We have been invoicing materials for over a year now, and all we hear from insurance companies is that we are the only ones! In reference to Vans question, you need to get your paint supplier involved and you need to weigh out everything to the ounce and bill accordingly. If your supplier doesn't have any job costing programs, why not. Don't rely on your estimating software companies, because there programs are not nearly as accurate.
 Posted 2009-11-05 08:04:04.0
Hi Tony: As always, a great article. Materials, here in the Caribbean, are, for the most part, 50% more than in North America. There is limited support from the paint manufacturer and warranties are almost non existent. The Insurance Industy here is like the Industry was in North America in the 1980s! Materials are not even considered as a seperate line item. They are inclusive of the cost to repair or refinish! So, challenges abound for everyone. As you suggest, use your clout as an industry in a particular city, make a statement and stick by it. It will work. Good luck with your time and energy investments.
 Posted 2009-11-17 06:34:21.0
Hey Tony, You are very correct in your analysis of the current situation. We in the collisionsion industry have for decades been ruled by the insurance companies. All too often we shut-up rather than put-up, so that we may be choosen for the precious DRP, or be bumped up a tier in the system. I agree with many of the respondents, that the current estimating program providers are in capable of providing the necessary information to create an accurate number to charge for paint and materials on each estimate. I think, unfortunately, all we can hope for in the short term is to be able to charge enough for materials and that our blended average costs fall below the amounts charged. Perhaps it is time for all of those associations we pay into to stand to this challange and try to change our system. Good Luck...
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Source: Automotive Body Repair News,
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