CCIF Special Event at NACE 2015: Outside the Box
At NACE 2015 in Detroit, CCIF hosted the only exclusive Canadian collision industry event and what a session it was.
When it comes to the collision repair industry in Canada, it’s often easy to just focus on what’s happening within our borders and perhaps with our friends to the south in the U.S.
At CCIF’s special event Global Trends: Changing the Course of the Collision Repair Business in Canada, the emphasis was very much on looking at the business from a global perspective.
David Lingham, IBIS Board member and Director, Orbis Business Impact, gave a hard-hitting analysis of what’s happening across the world when it comes to collision repair.
In terms of Canada, Lingham gave good and bad analysis on what the industry here is doing right and what perhaps needs to be done better.
“Smile Canada,” he said “and Scowl Canada.” As far as the smile part is concerned, Lingham noted Canada is “getting it right” on a number of levels and our highly developed consolidation model is one of the most effective in the world. He said the only other nation that comes close is the Netherlands.
Lingham noted that Canada’s model for cooperation between collision repair shops and insurance providers is good compared with many other countries and the cooperative approach means that independent shops can play a significant role with OEMs, as well as those belonging to franchised retail networks.
When it came to “Scowl Canada,” however, he noted that worldwide, there’s still a huge pressure on margins and lack of trust among partnerships remains a significant problem, even here.
Lingham asked the audience to think about the insurer’s perspective. “If you’re able to get inside the head of the insurer you way well see things differently,” he said.
He talked about the three hats insurers wear: claims, sales and legal.
He said that when it came to shops, there’s too much emphasis on labour rates for work performed and not enough on what the job itself actually costs.
He said the huge price differential between labour rates for independents and franchise dealer operated shops in many countries creates pressure.
“For the insurer the work has to be done at a reasonable price, it’s about who is going to come up with the best package.” He noted that insurers do recognize the need for repairing vehicles properly, which explains why more independent shops are partnering with OEMs on certified repair programs.
He said it’s important for shops to look at the value of the services they provide, noting that in many retail businesses, such as restaurants, customers will pay or tip more based on the perceived value they receive. By contrast, simply raising prices can kill the business.
Lingham also talked about the emergence of what he sees as two-tier repairs, driven by advances in technology and the increasing expectations from insurers and customers.
“The whole concept of how we repair cars is up for question,” he said.
In the future, he noted some shops might just focus on heavy repairs, while others might stick with cosmetic jobs such as bumper repairs and minor scrapes. A further twist is that if the autonomous car does become commonplace, 80 percent or more of repairs could simply be minor fender benders.
In terms of efficiency, Lingham said there are ways shops can still improve and make money doing it. An example is bringing the equipment to the car, rather than the car to the equipment. Another is making the shop a focal point of the community, using it to host events that have nothing to do with collision repair.
Lingham cited the example of a shop in Brescia, Italy, that runs 20 percent net margins and doesn’t rely on any business from insurers or fleets. The shop in question is spotless, well run and is also used as a base for local marathons and community markets among other things. And if the shop can draw an additional 100 customers from hosting events like these, it’s already winning.
“It creates an entirely different culture and the level of service is so much better,” he said.
Given that Generation Y are expected to be around 80 percent of a collision centre’s customers within a decade and the value they place on customer service, anything that’s designed to deliver an exceptional experience is paramount. “Generation Y will walk at the first hint of poor service,” said Lingham “and they will tell everybody.”
Following Lingham’s presentation, he moderated a panel discussion with a number of suppliers: Dave Smith, Country Manager VR/CV, Canada, AkzoNobel; Patrice Marcil, Strategic Planning, Training & Customer Care Manager, Axalta; Roland Taube, Director, PBE Operations, LKQ Canada and Rick Orser, Business Manager, Automotive Aftermarket Division, 3M Canada and asked them if his observations about the Canadian collision repair industry made sense.
The panel discussion also focused on the need to develop a sustainable future when it came to business practices and the need collectively for all industry stakeholders to come together, whether its suppliers, shops, insurers and OEMs and to work on common KPIs with the end goal of delivering high quality repairs to satisfied customers while doing so profitably.
A second panel discussion, moderated by CCIF Chairman Larry Jefferies and featuring Paul Prochilo, Director, Corporate Strategy Prochilo Brothers Collision; Dennis Carlini, President, Windsor CARSTAR Collision; Joe Carvahlo, Manager, National Physical Damage Vendor Programs, Economical Insurance and Paul Stella, Manager, Collision Repair & Refinish, Toyota Canada Inc., talked about “Made in Canada” solutions in terms of providing the best customer service possible. Using videos to further the discussion, there was general consensus that in the future, the business has to revolve around the client—from taking care of the insurance claim immediately, to arranging a tow truck, to having the car taken to the repair facility and the rental arranged—all as soon as a motorist is involved in a collision. And doing so requires every stakeholder, from the shop to the insurer, to the OEM, to the tow company and rental car provider to take an active role in creating a seamless process from start to finish.
“We all want the same thing,” said Dennis Carlini, “to have the customer taken care of as soon as possible. If we do, our CSR scores will be higher.” As they say, strong reputation equals strong business.