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Allstate Announces ‘Process Changes’ Designed to Improve Network Cycle Time Back on July 11, Allstate Insurance Company announced to its DRP participants that shops will be required to
Tracy Tramm, Allstate Claim Service Manager, announcing process changes via video
honor completion dates or assume all related costs, expedite estimate and
upload completion times, and extend their hours of operation, when necessary, for the convenience of Allstate customers. Now Allstate’s customer service initiative for 2011 has been expanded. The new program requirements were introduced to shops in a series of cycle time web conferences held recently. Those unable to view the web conferences are encouraged by the company to contact their local performance managers. Allstate is making “several key process changes” within its Good See Allstate Process, Page 12
Shop Owners Share Frustrations Renegotiating Contracts with Information Providers by John Yoswick
The experiences of a number of shop owners around the country serve as a reminder to make sure you always understand the terms of any contract you are signing. Failure to read the fine print—or negotiate clauses for additional rights to end even something as seemingly innocuous as a software contract—have cost some shops tens of thousands of dollars. A shop owner in California, for example, has been disappointed in the response he has received from one of the Big Three information providers to his requests over the past 18
months to renegotiate his software contract. The shop owner, who asked that his name and the provider’s not be used, said he purchased a complete package—hardware and software—from the provider, but realized shortly after he did so that he did not intend to the use the shop management module of the package. “We’re not a large enough shop to benefit from the time I’d have into using it,” the shop owner said. While he wants to continue using the company’s estimating system, as his shop has for more than 15 years, the information provider has refused See Contract Frustration, Page 18
VOL. 1 ISSUE 5 AUGUST 2011
Reorganized Lehigh Valley Collision Repair Association Now Serves Eastern Pennsylvania By David M. Brown Special to Autobody News
The re-energized Lehigh Valley Collision Repair Association is serving eastern Pennsylvania, including cities such as Allentown, Easton and Bethlehem. The one-year-old group comprises 18 auto body repair facilities, jobbers, parts suppliers, information providers and rental car companies, says its president, Matt Dewalt, AAM. “Our mission is to promote the professional image of our industry through safe, quality and ethical repairs,” explains Dewalt, vice president of Scott’s Collision Centers, which is celebrating its 40th year serving the Lehigh Valley. “We want to educate and lead our members to better themselves by al-
lowing the free exchange of ideas and assist with ongoing training,” he adds. “It is truly an organization made up of members who want to better our industry.” His father, Scott, a past and current member of LVCRA, started their business in 1971, and today the two locations, in Easton and Stroudsburg, comprise 34,000 square feet and generate about $5 million in annual sales. The original LVCRA has roots at least 50 years deep and was very active in the late ‘80s and early ‘90s, sponsoring golf tournaments, hosting monthly meetings and holding I-CAR and other classes, Dewalt says. At the time, Scott participated with his early shop, but membership dwindled and meetings stopped about 10 years ago.
REGIONAL STORIES in this issue...
See LVCRA, Page 6
Keenan Auto Body Raises Funds for PA Charities . . . . . . . . . . . .p. 4 Allstate Continues Fraud Lawsuits in NY . . . . . . . . . . . . . . . . . . .p. 4 Brooklyn DA: Body Shop Inflated Insurance Bills . . . . . . . . . . . .p. 4 AASP-NJ Announces 2012 NORTHEAST™ Dates . . . . . . . . . . . .p. 10 PA Lawsuit Seeks GM Repairs of Recalled Impalas . . . . . . . . . . .p. 11 Crashes Increase at New York State’s Roundabouts . . . . . . . . . .p. 39
NATIONAL ARTICLES in this issue...
Chevy Cars Get Highest Brand Share in 20 Years, GM Says . . . .p. 11 Detroit 3 Meet with UAW on Feds New CAFE Standard . . . . . . . .p. 15 Comprehensive Review of Distracted Driving Research Released .p. 32 Automatic Braking, as Implemented by Volvo, Does Prevent Crashes .p. 38 The Devil in the Details—Measuring Metrics Properly . . . . . . . . .p. 44 Dealership-based Body Shops Down by 24% Since Recession Began .p. 48 California Appeals Court Rules Consumers Can Sue Insurers For Steering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 53
COLUMNS in this issue...
Williams — How is a Dealership Selling Wholesale Parts Distinctive? .p. 16 Sisk — E.J Henry and Sons in DE, Specialists and Generalists .p. 24 Weaver — How to Keep Your Cool With HVAC Diagnostics . . . .p. 31 Insurance Insider — Don’t Become an Insurer’s Puppet . . . . . . .p. 36 I-CAR — Thin-Film Technology Comes to Collision Repair . . . . .p. 40 Sisk — Egon’s Auto Repair: Custom Work in NJ . . . . . . . . . . . . .p. 42 Sisk — Reedman-Toll in PA, Dealership’s Parts Bottom Line . . .p. 48 Chess — Are Your Repair Methods Ten Years Out of Date? . . . .p. 49 Evans — Lesson Learned: Re-Painting a 57 Thunderbird . . . . . .p. 52
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2 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
COLUMNISTS Attanasio - Prestige Imports is a BASF Waterborne Advocate in Colorado . . . . 22 Chess - Are Your Repair Methods Ten Years Out of Date? . . . . . . . . . . . . . . . . 49 Evans - Lesson Learned—Re-Painting a ‘57 Thunderbird . . . . . . . . . . . . . . . . 52 I-CAR - Thin-Film Technology Comes to Collision Repair . . . . . . . . . . . . . . . . . . 40 Insurance Insider - Hate the Way the Strings Are Pulled? Don’t Become an Insurer’s Puppet . . . . . . . . . . . . . . . 36 Schroeder - Carl Owen’s Paint and Body in Tyler, TX, Offers Top Rated Auto, RV and Truck Repair . . . . . . . . . . . . . . . . . 14 Sisk - Edward J. Henry & Sons, Auto Body Specialists and Body Generalists . . . . . 24 Sisk - Egon’s Auto Repair: A Custom Shop for Custom Work . . . . . . . . . . . . . . . . . 42 Sisk - Reedman-Toll in Langhorne, PA, Finds Ways to Boost its Bottom-Line . . 46 Weaver - How to Keep Your Cool When Working With HVAC Diagnostics . . . . . 31 Williams - What Makes A Dealership Selling Wholesale Parts Distinctive?. . . 16 Yoswick - State and Federal Governments Consider New Insurance Regulations . . 26 NATIONAL Allstate Announces ‘Process Changes’ Designed to Improve Network Cycle Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Allstate Shakes Up President’s Position, Shares Drop on the News . . . . . . . . . . 12 And You Thought You Knew Ugly Dogs. . . 35
Assured Performance and CARFAX Join Forces . . . . . . . . . . . . . . . . . . . . . 47 Audi Plans to Build Cars in North America, Eventually . . . . . . . . . . . . . . . . . . . . . . 32 Automatic Braking, as Implemented by Volvo, Does Prevent Crashes . . . . . . . . 38 California Appeals Court Rules Consumers Can Sue Insurers For Steering . . . . . . . 53 Chevy Cars Get Highest Brand Share in 20 Years, GM Says . . . . . . . . . . . . . . . 11 Chrysler is Free and Clear After Paying Back Federal Loans . . . . . . . . . . . . . . . 41 Companies Working to Expand Natural Gas Vehicle Options. . . . . . . . . . . . . . . 30 Comprehensive Review of Distracted Driving Research Released. . . . . . . . . . 34 Dealership-based Body Shops Down by 24% Since Recession Began . . . . . . . . 48 Detroit 3 Meet with UAW on Feds New CAFE Standard . . . . . . . . . . . . . . . . . . 15 Fiat and Chrysler to Get Single Management Structure. . . . . . . . . . . . . 25 GM is Top OEM in Truecar.com June Performance Scorecard . . . . . . . . . . . . 39 Groupon Offers First New Car Deal With Detroit Auto Dealership . . . . . . . . . . . . 19 Hertz Files Premerger Notice with Federal Antitrust Regulator . . . . . . . . . . . . . . . . 37 Hertz to Acquire Donlen in $930M Transaction . . . . . . . . . . . . . . . . . . . . . 32 Hyundai and Kia Both Raise 2011 Sales Forecasts . . . . . . . . . . . . . . . . . . 15 J.D. Power Survey Ranks Ford 23rd out of 32 Auto Brands, of US Manufacturers Only Cadillac Makes the Top Ten . . . . . 15 KBB Says Honda & Toyota Challenged by Hyundai for Tops in Brand Loyalty, Hyundai Holds Top Spot for Latest Quarter of ‘11 . 32 Michigan Expects Bright Future for Electric Vehicles in State . . . . . . . . . . . . . . . . . 32 New Vehicle Dealerships’ Sales for Service, Parts, and Body Shop Sales Total $78M. 51 Nissan Researching Solar Charging for Batteries in its All-Electric Leaf . . . . . . 30 NSF International Launches New Aftermarket Parts Distributor Certification Program . 43 QMT 1000, New Metal Tester, Saves Time and Ensures Safe Repairs . . . . . . . . . . 45 Ray LaHood Softens Stance on 56 mpg Fuel Standard for 2025 . . . . . . . . . . . . 32 Shop Owners Share Frustrations Renegotiating Contracts with Information Providers. . . . . . . . . . . . . . . 1 The Devil in the Details—Measuring Metrics Properly . . . . . . . . . . . . . . . . . 44 U.S. Demand No Longer the Single-Largest Driver of Oil Prices, Consumption in China and India Expected to Push Prices Higher . 14 VW sales up 35% in U.S. Could top 300,000 this year . . . . . . . . . . . . . . . . 25 Walker Automotive Among Largest US Dealerships . . . . . . . . . . . . . . . . . . . . . 12
Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Assistant Editor: Erica Schroeder Contributing Writers: Tom Franklin, John Yoswick, Lee Amaradio, Dan Espersen Janet Chaney, Toby Chess, Mike Causey, Tom McGee, David Brown, Rich Evans, Ed Attanasio, Chasidy Sisk Advertising Sales: Joe Momber, Sean Hartman (800) 699-8251 Sales Assistant: Kristy Mangum Art Director: Rodolfo Garcia
Northeast
REGIONAL AASP-NJ Announces 2012 NORTHEAST™ Dates . . . . . . . . . . . . . . . . . . . . . . . . . 10 Allstate Continues Fraud Lawsuits in NY . . . 4 CCAR Honors PA Shop with “GreenLink Shop” Title. . . . . . . . . . . . . . . . . . . . . . 10 Crashes Increase at New York State’s Roundabouts . . . . . . . . . . . . . . . . . . . . 39 Dunn Tire Opens 31st Store in Pittsford, NY. 10 Electric Carmaker Hiring in DE For Second Line Production . . . . . . . . . . . . . . . . . . . 4 Fire Breaks Out at Scrap Metal Yard in Delaware . . . . . . . . . . . . . . . . . . . . . . . . 6 GM Plant in NY Gets $33 Million Investment . 4 Keenan Auto Body Raises $28,500 for Philadelphia Charities. . . . . . . . . . . . . . . 4 Motorcycle Rider Deaths On The Rise in Delaware . . . . . . . . . . . . . . . . . . . . . . . 11 New York Offers Self-Service Printing of Insurance Licenses . . . . . . . . . . . . . . . 10 NY Body Shop Inflated Insurance Bills . . . . 4 PA Lawsuit Seeks GM Repairs of 400,000 Recalled Impalas . . . . . . . . . . . . . . . . . 11 Reorganized Lehigh Valley Collision Repair Association Now Serves Eastern Pennsylvania . . . . . . . . . . . . . . . 1
Indexof Advertisers
Contents
Serving New York, New Jersey, Pennsylvania, Delaware and adjacent metro areas, Autobody News is a monthly publication for the autobody industry. Permission to reproduce in any form the material published in Autobody News must be obtained in writing from the publisher. ©2011 Adamantine Media LLC.
Autobody News
Box 1516, Carlsbad, CA 92018; (800) 699-8251 (760) 721-0253 Fax www.autobodynews.com Email: news@autobodynews.com AkzoNobel . . . . . . . . . . . . . . . . . . . . . . . 7 Amato Agency . . . . . . . . . . . . . . . . . . . . 6 Autoland Scientech . . . . . . . . . . . . . . . 31 Audi Wholesale Parts Dealers . . . . . . . 49 BK Listings . . . . . . . . . . . . . . . . . . . . . . 10 BMW Audi of Turnersville. . . . . . . . . . . 35 BMW Wholesale Parts Dealers . . . . . . 44 Burdick Chevrolet . . . . . . . . . . . . . . . . 25 Central Avenue Chrysler-Jeep-Dodge . 11 Chief Automotive . . . . . . . . . . . . . . . . . 15 Circle BMW . . . . . . . . . . . . . . . . . . . . . 16 DuPont . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Equalizer Industries . . . . . . . . . . . . . . . 36 Ford Wholesale Parts Dealers . . . . . . . 37 Franklin Sussex Automall . . . . . . . . . . 19 Fred Beans Parts . . . . . . . . . . . . . . . . . 56 Fuccillo Auto Group . . . . . . . . . . . . . . 8-9 Garmat . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Global PDR . . . . . . . . . . . . . . . . . . . . . 34 GM Wholesale Parts Dealers. . . . . . . . 43 Hyundai Wholesale Parts Dealers . . . . 45 Jaguar Wholesale Parts Dealers . . . . . 54 Kia Motors Wholesale Parts Dealers . . 50 Koeppel VW-Mazda . . . . . . . . . . . . . . . 12 Lazare Kia . . . . . . . . . . . . . . . . . . . . . . 23 Lexus Wholesale Parts Dealers . . . . . . 51 Lynnes Subaru. . . . . . . . . . . . . . . . . . . 41 Manhattan Automobile Company . 28-29
Maxon Mazda-Hyundai . . . . . . . . . . . . 32 Mazda Wholesale Parts Dealers . . . . . 47 Mercedes-Benz Wholesale Parts Center. 27 Mercedes-Benz Wholesale Parts Dealers. . . . . . . . . . . . . . . . . . . . . . . 42 Metric Subaru . . . . . . . . . . . . . . . . . . . 38 MOPAR Wholesale Parts Dealers . . . . 33 NACE / CARS Registration . . . . . . . . . 55 Nissan/Infiniti Wholesale Parts Dealers . 46 Nucar Mazda . . . . . . . . . . . . . . . . . . . . 13 Porsche Wholesale Parts Dealers . . . . 46 PPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Prince & Portnoi. . . . . . . . . . . . . . . . . . 38 Safety Regulations Strategies . . . . . . . 36 SATA Spray Equipment . . . . . . . . . . . . 18 Scion Wholesale Parts Dealers . . . . . . 50 Scorpion Coatings. . . . . . . . . . . . . . . . 26 Security Dodge-Chrysler-Jeep . . . . . . 24 Stadel Volvo . . . . . . . . . . . . . . . . . . . . . 40 Subaru Wholesale Parts Dealers DE, NJ, PA . . . . . . . . . . . . . . . . . 20-21 Subaru Wholesale Parts Dealers. . . . . 39 Thompson Organization . . . . . . . . . . . 17 Toyota Wholesale Parts Dealers . . . . . 41 VIM Tools . . . . . . . . . . . . . . . . . . . . . . . 53 Volkswagen Wholesale Parts Dealers . 48 Volvo Wholesale Parts Dealers . . . . . . 48
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 3
Allstate Continues Fraud Lawsuits in NY
Allstate Insurance has filed another lawsuit in New York—this time in an attempt to get back $1 million from 10 psychological services facilities that alleged were never eligible to get insurance payments. Since 2003, Allstate has filed 30 fraud lawsuits in New York, seeking close to $170 million in damages. The lawsuit, filed after an investigation by the insurer’s Special Investigations Unit, is the third fraud-related lawsuit to be filed by Allstate in New York this year. This most recent suit, filed under the Racketeer Influenced and Corrupt Organizations Act and state law, claims four psychological services corporations were fraudulently licensed by using the name of licensed psychologists, but the facilities were owned and controlled by five laypersons. The facilities were not eligible to receive personal injury protection payments under the state no-fault insurance law, Allstate says. Insurers have been pushing for reform to the state’s no-fault system. In a statement announcing the lawsuit, Allstate refers to Fraud Costs NY, a group of insurance trade associations, consumers, small business, and
legislators looking to get laws changed. “The no-fault system is being exploited and responsible citizens are the victims,” says Krista Conte, Allstate spokeswoman. “Without the support of lawmakers, incidents of fraud will continue to increase.” According to the lobbying website, New York’s average nofault claim cost is 64 percent higher than the national median of $5,289 and has increased 55 percent since 2004.
Brooklyn DA: Body Shop Inflated Insurance Bills
The Brooklyn district attorney says a yet undisclosed auto body shop has been indicted in an insurance fraud case, according to Claims Journal. DA Charles J. Hynes alleges the body shop in Borough Park “enhanced damage to cars” when submitting inflated bills to insurance companies. The prosecutor’s office said June 24 that about $700,000 in cash has been recovered. The indictment names the company, its owner and one of its employees.
GM Plant in NY Gets $33 Million Investment
Additional need for Ecotec fourcylinder engines used in Chevrolet’s fuel-efficient cars and crossovers, including the all-new 2013 Malibu, is driving $65 million in new investment at plants in New York and Tennessee that will create or retain 163 jobs. “GM is committed to investing in manufacturing and jobs in the U.S.,” said Cathy Clegg, vice president Labor Relations. “These investments in powertrain manufacturing technology will help us meet the growing needs of our customers for high quality, fuel efficient vehicles both today and in the future.” In Tonawanda, N.Y., additional capacity is being added for engines used in the Chevrolet Equinox and GMC Terrain crossovers that achieve 32 mpg on the highway and can travel up to 600 miles between fill-ups. GM is investing $33 million that will create or retain 100 jobs. In Spring Hill, Tenn., the engine plant is adding capacity for direct-injection four-cylinder engines to support the acceleration of the 2013 Chevrolet Malibu. GM Is investing $32 million that will create or retain 63 positions. The next-generation Malibu is scheduled to start production in early 2012. It will be sold in about 100
countries on six continents. Chevrolet will begin sales in the United States with the Eco, the most fuel-efficient Malibu ever. It features GM’s 2.4L Ecotec with eAssist technology. Malibu will debut an all-new 2.5L Ecotec engine next summer. The new Malibu will be assembled at the Fairfax Assembly plant in Kansas City, Kan., and Detroit-Hamtramck plant in the United States, as well as other plants around the world. “With gas prices becoming increasingly unstable, investment in new powertrains is vital if GM wants to be competitive,” said Joe Ashton, UAW vice president-GM Department. “Our customers want vehicles that get great gas mileage and our members have proven they can build innovative products that exceed our customers’ expectations.” The Tonawanda and Spring Hill investments are part of $2 billion in U.S. manufacturing investment GM announced May 10 that will create or retain 4,000 jobs in 17 facilities in eight states. These investments are in addition to $3.4 million GM has invested in U.S. manufacturing facilities since July 2009, adding or retaining more than 9,000 jobs. For more information please visit www.gm.com.
4 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
Keenan Auto Body Raises $28,500 for Philadelphia Charities
Keenan Auto Body, a multi-shop operation with businesses in Pennsylvania and Delaware, held their 12th Annual Charity Golf Outing on June 3. Keenan VP and COO, Michael LeVasseur announced the successful outcome of the outing. “I am very pleased to announce that we have raised a record amount of $28,500 for the Philadelphia Ronald McDonald House and the Russella Educational Fund. This was the first year that we chose more than one charity to name as the benefactor. $15,000 was earmarked for playground equipment for the PRMH located at front and Erie streets in Philadelphia Pa and $13,500 was given to the Russella Educational Fund, a fund set up for the children’s educations of Bernadette Russella, who recently lost her battle to breast cancer.” “This year’s outing was special”, stated Craig Camacho, Keenan Auto Body’s Marketing Director, “Bernadette LeVasseur Russella is the sister of Mike LeVasseur, Keenan’s VP and COO. It’s a great feeling when you can come together and help those who consistently without fail help others. Mike is always there for everyone when called upon, it’s a trait his entire family lives by. I want to personally thank everyone that played a part and
generously donated making our event a complete success.” Keenan Auto Body has raised close to $200,000 in the last 12 years for charities such as Big Brothers Big Sisters and Camp Make A Dream Foundation, among others, and this year’scharities, The Philadelphia Ronald McDonald House and the Russella Educational Fund. For additional information, contact Craig Camacho at 610-5873187.
Electric Carmaker Hiring in DE For Second Line Production
Electric automaker Fisker started the initial stage of a "comprehensive job creation program" during the last weekend of June, filling positions at the recommissioned Wilmington, DE, plant, according to reports made by the Detroit News. About 120 engineers, electro-mechanical technicians and early teams of production workers will be hired this year, as Fisker prepares for the launch of its second line of production vehicles, a midsize premium sedan code-named Project Nina, at the end of 2012.
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 5
Continued from Front Page
LVCRA
LVCRA had a regular following of shops early on, says Garry Sandt, a current board member with 23 years experience in the collision repair industry. “However, over time it became basically the same six or seven shops that were attending, and it grew stale, although this was in no part related to the efforts or energy of those participating.” Today Sandt is district manager for National Coatings & Supply -PA and NJ Group. “It was a real struggle to get shops to come out and get involved — regardless of timing and/or content of the meetings,” he adds. About two years ago, the association stopped growing completely. One reason: “Shops that were not participating were concerned that they would be looked at unfavorably by the insurance companies for participating.” Joe Hepp, a past member and current secretary of LVCRA, agrees that low membership was attributable to industry divisions in the 1980s. “Some shops were not on speaking terms with other shops because of poor communication,” he says. “To help create better camaraderie among the shops, I originally joined the association and have been a member since.” In Allentown, his Hepp Brothers Collision Center is celebrating its 35th anniversary. About a year ago, Rich Daku, past member and current treasurer of LVCRA and a partner in Daku Auto Body of North Catasauqua e-vited former members to his shop one night to view his building addition. His fourthgeneration family business was founded in 1948, and in the early years, his grandfather was president of what was then called the “Auto Body Association”—his father was later a board member. “While there, discussions turned to the old association,” Dewalt recalls. “Rich mentioned that there was
still a few hundred dollars left in the account and suggested donating it to the local technical schools. He said, ‘Unless someone wants to get it started again’—and everyone looked at me.” So Dewalt volunteered, helping to re-establish the organization on a challenging budget. “I said that I have no idea how to run an association but that I could get a group of people together and get some great guest speakers.” He was motivated to help the local shops: “I remembered that when the association was going strong, shops seemed to be doing well. Once the association dwindled, it seemed a disconnect happened over time amongst shop owners. I always felt that we are stronger working together toward a common goal.” In addition, Dewalt had been a member of the DuPont Business Council IV for many years. “I’ve had the fortunate opportunity to learn a lot of great things from a lot of great people,” he says. “Now I have a chance to share that with others.” The group met again a few times and formally restarted at a Sept. 27, 2010, meeting. They established a structure of four officers and two board members and quarterly membership meetings, held at members’ shops or a hotel meeting room. Mike Anderson of Collision Advice spoke to that first meeting, with 50 people attending, he recalls. Since then, Aaron Schulenburg, SCRS executive director, has also spoken to the group and, as a result, LVCRA is exploring an affiliation with the national organization. Just recently, Chuck Sulkala, who was in the Lehigh Valley area at the time, spoke about I-CAR and the NABC. To prevent the fate of the original organization, the new group is focusing on membership expansion— up to 50 miles away from the Lehigh Valley base. “The association is working hard to recruit a more di-
verse membership so that there is a wider view to all of those involved with our industry,” Daku says. “We are explaining that we are here to help each other to improve relationships with each other and the insurance companies.” Emphasis, too, is on education: Future meetings will discuss database enhancement gateway (DEG), estimating and blueprinting, new metals and equipment as well as feature speakers, Dewalt explains. “Through educating ourselves, if we can help define the rules of engagement that are fair for everyone in the industry, then the association will be successful,” says Andy Estojak, past and current LVCRA member and owner of Andy’s Champion Auto Body in Bethlehem. “At the same time, the association also provides us a unified front as collision shops.” “Our industry is getting tougher and tougher all the time, due to higher customer standards and insurance cutbacks,” Daku adds. “We constantly have to change with technology and structure our shops to be most efficient at how they are run.”
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Fire Breaks Out at Scrap Metal Yard in Delaware Authorities say a scrap metal yard near Wilmington has caught fire for the second time in three weeks, according to Claims Journal. The fire began about 3 p.m. Wednesday at theAmerican Scrap Company on New CastleAvenue, and spread to a nearby building on the property.
Deputy Fire Chief Mark Willis says no one was injured in the fire, and that it was accidental. He says the fire was brought under control an hour and a half after it started. The scrap yard was also the site of a fire on June 21.
6 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
Keith Stephens and his son, Benjamin, agree on the group’s educative mission. “One major element for us is helping our fellow shops understand the complexities of estimating systems —aspects such as ‘P’ or procedure pages,” says Keith, a current member and past president of LVCRA. He owns North Star Automotive in Bethlehem, which he founded in 1984. “Every aspect of the business is more complex than it was in the past.” “There’s a learning curve for all of us,” says Benjamin, LVCRA’s vice president and general manager/estimator at North Star Automotive. “But the more people from the area who can participate, the better everyone will understand the changing nature of our industry. Add to that, there’s a great sense of camaraderie within the group.” Adds Dewalt: “There is a lot of comfort in knowing that what you are currently going through with your business, there is someone else experiencing it also. The association provides a forum where people in the industry can get together and freely exchange information to better themselves.”
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 7
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 9
AASP-NJ Announces 2012 NORTHEAST™ Dates
Dunn Tire Opens 31st Store in Pittsford, NY
The Alliance of Automotive Service Providers of New Jersey (AASP-NJ) announced June 27 that the 35th annual NORTHEAST™ 2012 Automotive Services Show will take place March 9–11, 2012 at the Meadowlands Exposition Center in Secaucus, New Jersey. NORTHEAST™ 2012 will look to continue the success and industry praise it has garnered since the show moved to the Meadowlands in 2009. “Every year we have taken another step up and improved all facets of the show,” AASP-NJ President Jeff McDowell said, “and the attendance, the industry response and vendors have all supported that fact. We are looking forward to providing another fantastic experience for everyone who attends in March 2012.” NORTHEAST™ 2012 hours are: Friday, March 9, 5pm-10pm; Saturday, March 10, 10am-5pm; and Sunday, March 11, 10am-3pm. For more information on NORTHEAST™, please visit: www.aaspnjnortheast.com.
Dunn Tire L.L.C. has opened its 31st store in Pittsford, a suburb of Rochester, N.Y. The Pittsford outlet, which opened July 11, is Dunn Tire’s ninth location in the Rochester market and occupies the former Trombley Tire and Auto location in the Pittsford Colony Plaza. The retailer retained the former Trombley Auto employees at the location. “We have customers in Pittsford, Fairport, Victor, East Rochester, parts of Brighton and all the surrounding areas that this store will be more convenient for,” said Patrick Logue, Dunn Tire’s managing director of retail operations. “We’re opening July 11 offering tires and oil changes, but will soon be a full service Dunn Tire store offering wheel alignments, brakes, shocks, struts, state vehicle inspections and all the quality services our customers expect from us.” Buffalo-based Dunn Tire is ranked by Tire Business as the 25th largest independent tire retailer in North America, with retail locations in New York and Pennsylvania.
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CCAR Honors PA Shop with “GreenLink Shop” Title
The Coordinating Committee for Automotive Repair (CCAR) recognized a Philadelphia, PA, collision repair shop with its “GreenLink Shop” status on June 29. The shop that received the recognition was Auto Show Collision Center. The “GreenLink Shop” status promotes consumer confidence in local automotive repair facilities’ environmental and safety awareness and implementation, according to CCAR. Repair facilities pursuing “GreenLink Shop” recognition must maintain high standards of excellence in environmental, health and safety practices in four categories. The CCAR initiative recognizes auto service facilities and collision repair shops with separate criteria established for each type of business. For more information visit ccargreenlink.org.
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New York Offers Self-Service Printing of Insurance Licenses
Insurance agents, brokers and other licensees of the New York State Insurance Department are now able to obtain and print copies of new and renewed licenses by accessing a self-service feature on the department’s Web site, according to Insurance Journal. The department issues approximately 125,000 new and renewed licenses a year. Licenses are generally issued within 24 to 48 hours after applications are received and then screened by the Department. The new electronic capability allows licensees to immediately download licenses in a secure .pdf format. Under the new system, the department will notify applicants by e-mail that when their licenses are issued and available to be accessed electronically. Alternatively, applicants may use the “producer look-up” tool on the Web site to see if a license has been issued. In addition to agents, brokers and adjusters, department licensees able to use the system include consultants, reinsurance intermediaries and life settlement brokers. In May, the department introduced a capability allowing licensees to obtain duplicate copies of licenses already issued.
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www.bklistings.com • admin@bklistings.com 10 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
PA Lawsuit Seeks GM Repairs of 400,000 Recalled Impalas General Motors Co. has been sued by a Pennsylvania woman seeking to force the U.S. automaker to fix rearend problems on more than 400,000 Chevrolet Impala vehicles for 2007 and 2008 model years, according to Reuters. In 2008, GM told dealers to replace the rear-wheel spindle rods on Impala cars used by police because the issue could cause the tires to wear out. The lawsuit, which seeks classaction status, contends GM should also repair cars sold to consumers because many contain the same problem. It charged GM with breech of warranty and asked the court to compel the automaker the repair or replace the rear spindle rods. “There are no relevant material differences between police vehicles and class members’ vehicles relating the defective spindle rods,” the lawsuit said. GM declined to comment, saying it does not discuss matters in litigation, but did confirm it sent a dealer notice regarding the rear suspension issue.
GM built about 24,000 police versions of the Impala in the 2007 and 2008 model years. According to the lawsuit, 423,000 Impala cars were sold over the two-year period. Donna Trusky of Blakely, Pennsylvania, the plaintiff in the lawsuit, bought an Impala in February 2008, but after 6,000 miles, the tread on the car’s rear tires were so worn that their use was “questionable”, according to the lawsuit. A dealer paid for new rear tires and provided a front-end alignment, but did not mention the potential problem with the rear spindle rods, according to the lawsuit. In November 2010, with a little over 24,000 miles on the car, Trusky replaced the rear tires again for about $290. “Defendant concealed the existence of the defect from class members, even those who presented their vehicles for repair of the defect,” the lawsuit said of GM. Lawyers for Trusky said complaints about the issue have been filed with the National Highway Traffic
Safety Administration, as well as on a number of auto websites, including edmunds.com. The case is Trusky v. General Motors Company, U.S. District Court for the Eastern District of Michigan, case no. 2:11-cv-12815.
Motorcycle Rider Deaths On The Rise in Delaware
Delaware highway safety officials are alarmed at the increased number of motorcycle deaths and are urging riders to drive sober and wear helmets, according to Insurance Journal. Authorities said 10 people have been killed in motorcycle crashes this year, compared to three as of this time last year. Only two of those killed were wearing helmets. Jana Simpler, director of the state Office of Highway Safety, urged motorcycle riders to slow down and look out for road hazards.
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Chevy Cars Get Highest Brand Share in 20 Years, GM Says
U.S. Chevrolet car sales in the first half of the year are set to reach their highest share for the brand in 20 years, outselling trucks in June for the third straight month. Chevy cars accounted for just above 50 percent of the brand's total U.S. sales for June—the third consecutive month in the majority—and 47 percent for the first six months of 2011, said Alan Batey, vice president of sales and service for Chevrolet. He declined to disclose GM's expected total results for June, which the company reported on July 1. Through May, Chevy sold 385,257 cars and 362,443 trucks— with total brand U.S. sales rising 17 percent in an overall market that improved 14 percent. "You'll see continued strength in passenger cars, particularly in the compact and mid-car segments," Batey said. Citing gas prices that are still about $1 a gallon higher than a year ago, GM pointed out that 46 percent of Chevy's retail buyers in the first six months chose a more fuel-efficient four-cylinder engine in their vehicles, double the rate of five years ago.
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 11
Hands Repair Network that the company says are designed to positively impact customer service and cycle time. The announcement comes in the form of a video released by the company featuring Tracy Tramm, Allstate Claim Service Manager for the Good Hands® Repair Network. In the video directed at the DRP
shops, Tramm says “As you know, reducing auto cycle time is a key component in improving customer satisfaction for Allstate and your facility... as you continue to deliver priority service to our mutual customers. “It goes without saying, that the quicker you reach out to the customer, the sooner they know, they’re in our good hands. I also want to remind you of four key messages and process changes to the network program in early 2011.
“Compliance with these items remains a core requirement for your participation inAllstate’s direct repair program. “First and foremost, your shop will give priority service to Allstate customers having their vehicles repaired by you. Estimates must be completed and uploaded within 24 hours of your receipt of the vehicle. Third, your facility will be required to commit to a guaranteed completion date for all vehicles repaired under the Network program. Your
Joseph P. Lacher Jr., president of Allstate Protection, is leaving effective immediately, Allstate Corp. announced July 18. Shares dropped significantly (@5%) on the news. Various presidents as well as claims and product operations executives of the various Allstate Protection units will report directly to Thomas J. Wilson, Allstate’s chief executive. Lacher, who led all of Allstate’s property and casualty offerings as president of Allstate Protection, no longer appears on a list of executives on Allstate’s website. Lacher joined Allstate
in November 2009 after having worked at Travelers for more than a decade, eventually becoming chief executive officer of Personal Insurance and executive vice president at the competing insurance firm. At Allstate, Lacher succeeded George Ruebenson, an executive who retired after almost 40 years. Last month, at an investor conference, Lacher outlined a business plan to grow Allstate’s P&C segments with a new distribution model. The National Association of Professional Allstate Agents did not look upon the plan favorably.
Lacher told investors Allstate will be increasing homeowners’ rates and tightening underwriting standards in an effort to achieve a combine ratio in the low 60s, excluding catastrophes, by 2013. In auto, Lacher said Allstate is primarily concentrating on New York and Florida, which account for 20 percent of the carrier’s business. Allstate plans to buy online auto insurer Esurance and independent insurance agency Answer Financial from White Mountains Insurance Group Ltd. for about $1 billion. The transaction is supposed to close this fall.
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Allstate Process
Allstate Shakes Up President’s Position, Shares Drop on the News
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For the fifth straight year, Alexandria-based Walker Automotive has made Ward’s Dealer Business magazine’s list of the 500 largest automobile dealerships in the country. Walker was No. 52 on the list, which ranks dealerships based on total revenue. Billy Navarre Chevrolet and Honda in Lake Charles also made the list, at No. 235, the only other Louisiana dealership on the list.
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shop will be responsible for any and all costs caused by a failure to meet the guaranteed completion date. And finally, at the customer’s reasonable request, your shop will provide extended hours of operation. Contact your local performance manager to answer questions. You are why it works. Thank you.” The video can be viewed at www.autobodynews.com by searching this story under the “Insurer Actions and Announcements” section.
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www.koeppelvw.com 12 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
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Mazda Wholesale Parts Distributors “Professionals Servicing Professionals” www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 13
Shop Showcase with Erica Schroeder
Erica Schroeder is a writer and editorial assistant for Autobody News in Oceanside, CA. She can be reached at eschroeder@autobodynews.com.
Carl Owen’s Paint and Body in Tyler, TX, Offers Top Rated Auto, RV and Truck Repair Carl Owen’s Paint and Body in Tyler, TX, is a family run business that has grown into a business with two area shops; one specializing in auto body work and one in RV and truck work.
RV and Truck Collision Center Manager Andy Wood
Carl Owens Paint and Body has been a family-run business for over 40 years; Carl Owens Sr. opened the Erwin Street shop in 1965 and had all operations running out of one shop for decades. Carl Owens Jr. took over management in 1981 and was able to open a second location dedicated to just auto repair about 5 years ago. Carl
Owens Jr. currently oversees all management operations at both shops. “This business was started in 1965 by Carl Owens Sr. and it was passed down to Carl Jr. in 1981 who still runs the business today,” said Andy Wood, Manager of Carl Owens RV and Truck Collision Center. The truck shop is a 9 acre facility and employs about 40 people. The auto shop is a 2 acre facility and employs about 20 people. Between both shops the business sees around 120 cars and various trucks per month and is able to pull in $600,000 gross per month. “We’re the biggest shop within about a 100 mile radius, from Dallas to Shreveport,” said Wood. Between both locations Carl Owen’s is able to service all sorts of different vehicles. According to Wood both shops are outfitted with the latest state of the art equipment. The truck shop has some custom equipment pieces most
U.S. Demand No Longer the Single-Largest Driver of Oil Prices, Consumption in China and India Expected to Push Prices Higher
Despite a significant reduction in the miles Americans are driving, fuel prices have not responded in traditional seasonal variations and are, if anything, continuing to rise after a brief unseasonal dip. The Benchmark price of West Texas Intermediate Crude jumped more than 2% on July 19, climbing $2.28 a barrel, to $97.43. In Europe, closely-watched Ice Brent Crude did slip slightly in early Wednesday trading, but had still climbed to $117.36 a barrel. Many economists had expected the oil price numbers to keep falling, as they did leading up to the beginning of the month, reflecting worsening economic news around the world— which theoretically translates into reduced demand. In previous similar situations, prices almost always slump on word that U.S. motorists cut back on driving—now for the fourth month in a row. However, a study by MasterCard found that even over the Independence Day weekend, normally among the most heavily travelled holidays of the year, demand for gasoline fell 1.7%. For the previous four weeks, the MasterCard Spending Pulse survey showed consumption down 1.1%.
There had been some signs of a last-minute surge as fuel prices briefly declined in June, but American drivers appear to be adjusting their behindthe-wheel habits, whether car-pooling more, staying home, or better planning their errands. The problem for U.S. drivers is that American demand, while still major, is no longer the single-largest driver of oil trading, as India and China, in particular, keep raising their consumption rates. OPEC this week warned that while demand is down a bit, it will still hit record levels in 2011, even though, “the unsteady global economy has added risks to the forecast.” The group predicts demand will reach an all-time high of 88.18 million barrels this year. The U.S. Energy Information Administration anticipates the figure will climb 1.6% this year to 88.16 million barrels. In traditional times, considering weak economic conditions, oil would likely be trading at closer to $67. But few expect to see the sort of wholesale collapse in prices that occurred in 2008.
14 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
body shops would not normally see because Carl Owen’s deal with trucks, trailers, RVs and field equipment. Both shops use a laser alignment machine and 2 downdraft spray booths. The truck shop is outfitted with a 50 ton car grabber frame machine and a 35 foot, 60 foot and 65 foot truck booth. The truck equipment enables technicians to repair vehicles that most shops would be unable to work Auto Collision Center Manager with. This ranges Johnny Nipper from big rigs to trailers to tractor equipment used by area farmers. Both shops are using PPG paints for their auto and truck painting needs. The auto shop is using PPG Deltron DBC acrylic paints and the truck shop is using PPG Dell Fleet paints.
Both Carl Owens shops also offers a lifetime warranty on any of the work done at either shop. This warranty covers anything that may happen as a result of the shops work and includes any body or mechanical repair work. Technicians at both shops are also I-CAR Certified. The business offers free estimates and rental cars in order to better serve Carl Owens’ customers every need when having their car repaired at either facility. More information can be found at www.carlowenspaint.com. Carl Owens Auto Collision Center 10145 Hwy. 64 East Tyler, Texas 75707 (903)566-5300
Carl Owens RV and Truck Collision Center 2415 E. Erwin Tyler, Texas 75702 (903)597-2628
J.D. Power Survey Ranks Ford 23rd out of 32 Auto Brands, of US Manufacturers Only Cadillac Makes the Top Ten For the first time since Ford CEO Alan Mulally took charge of the automaker, its initial quality scores have fallen below the industry average. The J.D. Power & Associates 2011 Initial Quality Rankings put Ford in 23rd place among 32 auto brands ranked by consumers. Ford fell 18 spots from #5 last year, with the latest survey showing Ford registering 116 problems per 100 cars. The industry average (107 problems per 100 vehicles) improved slightly from last year's IQS rankings with Lexus topping the list this year with 73 problems per 100. The top 10 in the J.D. Power IQS Rankings. #1 Lexus, #2 Honda, #3 Acura, #4 Mercedes-Benz, #5 Mazda, #6 Porsche, #7 Toyota, #8 Infiniti, #9 Cadillac, #10 GMC The other American brands all came in below the industry average. #14 Chevrolet, #16 Chrysler, #17 Lincoln, #20 Buick, #22 Ram, #23 Ford, #32 Dodge With Ford, car and truck buyers have been complaining of technical and electronic features not working as they should. In January, Consumer
Reports called the new MyFord and MyLincoln Touch systems a distraction, summarizing the frustration some new Ford buyers are feeling. There have been reports of Ford buyers complaining the system struggles to respond to voice commands or that it's simply too confusing. For Ford, this latest ranking shows the downside of trying to ride the tech advantage it's had for last couple of years with the Sync system. Sync was a game changer that not only helped drive sales with higher transaction prices, it changed the image of Ford. MyFord Touch was supposed to be the next generation that would extend Fords lead when it comes to in-car technology and communications. Overall, Ford is still doing very well, and the quality of its new cars and trucks are much better than a few years ago.
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Hyundai and Kia Both Raise 2011 Sales Forecasts
Hyundai Motor Co. raised its 2011 U.S. sales forecast to 624,000 units, representing a 16 percent gain from last year, the Korean automaker said June 30. Last year, the Hyundai brand's U.S. sales rose 24 percent to a record 538,228. Sales through May are up 29 percent to 263,588 vehicles. Reuters reported June 29 that Kia Motors Corp. also hiked its 2011 U.S. sales forecast to 433,000 units. That would be a 21.5 percent increase from the 356,268 vehicles the brand sold in the United States last year. Through May, Kia's sales are up 45 percent to 200,060 units from the year-ago period. Hyundai credited robust demand for current and upcoming vehicles for the higher sales target. Recent vehicle debuts include the redesigned Elantra compact, the 2012 Accent subcompact and a freshened 2012 Genesis luxury sedan. The new 2012 Veloster sports coupe and an updated Equus full-sized luxury car will debut by year end. In January, Hyundai Motor America said production constraints would limit U.S. sales to around 600,000.
Detroit 3 Meet with UAW on Feds New CAFE Standard
Reps from all three Detroit automakers met with the United Auto Workers July 12 to discuss the higher federal fuel-economy standards being proposed by the Obama administration. This was the latest in a series of regular meetings between GM, Ford,. and Chrysler and UAW President Bob King on the issue. The White House is weighing an increase of the Corporate Average Fuel Economy, or CAFE, standards from the current target of 35.5 mpg by 2016 to 56 mpg by 2025. The standards apply to both cars and light trucks. Automakers are lobbying against the stricter standards. The union is also concerned about the impact the increase would have on its members, because they would likely force an even more dramatic shift away from trucks and sport utility vehicles to small cars than the one already under way. A recent poll of 800 likely voters in Michigan found that 78 percent favor higher federal fuel-economy standards.
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 15
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 ljoew2@gmail.com
Parts Profiles
What Makes A Dealership Selling Wholesale Parts Distinctive? with Larry Williams
What makes a dealership distinctive? By my definition, that dealership must have a greater image of integrity, service, and loyalty than their competition. They have the greatest number of regular customers, and the best word-ofmouth reputation. Even their smallest customers know that their business is appreciated. I offer you an example, an organization that has not just survived, but has grown steadily based on their customer service. Lasher Auto Group in Elk Grove, CA is an excellent example of the rewards of good service. AJ Killian, the parts manager, was determined to stay active even when others were cutting back or even closing. He now offers eight full time delivery vehicles covering the greater Sacramento area. This is no sudden success; it has come slowly over the last eight years. Steady, reliable service enabled AJ
and his partner customers to grow even in the hardest times. He talked to me about his operation, and I pass along some of his ideas here. Quicker loading of his delivery trucks happens with a drive-through system that avoids congestion. AJ handles all the stocking orders, but delegates the customer orders for better service. VW, Honda, and Chrysler programs assist him when Insurance Company demands create excessive use of non-OEM parts. Hopefully other manufacturers will follow their lead, and also help their dealer body to compete. Separate inventories, approaching 1.5 Million, but with combined facilities, for more efficiency. Expanding when necessary, watching driver over-time for clues, and always having a spare delivery vehicle available. Trucks routinely deliver within
35 miles, and a scheduled delivery even goes 125 miles for some very special customers. AJ has two full time parts representatives, and visits his customers whenever he can. AJ belongs to the California Autobody Association, and attends their meetings. All of these ideas have one thing in common, they all relate to customer service. All the dealers who failed their customers, several in this area, are now closed. I believe that the continuing increase in this dealers business is due to overall attitude. Positive attitudes will create positive results. If you are in the southern Sacramento area, and need parts for a VW, Audi, Subaru, Isuzu, Suzuki, Dodge, Chrysler, Acura, or Jeep, I wholeheartedly recommend Lasher Auto Group. I have no doubt that you will be pleased with their service.
I invite other parts managers to contact me, and tell me their own stories of success. Wholesale relationships, quality personnel, always striving to be better, these philosophies deserve rewards. I will be happy to add you to my list of distinctive dealerships. Larry Williams is a former parts manager and consultant with national awards and over 30 years of experience in creating profitable departments. He can be reached at ljoew2@gmail.com.
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 17
Continued from Front Page
Contract Frustration
to accept any changes to the 40-plus months that remain on the shop management module contract. “I’ve never have even had the program turned on,” the shop owner said. “They already have a year-and-ahalf of my money. I said they can keep the amount I’ve paid but just cancel it from there on. But they want it all. I know if I ran my business like that I would be out of business.”
Stuck in contract after DRP changes Steve Schaefer is only too familiar with being locked into a contract with an information provider. Schaefer is the president of Schaefer Autobody Centers, which operates six shops in the St. Louis, Missouri, area. Four years ago, he said, the company joined an insurer’s direct repair program that necessitated that he add a particular estimating system, signing a 4-year contract with that system provider for three of his shop locations. “Having been burned before, a clause was added to the agreement
such that if I ever ceased to participate in that specific insurer’s DRP program, the contract could be terminated,” Schaefer said. However, a few months later, the insurer switched to a new information provider, requiring its DRP shops to use a different system than the one the insurer had previously required. Schaefer said he was among the similarly-situated shops that asked the first information provider for some sort of release or relief from the contract for the system they no longer needed or wanted. “I was told I was bound to the full term of the contract since I was still participating in the insurer’s DRP program, despite the fact that the insurer was no longer using (that Steve Schaefer system),” Schaefer said. “I understood that they had some up-front implementation costs that had to be covered, but a 4-year contract for a product I wasn’t using was ridiculous. Their excuse was they had stockholders to protect. My thought
18 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
was: How about your customers and this industry?” Today, almost $42,000 later, Schaefer said, he is almost done paying off that obligation. “It’s a shame when these companies don’t respond with the same reasonable ethical business practices we expect of ourselves and business partners in general,” Schaefer said.
Beware of automatic renewals Scott Johnson of Greensboro Body Company in Greensboro, NC, said shop owners should remain keenly aware of when any software contracts end. Such contracts, he said, often include automatic renewal clauses, and if you make even one payment beyond the term of the original contract, it automatically renews for another year or more. John Hackleman of Hackleman Auto Collision Repair, in Danville, Ind., concurred. He switched shop management systems last year, and told the previous system provider he no longer needed the support he was paying for every month. “I found out that although we were well beyond our original con-
tract, it renews automatically in oneyear increments,” Hackleman said. “I discovered this at my anniversary month but had not given them the 30days’ notice to stop as required in the contract. So I was required to pay for an additional year and was not able to change their mind.” Another Indiana shop owner, who also asked not to be identified, said he actually had some success in renegotiating a contract with an information provider. Like Schaefer, he had signed the agreement for an estimating system—even though his shop already had another one—in order to participate in a particular DRP. When he decided to part ways with that DRP, he called the information provider to say he no longer wanted that second system, only —like Johnson and Hackleman—to find out he was several months into an automatic renewal period. “The only answer I could get was, ‘Sorry about your luck,’ and information on what page in the contract that was so I could get my magnifying glass out to look at the clause,” the shop owner said. He now considers himself lucky that the information provider soon up-
graded to a new system. When representatives of the company contacted his shop to see why it hadn’t converted over, the shop owner told them he wasn’t using it and didn’t want it. “The next day a lady called and said she could not get me out of the contract but could put me into a less expensive alternative,” the shop owner said. “I am now paying about a third of what I had been paying.” His recommendation: First thing upon signing a new contract, take the low-tech approach to knowing when you are able to get out of it. “I now have it on every calendar in the office to cancel the contract by sending them a letter 90 days, 60 days and 30 days before the end of this contract,” he said. John Yoswick is a freelance automotive writer who has a body shop in the family in Portland, Oregon. He has been writing about the industry since 1988. He is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact John by email at jyoswick@SpiritOne.com.
Groupon Offers First New Car Deal With Detroit Auto Dealership Groupon Inc offered its first car coupon on July 12, a sign the largest online daily deal company is expanding into bigger-ticket items, according to reports made by Reuters. Groupon offered a $199 deal good for $500 off the purchase or lease of a new or pre-owned vehicle at LaFontaine Auto dealership in Detroit. Unfortunately for the companies involved, only four consumers agreed to pay $200 for the $500 discount voucher. Groupon and LaFontaine had set 10 as the minimum required for the vouchers to be issued. In an effort to turn things around, the dealership and Groupon extended the offer from the original two days to four and considered lowering the number of consumers needed. But the lukewarm response showed that the online coupon craze isn’t a natural fit with auto retailing. Groupon, the group-oriented coupon site that specializes in daily deals, has more than 80 million members, usually offers discounts on
smaller items—such as restaurants and spa visits. The company typically takes 50 percent of revenue generated by deals. Branching out into bigger purchases means that 50 percent cut will be bigger in dollar terms. “The prospect of opening up markets like new cars and leases is attractive,” said Ben Edelman, an associate professor at Harvard Business School who has been critical of Groupon. “To the extent they can still take 50 percent revenue share that’s more money.” Groupon has done some other big-ticket deals recently, such as $500 off closing costs for real estate purchases, Edelman noted. The car offering may be more problematic, he added. “This voucher is for a very small portion of the cost of a car or lease, so it’s basically an agreement to buy or lease a car from LaFontaine,” Edelman said. “That’s poor negotiating because the dealer could take advantage of that by offering the same car for more money.”
In many Groupon offers, like restaurants and spas, prices are posted already, so customers know what they are getting, Edelman noted. In the case of the car voucher, it may not be clear what the discount will be applied to, he explained. “They need to fix that before this part of the model can take off,” Edelman said. Groupon filed to sell shares to the public last month, saying it hoped to raise at least $750 million. The company has been called into question by critics who say its business—essentially a coupon service—can be easily replicated both by startups and existing Web powerhouses. Google Inc has already begun such a service and Amazon.com Inc started a similar effort called AmazonLocal this month. The company has also garnered a lot of criticism for the percentage of profits they take from a businesses’ sales made through deals on their website.
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 19
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 21
Prestige Imports is a BASF Waterborne Advocate in Colorado by Ed Attanasio
When his customers are spending big money on vehicles costing more than $50,000 and sometimes well into six figures, Jim Frost, the manager at Prestige Imports Collision Center in Lakewood, Colorado, knows his paint jobs have to be top-tier every single time. That’s why he’s enthused on several levels about his conversion to waterborne paint. Frost is pleased about the performance and the finished product he’s getting with Glasurit 90-Line, BASF’s waterborne product, and Prestige is proud to be a Colorado waterborne pioneer—the very first body shop in the Centennial State to adopt the green approach nearly three years ago. Frost, 41, started working for his father’s shop at age 15. Now his collision center serves three Colorado dealerships: Prestige Imports Porsche Audi, MercedesBenz of Littleton and Mile High Honda Acura Mitsubishi. Prestige Imports Collision Center will repair any type of vehicle, but primarily focuses on the European brands its dealership sells, as well as Ferraris, Bentleys, Maseratis and Lotuses, among others. With 19 employees, this 19,000 square-ft. facility has an average repair ticket of approximately $3,300 and at any given point it’s likely that the shop will have more than a dozen repair orders in-house averaging more than $20,000 each. Frost conducted an in-depth study before he chose BASF as his paint vendor, he told Autobody News. “We decided to change to waterborne and adopt all of the California laws even before they went into effect there. We analyzed all of the waterborne paint lines that were out there starting a little more than three years ago. We discovered that BASF offered an ideal solution for us in our environment. Many of the cars we repair were originally painted with BASF waterborne from the factory. We liked the product and appreciate their support, so that was a big part of the decision.” Becoming familiar with BASF Glasurit 90-Line involved watching other shops using it, Frost explained. “I went out to Southern California with my painting team to their training facility there and BASF took us around to local body shops that were using the BASF waterborne product. At that point, we went through some training and when we came back here, we felt as though we were
SHOP & PRODUCT SHOWCASE Prestige Imports Collision Center Location: Lakewood, CO
Telephone: 303-238-7391 www.prestigeimports.com www.????.com Company At A Glance... Type: Collision Repair
Facility Employees: 19
In Business Since: 1974 DRP Programs: Zero
Number of Locations: One All of the equipment and systems at Prestige have to be top-notch, because they work on the world’s most expensive cars
ready to roll. FinishMaster, our local jobber, assembled all of the necessary materials and we came in one Saturday and switched over to water.” It was a challenge for his paint crew during the first month or so, but Prestige didn’t have a single comeback and the learning curve flattened out quickly. “Change is never easy, but we’re always looking to make ourselves better,” Frost said. “We decided to push the envelope and make a definitive move. After 30 days of saying this is the way we’re painting cars and we’re not looking back, the painting staff accepted it. And now I can guarantee that they would never go back.” What was the biggest issue to converting to BASF Glasurit 90Line? “The main challenge for us is our climate here in Colorado,” Frost said. “The humidity swings and the temperature changes here all the time, so we had to start what I call “cocktailing our mixes” to make them correct. Once we were able to solve that, it was seamless. We retrofitted the booths and we installed more fans and that was essentially it. A lot of people were telling us that we had to buy a lot of other equipment, but we determined it wasn’t actually necessary.” Frost also uses BASF’s paint inventory system and values it for its ease-of-use. “We have incorporated their SmarTools inventory control and management system, and we like it. Every week, I get an accurate report, so I know what to order and exactly what I have at any given time. I also credit that to an increase in profitability, because we don’t run
22 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
out or ever buy too much of the product.” Even without any pending legislation on the horizon in Colorado, body shops are flocking toward the waterborne solution statewide, Frost said. “Since we switched over in 2008, roughly 35 shops have converted and we always invite other shops here so they can see how we’re doing it. We’ve even had other shops sending their painters here, pulling the triggers alongside our crew to learn the product and tell them “hey, it’s not so hard. You don’t need to be afraid of it.” We tell other shops to try the BASF Glasurit 90Line and make your own call. There is no substitute for doing it yourself. Some of these shops are competing with us, but we have no problem with sharing information this important. In the end, we should all be stewards of the land, and if I can help to get one guy over his apprehension using this product, then so this is definitely a win for everyone.” Business life is a series of tradeoffs, but switching to waterborne was a win-win for Prestige, Frost says. “The product costs slightly more, but the coverage is superior. The color matches are more accurate and we have experienced an increase in our overall material gross profits since we made the change. We’re very environmentally-minded here in Colorado and we participate in the Environmental Leadership Program sponsored by the state. They’ve recognized us for our green practices from a recycling perspective and they awarded us with their silver certificate for the changes that we’ve made here.”
Combined Production Space: 19,000 square feet
Prestige was the very first collision facility in Colorado to make the green move to waterborne paint, when they embraced BASF Glasurit 90Line in 2008
Prestige is pleased to report that their color matches are dead-on with BASF Glasurit 90Line
BASF Company Contact: David Brez Strategic Initiatives Manager Phone: 951-315-1395 (Mobile) email: dave.brez@basf.com website: www.basfrefinish.com
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Shop Showcase
Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.
Edward J. Henry & Sons, Auto Body Specialists and Body Generalists with Chasidy Rae Sisk
Jet skis, buses, and construction equipment, oh my! While many auto body shops boast that they can do anything, Edward J. Henry & Sons Auto Body Specialists in Wilmington, DE, stands behind their ability to repair any type of vehicle, and even some non-vehicles.
Owners Edward J. Henry III and Cathy Henry May
Besides offering collision repair on all foreign cars and trucks, including classics, the shop has done body work on snowmobiles, jet skis, buses, construction equipment, tractors and
even an antique stroller that was damaged when hit by a car. On average, Henry Auto Body works on five cars, or other vehicles, per day. Additionally, they install alarm systems and offer paintless dent repair, as well as other specialty work. They provide storage both inside and outside, depending on the customer’s needs and the length of time they will be storing the vehicle. Customers can also turn to Henry Auto Body for their towing needs and even lawn furniture refinishing. Edward J. Henry & Sons Auto Body Specialists has been in business since 1943, boasting sixty-eight years of experience through three generations of the Henry family. In 1938, founder, Edward J. Henry Sr., opened a shop on nearby Walnut street with his brother, but when that shop did not survive, Edward rented a small stall in the shop’s current location, a
24 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
dairy farm at the time. He expanded his business over the years, passing the shop down to his son who turned the business over to his son, Edward Jr. Twenty-five years ago, Edward Jr.’s son and two daughters bought their father out, and they now run the shop, along with one of Edward Jr.’s son-in-laws.
What began as one stall rented from a dairy farm has now expanded into several large buildings which total 22,000 square feet and encompass 1.5 acre, an impressive amount
of space in the bustling city of Wilmington. Edward J. Henry & Sons Auto Body has 17 employees, all except one of whom are I-Car Platinum certified. They also participate in a co-op program with local high schools, and there are 2 co-op students currently working at the shop. The shop is ASE certified and currently awaiting their last employee to obtain the I-Car Gold Platinum certification in order for the shop to achieve I-Car Gold status. Edward J. Henry & Sons Auto Body is careful to meet and surpass all insurance requirements, and they participate in four direct repair programs. The shop utilizes a Mitchell estimating system, a Chief EZ Liner, and standard lifts and MIG welders. They use a CWN paint booth, and the shop paints with Sherwin-Williams Waterborne AWX paints which meet Delaware’s VOC content requirements. For example, Delaware re-
quires primer to be contain no more than 2.1 lbs/gal, clearcoats to contain no more than 2.1 lbs/gal, and basecoats must contain no more than 3.5 lbs/gal. According to environmental data sheets, Sherwin-Williams’ primer contains 0.51 lb/gal, their clearcoat contains 0.63 lb/gal, and the basecoat lists at 0.88 lb/gal. Besides using waterborne paint, the shop also shows concern for the environment by recycling approximately 95% of their productionwaste even though it costs small businesses in Delaware to do so. Owner Edward J. Henry III states it is worth the cost because they produce a lot of waste, as do virtually all shops. The shop provided funding for a student at the Salesianum School, a private, all-boys Catholic school, from 1972 until 2010, but they were unable to do so in
2011 due to economical pressures. Edward J. Henry & Sons Auto Body continues to be a family-oriented shop. According to Edward J. Henry III, they are “still a mom and
pop corner store.” To ensure quality, Ed personally inspects all repaired vehicles before they are returned to the owners. He is proud that the shop now serves fourth-generation customers as this demonstrates his customers’ satisfaction and the fact that he has maintained the same shop values as his father and grandfather exhibited before him. Edward J. Henry and Sons Auto Body Specialists 2300 West 4th Street Wilmington, DE 19805 (302) 658-4324
Fiat and Chrysler to Get Single Management Structure
Chrysler Group will have a single management structure soon, Sergio Marchionne, CEO of both companies, said July 13, as he takes another step toward merging the two automakers. Marchionne plans to announce a unified structure “in terms of leadership pretty quickly,” the executive told Automotive News reportors.. Marchionne is working on management changes as he steps up the integration of the two companies. He plans to merge the carmakers to reduce costs and achieve a target of more than $140 billion in combined revenue by 2014. “No one is better than Marchionne at selling an auto story,” Societe Generale analyst Stephen Reitman wrote in a note to clients this week. “The current stock price already discounts most of the good news to come from Chrysler and ignores much of the risk.” Fiat consolidated Chrysler’s financial results starting at the end of May, a sign of the rapid integration of the two automakers since the U.S. manufacturer exited bankruptcy in June 2009.
VW sales up 35% in U.S. Could top 300,000 this year
Sales for the first six months of 2011 are up 22% in the U.S and Volkswagen of America forecasts 2011 sales will break 300,000 units—a threshold not seen since 2003. VW sold 256,830 vehicles last year in the U.S. In 2003, VW sold 302,686 units. “We’ve been able achieve a volume in the first half of this year in what took us effectively seven months last year,” Jonathan Browning, CEO of Volkswagen of America, said in a statement. “With Volkswagen’s broad range of fuel-efficient, high-quality vehicles, we expect the momentum to continue into the second-half of the year.” Volkswagen said it sold 28,444 vehicles in June 2011, a 35 percent increase over June 2010. Sales through June were 154,152, compared with 126,012 a year earlier. Browning said June was VW’s best month in nine years, despite the run-out of the Passat sedan and the Beetle compact car. June sales were led by the redesigned Jetta, which was up 88 percent in June and 66 percent for the first six months. Browning estimated that shortages at Japanese competitors because of the March 11 Japan earthquake will give VW about 10,000 additional Jetta sales in 2011.
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Industry Insight with John Yoswick
John Yoswick is a freelance writer based in Portland, Oregon, who has a body shop in the family and 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). Contact him by email at jyoswick@SpiritOne.com.
State and Federal Governments Consider New Insurance Regulations From California to Massachusetts, the judicial system and lawmakers are tackling related to the auto insurance that pays for much of the work collision repairers do. The federal government is also considering the role it should play in regulating insurers as well. Here’s a wrap-up of some of the insurance-related news that will likely be of interest to shops. Feds eye more insurance oversight. Federal legislation (HR 1943) that would partially repeal the McCarran-Ferguson exemption from antitrust regulations for insurers has been reintroduced into Congress by Reps. Peter DeFazio (D.-OR) and Louise Slaughter (D.-NY). “No matter what political ideology, most can agree that insurance companies should play by the same rules as virtually every other industry in America,” DeFazio said.
A similar bill, which requires only that health insurers operate under antitrust laws, passed the House during the last Congress but was not acted upon in the Senate. The Automotive Service Association (ASA) has supported such legislation, saying it is a step toward broader repeal of McCarran-Ferguson. Meanwhile, former Illinois Insurance Commissioner Michael McRaith started work in June as the first director of the new Federal Insurance Office. McRaith previously worked in various capacities in connection with the National Association of Insurance Commissioners, and was an attorney in private practice for 15 years in Chicago, representing insurers and other financial institutions. McRaith leads a new federal office with little regulatory power but that will report to Congress next year
26 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
on gaps in the existing state-based regulation of insurers. Court decision clears way for lawsuits. A California appeals court ruling in June appears to open the way for policyholders to sue insurers for violations of the state’s anti-steering regulation rather than leaving enforcement of that section of the insurance code up to the Insurance Commissioner. The appeals court reversed a lower court’s dismissal of Chris Hughes’ potential class action suit against Progressive. Hughes sued Progressive claming that the insurer didn’t tell him after a 2005 accident that he had the right to select the shop that would fix his vehicle (and he thus took it to a Progressive DRP shop and was unhappy with the work). California insurance code prohibits insurers from suggesting or requiring use of a particular shop unless
the insured asks for a referral or is notified in writing of the right to use any shop. Hughes’ suit said Progressive has a company-wide practice of using “its position of power over its insured, in the form of incentives and requirements to carry out its program of steering.” Progressive argued that prior court rulings held that suits brought by private parties to enforce the insurance code are not provided for under California law. But the appellate court found that Hughes was not suing over a violation of insurance code but for violation of unfair competition law. Texas again cautions insurers. Texas, too appears to be brewing as a key battleground in the fight over steering. For the second time within a year, the Texas Department of Insurance has issued a bulletin reminding insurers that state law prohibits them from “directly or indirectly” limiting
auto insurance coverage by limiting policyholders from using a shop of their choice. The bulletin also states that while an insurer is not required to pay more than a reasonable amount for repairs or repair parts, neither that nor policy language suggests that the reasonable amount for repairs or parts must be based on the amounts charged by DRP shops. Insurance Commissioner Mike Geeslin said that despite his similar warning last August, his department continues to receive reports of insurers steering and limiting reimbursement rates. Others states pass or consider insurance legislation. Alabama Gov. Robert Bentley has signed a new law to create by 2013 an electronic database to match up cars in that state to valid insurance policies; the system will enable law enforcement officials and DMV officials registering vehicles to verify proof of insurance. Officials estimate that about 22 percent of Alabama drivers lack car insurance. A legislative proposal in Michigan would allow low-income drivers
with clean driving records in Wayne County (which includes Detroit) to purchase reduced personal injury auto insurance coverage for lower rates; data from the Insurance Information Institute indicates Detroit drivers have the highest premiums in the country, 56 percent more than second-place New Orleans. A new law in Nevada raises the penalties for drivers who let their insurance lapse; a single lapse of 30 days or less carries the same $250 penalty that had been in place in the state, but longer or multiple lapses can raise the penalty to as high as $1,250. Rhode Island has passed a budget bill that as of October 1 will require consumers whose vehicle is a total loss to pay sales tax on the full value of a replacement vehicle. Superintendent of Insurance Joseph Torti has issued an advisory saying insurers will have to include sales tax in their settlement calculation on total losses in order to fully compensate the policyholder. Under a legislative proposal in Massachusetts, insurers and lienholders could not mandate that a vehicle owner release of any “black box” data
from a vehicle’s “event data recorder” as a condition of a policy or lease. The bill requires vehicle manufacturers to disclose the presence of such recorders, and designates the vehicle owner as the owner of any such data. Reports on insurance complaints available. Missouri regulators have released the latest report on consumer complaints about auto insurers, showing complaints fell by 14 percent last year to fewer than 3,100. For a copy: http://tinyurl.com/64kp2yf And Wisconsin regulators said they received about 780 complaints against auto insurers last year, about 10 percent of all consumer complaints related to insurance. For a copy: http://tinyurl.com/65dt64a Other insurance-related news. GM will include one year of free auto insurance through MetLife for residents of Oregon or Washington who purchase a new GM vehicle by Sep-
tember 6. Commercial and fleet customers are not eligible. MetLife has the option to cancel the coverage after one year, and GM offers no discounts for those who choose to stick with their current insurer and opt out of the MetLife coverage. The automaker said it may expand the program to other markets if successful. Also in the Northwest, some insurers are clearly keeping an eye on the ranking they are given by shops in an annual surveys similar to one conducted by a number of state associations around the country. Oregon Mutual Insurance, the 14th-largest auto insurer in that state, is including with its policy renewal mailings to its insureds a flier touting the “B+” grade it received (which tied it for the highest grade among 21 insurers) from collision shops in a survey conducted by the Northwest Automotive Trades Association.
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Nissan Researching Solar Charging for Batteries in its All-Electric Leaf Autobody News
NEW YORK • NEW JERSEY • PENNSYLVANIA • DELAWARE
August 2011
Japanese automaker Nissan is testing an easier and greener way to recharge its Leaf electric vehicle by using solar power, part of a broader drive to improve electricity storage systems, the Associated Press reported. Nissan’s Leaf went on sale late last year, but the automaker is looking ahead to about five years time when aging Leaf vehicles may offer alternative business opportunities in using their lithium-ion batteries as a storage place for electricity. Nissan Motor Corp. acknowledges that, once the Leaf catches on, a flood of used batteries could result as the life span of a battery is longer than an electric vehicle’s. Electricity generation and storage are drawing attention in Japan after the March 11 earthquake and tsunami caused massive blackouts in
the country’s northeast. A nuclear power plant that went into meltdown, Fukushima Dai-ichi, after backup generators were destroyed by the tsunami, is also renewing fears about a power crunch. In the new charging system, demonstrated to reporters earlier this month, electricity is generated through 488 solar cells installed on the roof of the Nissan headquarters building in Yokohama, southwest of Tokyo. Four batteries from the Leaf had been placed in a box in a cellar-like part of the building, and store the electricity generated from the solar cells, which is enough to fully charge 1,800 Leaf vehicles a year, according to Nissan. Although interest is growing in renewable energy such as solar and
wind power, a major challenge is the storage of electricity, which remains expensive without a breakthrough in battery technology. Such interest is likely to keep growing in Japan because of fears about the safety of nuclear power. The Hamaoka nuclear plant is being shut down because of such concerns, and more may follow. Other Japanese automakers, such as Toyota Motor Corp. and Honda Motor Co., are working on similar projects, such as linking hybrids with solar-equipped homes as part of energy-efficient communities called “smart grids.” Electric vehicles produce no pollution or global-warming gases but need electricity, whose production mostly relies on polluting oil or gas. Even after a Leaf is ready to be
scrapped, its battery is likely to have 80 percent of its capacity. On the plus side, the Leaf with its high-capacity battery can store the equivalent of two days of household electricity use, Nissan said. “What’s important for Nissan is to show solutions through EVs, step by step,” said Corporate Vice President Hideaki Watanabe. A joint venture with Sumitomo Corp. called 4R Energy Corp. plans to offer eletricity storage systems like the one at Nissan headquarters for business and public facilities as a commercial product by 2016. Nissan also hopes to start selling such storage systems for regular homes by the fiscal year starting in April 2012. It will carry out field tests starting in December, 4R Energy President Takashi Sakagami said.
Vehicle owners who opt to convert vehicles to run on compressed natural gas have a new refueling option, according to the Detroit News. Michigan Consolidated Gas Co. on July 14 unveiled a new, four-pump compressed natural gas station— complete with a credit card reader for the public. It is one of 13 such stations in Michigan that are open to the public. The natural gas utility is hoping the alternative fuel’s lower emissions and lower cost per equivalent gallon of gasoline will propel more companies that use heavy vehicles such as trucks or low-gas-mileage vans to consider making the switch to compressed natural gas. “As you make it more convenient for people and there are more options for refueling, it makes it a more attractive alternative,” said John Austerberry, a spokesman for DTE Energy, the parent company of MichCon.
In 2009, MichCon was awarded $5.4 million in federal money through the nonprofit Clean Energy Coalition to boost the number of natural-gas fueling stations in Michigan and convert 173 new Ford Econoline vans to operate on natural gas. DTE Energy is investing $6.8 million toward buying the new vans and refurbishing more than 10 other natural gas stations it operates across Michigan. Jerry Norcia, MichCon president and chief operating officer, said he personally bought a Ford F-150 Harley-Davidson model this year and converted it to run on natural gas. “Especially at $1.94 a gallon (equivalent to gasoline), it makes me feel good every time I jump in that truck and drive it,” he said. The cost to convert a regular gas vehicle to natural gas, though, is a barrier that prevents some companies and others from making the switch. Conversions can range from
$11,000 to $20,000, depending on factors such as the natural gas tank size, said Ken Baranski, director of sales for Suburban Ford of Sterling Height’s fleet division. The dealership sold the vans to MichCon and contracted with National Fleet Services of Michigan for the conversions. “I’ve already saved about $1,000 in fuel,” Norcia said, after filling 2.9 gallons of compressed natural gas into his truck for $5.67. The U.S. Energy Information Administration estimated in 2009 that 645 vehicles were running on compressed natural gas in Michigan, up from 518 in 2008. The 2009 numbers are the most recent available. Nationally, more than 114,000 natural-gas powered vehicles are on U.S. roadways, according to the federal government. About 1,000 natural-gas fueling stations are available across the nation, about half of which are publicly
available, says National Gas Vehicles for America, a Washington D.C.based trade association representing the natural gas vehicle industry. Refueling infrastructure and the range of a natural-gas vehicle are among other barriers to more adoption, said Sean Reed, executive director of the Ann Arbor-based Clean Energy Coalition. Although these barriers will potentially exist for any new vehicle technology. The coalition, through its $15 million federally funded Green Fleets initiative, works with other Michigan entities to deploy clean-fueled vehicles, such as those running on natural gas and liquefied petroleum gas, and build infrastructure to support them. “If they don’t know anybody who has a vehicle like this, it makes it seem like a challenging thing to do because of the unknown,” Reed said. “When people see more of them around, it gives people a greater comfort level.”
Companies Working to Expand Natural Gas Vehicle Options
30 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
Gonzo’s Toolbox
This is a new story by Scott “Gonzo” Weaver as posted on his website, www.gonzostoolbox.com. Gonzo has been serving the Tulsa area at Superior Auto Electric for over 27 years. 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.
How to Keep Your Cool When Working With HVAC Diagnostics with Gonzo Weaver
Leave it to the manufacturers to take a simple thing like heat and air conditioning and turn it into an electronic jungle of wiring, sensors, and computer components. HVAC units have come a long way from when I started in the business. Not that I want to dwell on the past, but it might be a good idea to make sure we understand the basics before diving into the problem of today’s systems. I always feel that if I understand a system fully before doing any repair work I’m more likely to get it right the first time. Diagnostics procedures vary from car to car and from year to year. I’m finding more and more these days it’s a lot easier to diagnose the HVAC system with a scanner rather than with a print and test light. With the advent of the electronic door motors and the crazy locations on some of these components I would definitely
try to use a scanner when possible. An interesting fact: even on some of the aftermarket scanners there is a wealth of information on HVAC systems. Before purchasing a scanner I would ask whether or not it covers HVAC units and which years, which models, and how thorough it is. The more information you can have before you have to get your hands dirty the better. One of the more common repairs I’ve see on both domestic and imports is connections. The manufacturers (in my opinion) have gone to the point of making these connection just barely survivable, but, not for the length of time that consumers are stretching their vehicles useable years on the road. The other item of concern is the control sensors, i.e. high pressure sensor, low pressure sensor, sun load, etc., for the most part I wouldn’t drag
out that test light and start stabbing the wires. They may look like a sensor, they may have wires like sensors, but there’s a good possibility that it’s not a positive or negative signal at the sensor. In some cases the sensor maybe reading a digital type signal (wave form voltage) that would be easier read on a scanner screen instead of that 12v test light. These values are then sent to the PCM to be interpreted and used to determine the actual A/C clutch engagement or door positions. There again, a scanner is the proper tool of choice, not the test light. Assuming we don’t have a component failure and that the entire problem is a connection somewhere—let’s say at the blower switch—which in some cases is also the “ON” switch for the entire system. If the plastic housing has been melted and the physical “metal” connector is
skewed out of place chances are that no matter how much manipulating you do to “re-fit” the metal tab back into place it’s still going to end up back where it started at and your customer will be back at your door with the same problem. I would locate a replacement connector either from the dealer or the local parts store. (I’ve had next to no luck getting a connector from the salvage yards, most of the connectors that come from the salvage yard are just as bad as the one I already have in the car. But, you might get lucky.) The advantage of using a scanner to see certain sensor values and door positions also has one extra quality to the diagnostic process. Codes; codes for the HVAC system are valuable information for you as the tech. However, a code is not the answer, a code is a starting point or a direction for reSee HVAC Diagnostics, Page 35
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 31
Hertz to Acquire Donlen in $930M Transaction
KBB Says Honda & Toyota Challenged by Hyundai for Tops in Brand Loyalty, Hyundai Holds Top Spot for Latest Quarter of 2011
Ray LaHood Softens Stance on 56 mpg Fuel Standard for 2025
Michigan Expects Bright Future for Electric Vehicles in State
Hertz Global Holdings and Donlen Corp. announced July 18 they have signed a definitive agreement for Hertz to acquire Donlen. The transaction has been approved by the boards of directors of both companies and by the stockholders of Donlen. The transaction is expected to be completed in the third quarter of 2011, subject to the satisfaction of customary closing conditions, including regulatory approvals. Mark Frissora, the chairman and chief executive officer of Hertz, said, “The acquisition of Donlen expands our portfolio of transportation solutions by giving Hertz an immediate leadership position in long-term car, truck and equipment leasing and fleet management for corporate customers who need scale and sophisticated fleet management services. This range of solutions from a single provider will make Hertz unique among its peers.” Frissora added, “The integration of Donlen gives Hertz a yearly and multiyear offering that complements our hourly, daily and monthly car sharing and car rental options for customers, giving us a more stable revenue stream and new adjacent markets to leverage our existing business model.
Transportation Secretary Ray LaHood took a more flexible stance to the aggressive 56 miles-per-gallon fuel economy standard for 2025 that has sparked resistance among legislators, especially in Michigan. The Obama administration told automakers and congressional leaders last week it was considering a 56.2 m.p.g. average by 2025. Currently, the industry is working to meet an average of 35.5 m.p.g. by 2016. LaHood, who spoke at General Motors’ Flint assembly plant June 29, tried to ease industry concerns. “We're going to talk to our friends in the industry,” LaHood said. “We're going to make sure we get it right for them and for what we believe is in the best interest of the country.” Industry leaders argue that requiring an average as high as 56 mpg. will add at least $2,000 to the price of an average new vehicle and could force automakers to limit or stop production of certain larger models. But Sen. Carl Levin, D-Detroit, has challenged the White House to explain how it came up with the 56.2 mpg. standard.
No longer is either Honda or Toyota holding the No. 1 spot for brand loyalty on Kelley Blue Book’s website. The top position is still in the possession of a foreign automaker, but Hyundai ousted these traditional mainstays to take headline spot for the second quarter of this year on Kbb.com. Furthermore, site officials mentioned Hyundai not only secured the leading spot in loyalty in February of last year, but Monday’s discovery also marks the first time since Kbb.com began tracking this data that Hyundai has held the No. 1 spot for an entire quarter. Kelley Blue Book believes shoppers’ loyalty to their respective brands has waned during the past year for the majority of nameplates due to the economic downturn and consumers becoming much more aware of issues such as fuel prices, safety recalls, available vehicle options and additional models within their intended price points. While many of the industry's top players have found themselves struggling to retain customers, analysts contend Hyundai has “blazed a new
Michigan has a promising future in electric car and battery production, with an estimated 20% of lithium-ion batteries coming from this state in the future. Electric cars are expected to be a $14-billion industry by 2014, with electrified-vehicle capacity jumping from 100,000 to 1.7 million by 2015. Projections for growth in EV battery companies in Michigan, especially if the industry must move toward a proposed 56mpg fleet average by 2025, are product shipping related because “these are 500-pound products, not the sort of thing you want to ship all over the world,” said David Vieau, President and CEO of battery maker A123 Systems. He decided to expand to Michigan because of state and local government cooperation, economic support and the region's talent pool. He said electric cars give the U.S. a huge opportunity to reduce its reliance on foreign oil and keep billions of dollars here. “We have the opportunity to convert that foreign oil money into U.S. jobs,” Vieau said, adding that switching to this new kind of car “is going to take 20 years. We need a commitment that we’re going to get it done.”
www.autobodynews.com CHECK IT OUT! 32 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
trail” and preserved its loyal consumer base. They attribute the driving factors behind this retention have been aggressive marketing campaigns combined with innovative product redesigns like the highly successful 2011 Sonata and 2011 Elantra. For the second quarter of this year, KBB determined Hyundai's brand loyalty was at 52.3 percent with Honda following at 49.7 percent and Toyota sliding in third at 47.7 percent. Rounding out the top five for the quarter were Ford in the fourth spot at 45.4 percent and Subaru in fifth at 44.8 percent. In a time when most brands are losing loyalty, Kelley Blue Book said it’s notable that fellow Korean automaker Kia also is bucking the trend. Analysts found Kia is one of only two brands that are up in brand loyalty year-over-year with the other being Mini. KBB thinks both Kia and Mini are succeeding in retaining loyalty for reasons similar to Hyundai with a combined result of attractive redesigns, additional models within their respective lineups and aggressive marketing campaigns.
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Audi Plans to Build Cars in North America, Eventually
Automotive News is reporting that Audi AG has decided to build a vehicle assembly plant in North America and is considering an additional engine and transmission plant. Volkswagen Group’s premium brand is completing details of the assembly plant—including models, location and capacity. Audi CEO Rupert Stadler said all decisions will be made within three years. “It is totally clear that we need new production capacity in the U.S.,” Stadler said in an interview. The question is when.” An Audi source said the carmaker is considering building an engine and transmission plant in North America to increase local content. That second plant could be shared with VW division. Inventory is an issue for Audi, which set a sales record in 2010 with 101,629 sales in the United States. Stadler said Audi plans to increase U.S. sales by 10 to 20 percent this year and could surpass 150,000 units by 2015. “Our dealers currently ask for more cars than we can deliver,” he said. “Our delivery times are still too high.”
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Comprehensive Review of Distracted Driving Research Released The Governors Highway Safety Association (GHSA) released the first comprehensive overview summarizing distracted driving research for state officials. The report considered research from more than 350 scientific papers published between 2000 and 2011. GHSA produced the new report—Distracted Driving: What Research Shows and What States Can Do—with a grant from State Farm®. The report summarizes: what distracted driving is, how often drivers are distracted, how distraction impacts driver performance and crash risk, what countermeasures may be most effective and what states can do to reduce distracted driving. “Despite all that has been written about driver distraction, there is still a lot that we do not know,” said GHSA Executive Director Barbara Harsha, who oversaw the report’s development. “Much of the research is incomplete or contradictory. Clearly, more studies need to be done addressing both the scope of the problem and how to effectively address it.”
The report outlines the following certainties: • Distractions affect driving performance. • Drivers frequently are distracted, perhaps as much as half the time. • Drivers adapt to some extent: they pay more attention to driving and reduce their distracting activities in more risky driving situations. • Distractions are estimated to be associated with 15 to 25 percent of crashes at all levels from minor property damage to fatal injury. • Texting likely increases crash risk more than cell phone use. • Cell phone use increases crash risk. Based on the existing research, the report urges states to implement the following countermeasures: • Continue to leverage effective, lowcost roadway countermeasures such as edgeline and centerline rumble strips, which alert motorists when they are drifting out of their driving lane. • Record distracted driving in crash reports to the extent possible, to assist in evaluating distracted driving laws and programs.
• Monitor the impact of existing handheld cell phone bans prior to enacting new laws. States that have not already passed handheld bans should wait until more definitive research and data are available on these laws’ effectiveness. • Evaluate other distracted driving laws and programs. Evaluation will provide the information states need on which countermeasures are effective and which are not. The report also lists countermeasures that states should consider, such as: • Enact a texting ban for all drivers and a complete cell phone ban (both hands-free and hand-held) for novice drivers. • Enforce all existing cell phone and texting laws. • Implement distracted driving communication programs. • Help employers develop and implement distracted driving policies and programs. GHSA Executive Director Barbara Harsha stressed, “While distracted driving is an emotional issue
that raises the ire of many on the road, states must take a researchbased approach to addressing the problem. Until more research is conducted, states need to proceed thoughtfully, methodically and objectively.” Harsha also noted that high visibility texting and hand-held cell phone enforcement demonstration projects in New York and Connecticut, funded by the states and the U.S. Department of Transportation and modeled after the Click It or Ticket seat belt program, are proving to be effective in helping to change motorist behavior. “Our report includes the preliminary results of these cell phone crackdowns, which have prompted dramatic declines in hand-held cell phone use and texting behind the wheel. The final results are expected shortly and should be considered as states move forward with education and enforcement initiatives.” Visit www.ghsa.org to view the full report.
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And You Thought You Knew Ugly Dogs One of our reporters, Ed Attanasio, recently entered his Chihuahua mix named Ratdog in the 23rd annual World’s Ugliest Dog Contest, held June 24th at the Sonoma-Marin Fair in Petaluma, California.
The first prize was $1,000, which comes with the coveted Ugly Trophy and a year-round modeling contract from House of Dog (which also comes with another $1,000!). Unfortunately for Ratdog, there was one canine deemed even uglier than Ratdog. A real dog from Sacramento, California named Yoda. Ratdog finished 2nd in the Mutt Division, which was a nice performance by this 14-year-old deaf and toothless rescue mutt.
Here’s the winner–a dog named Yoda from Sacramento, California. PHOTO CREDIT: Simone Alexander
ABN reporter Ed Attanasio displayed Ratdog at the 23rd annual World’s Ugliest Dog Contest on June 24th at the Sonoma-Marin Fair in Petaluma, California. PHOTO CREDIT: Simone Alexander
Pictures of Ed and his dog appeared in newspapers worldwide and were interviewed for television news organizations from the U.S., Germany, Israel, Japan and the UK, among others.
Continued from Page 31
HVAC Diagnostics
pair. So many times I see vehicles come in with new parts bolted in because the last place that had it read a code and assumed that meant replace the part. A perfect example of this was a 2002 VW Beetle that came in with a brand new compressor and fan controller on it. There was a code stored for poor compressor performance at idle, which was exactly what it was doing. If the car was at an idle the A/C was off, rev the engine just slightly and the compressor would turn on and work perfectly. Bring it back to an idle and the compressor would shut back off. Checking into it a little further, I found the real culprit to be the charging system. At an idle the alternator couldn’t develop enough output to maintain all the systems in the car. The PCM would shut down the A/C trying to maintain a voltage level that was acceptable but never got to the point of causing the charge indicator to come on during
this whole process (Cars are getting too smart these days). The best thing I can tell you about diagnosing HVAC systems is to consider the year and make of the car, find out whether or not a scanner can code, read values, and or give you some information on the condition of the components before you start changing things. If there isn’t an access by way of a scanner, then I would suggest a wiring diagram and a description page that will inform you of how each component works in that given system. If you keep your cool I’m sure you can get it diagnosed and repaired before your customer gets too hot.
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Inside Insurance
The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com
Hate the Way the Strings Are Pulled? Don’t Become an Insurer’s Puppet with The Insurance Insider
Thanks to a suggestion emailed from a reader of this column (J.W.), here are my thoughts and insights on the Farmers Insurance Circle of Dependability (COD) direct repair program agreement requirements. The Society of Collision Repair Specialists (SCRS) recently published the agreement, saying it felt that some of the requirements warranted being made public. As an insurance company executive, I often wonder what the association’s true intent is. My guess is that it’s not because they were trying to foster good relations with insurers. Personally, I think it’s a childish reaction to a big-boy problem. Hopefully, they feel they accomplished their mission. I can assure you that it doesn’t build trust or confidence with any insurance company or organization looking to build common ground with the association.
But enough of that rant. What I’d like to focus on is some critique of the
36 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
concerns about the requirements that SCRS raised, and my view of the stupidity surrounding agreements like this one. Suffice it to say, no one shall be spared the rod. SCRS states that insurance carriers have continued to increase pressure over repair shops to obtain the quickest and cheapest repair. Does that really sound like a bad thing? Anyone operating a for-profit business should be doing the exact same thing. Don’t body shop owners pressure their staff and technicians to perform the quickest, most economical repair?
SCRS goes on to further state that to improve business conditions, body shops need to find their voice. I have a suggestion. You don’t need to find your voice. You need to find something else that only males have. I would suggest letting your actions dictate what your voice and mind are saying. If it’s not good business, don’t sign the agreement. Don’t fax, mail or e-mail a response. Silence can be deafening. I would argue that it must not be too bad or else people wouldn’t do it. The trade-offs are apparently worth it to thousands of shops. That doesn’t make one shop better or worse than the other. It simply means that one man’s trash is another man’s treasure. Would you sign that agreement if you had to give up an ownership stake in your business? Complain if you like but ultimately, you decide what you want for your business. Being a
COD shop wouldn’t be worth giving up even a small portion of your business no matter how small of a percentage. To SCRS’ credit, I agree that there are quite a few undesirable items noted in their press release about the COD agreement. The “most favored customer” clause—which requires the shop to give Farmers the best pricing it offers any other insurer—is a stroke of genius. State Farm struck gold with this one a few years ago. Farmers is trying to ride State Farm’s coattails by including a similar requirement. I think this is a fair clause if you are State Farm and the largest insurance carrier in the United States. Why shouldn’t they expect to receive the best discount you offer? But it’s ridiculous that Farmers assumes they are entitled to the same discount structure. That’s similar to Kohl’s or Sears demanding the same discount structure from their vendors that Wal-Mart receives. You shouldn’t throw around your weight where it doesn’t belong. Clearly, Farmers is leveraging the industry’s inability to unite. Remember that in any relationship, power is given. Body shops have
given insurers the power to make demands. Shops have given insurers the puppet-strings. I’m laughing inside because most of you don’t realize you have the power to change it. If you’ve ever seen ‘The Wizard of Oz,” you know Dorothy had the power to return home any time she wanted. I’m not suggesting you simply need to click your heels and recite, “There’s no place like home,” but it is almost that easy. Obviously, you don’t have any strings attached to you. You aren’t a puppet. You don’t have to jump when the puppet-master pulls your strings. The sooner you realize it, the quicker that ridiculous direct repair agreements become a thing of the past. What makes Farmer’s “most favored customer” clause unique is the requirement that once a quarter you provide a written, I-swear-on-mylife, cross-my-heart-and-hope-to-die statement that you are in compliance with the terms of that provision. Give me a break! I think Farmers would be better served if it took the money it will spend to receive, document and follow-up with their COD shops on this and donate it to a char-
ity instead. It would get more press and accomplish more. Body shops aren’t criminals on parole requiring a weekly or monthly check to ensure they aren’t breaking the law. Farmers should remove this portion of the requirement if for no other reason to show that they trust their COD partners. What happened to the good ol’ days when a man’s word and a handshake was all that was needed? I miss John Wayne and those days. For more information, here is a link to the Farmer’s COD Agreement; http://autoepi.org/uploads/Farmers_COD_Agreement_-_2011.pdf__Adobe_Acrobat_Pro.pdf Also visit: http://www.scrs.com/pdf-news/PR%206-202011%20SCRS%20Releases%20DRP%20 Agreement%20Guidelines%20%20FINAL.pdf for SCRS’s press release about the agreement. The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com.
Hertz Files Premerger Notice with Federal Antitrust Regulator
Hertz Global Holdings has pushed back the deadline of its latest offer to acquire Dollar Thrifty Automotive Group, but the proposed Hertz-Dollar Thrifty merger took a major step forward the week of July 10. Hertz says that it gave federal antitrust authorities the premerger notification required by the Hart-ScottRodino Antitrust Improvements Act of 1976, as amended, regarding its offer for DTAG. According to the Federal Trade Commission, Hart-ScottRodino basically created the path by which parties must inform the FTC and Department of Justice about large mergers and acquisitions ahead of time. “The Hart-Scott-Rodino Act established the federal premerger notification program, which provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur,” the FTC explains on the Bureau of Competition section of its website. The FTC says that deals cannot be closed until the one of the following happens: the specified waiting period ends or the government allows the waiting period to end early.
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www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 37
Automatic Braking, as Implemented by Volvo, Does Prevent Crashes Collision Week has reported that a new study of insurance claims data by the Highway Loss Data Institute (HLDI) finds that Volvo’s City Safety collision avoidance system is working well in real world situations, and may be preventing as many as one in four lowspeed rear-end crashes that happen in everyday commuter traffic. The study found that Volvo XC60 midsize SUVs outfitted with the standard collision avoidance feature are far less likely to be involved in lowspeed crashes than comparable vehicles without the system. In fact, HLDI found that claims under property damage liability coverage were filed 27 percent less often for the XC60 than other midsize luxury SUVs. The implications for the future collision repair market could be enormous. This system is designed to avoid typical low-speed (read repairable) rear-end crashes. Each time the system successfully avoids a collision, it avoids a single crash, but as in many rear-end collisions, the system eliminates two repair jobs, and sometimes more.
City Safety, an automatic braking system based on forward scanning laser, is designed to help a driver avoid rear-ending another vehicle in slow-moving, heavy traffic. In the event of an impending collision, City Safety automatically brakes when traveling at speeds of about 2 to 19 mph. It detects and reacts to other vehicles within 18 feet of the front bumper. If the speed difference between vehicles is less than 9 mph, City Safety helps avoid some crashes altogether. If the difference is between 9 and 19 mph, the feature may not prevent the crash but will reduce the severity. It’s not designed to work at speeds faster than 19 mph. HLDI analysts compared claim frequency and claim severity for the 2010 XC60 with 2 groups: other 200910 midsize luxury SUVs and other 2009-10 Volvo models. Researchers examined claim frequency and payouts under three types of auto insurance coverage: property damage liability, bodily injury liability, and collision. Claim frequency rates for the XC60, the only Volvo with the auto-
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matic braking feature in the study, were lower than all other midsize luxury SUVs combined, as well as other Volvos, under all three types of insurance coverage. Adrian Lund, president of HLDI, said, “The pattern of results strongly indicates that City Safety is preventing low-speed crashes and reducing insurance costs. XC60s in the study had fewer claims, but when owners did seek payment under property damage liability, the average claim cost of $3,058 was higher than for vehicles in either control group, 10 percent higher than for other midsize luxury SUVs and 27 percent higher than for other Volvos. “Although it may seem counterintuitive, higher payouts for property damage liability are a sign that City Safety works,” says Matthew Moore, HLDI vice president and director of the study. Because the feature is preventing the kinds of fender-benders drivers get into on busy roads, XC60 owners aren’t filing as many low-cost claims (those less than $1,500) as people who
drive other midsize luxury SUVs. The frequency of high-severity claims ($7,000 and higher) was about the same for the XC60 as it was for the control vehicles. City Safety has been standard on XC60s since the 2010 model year and is standard on 2011-12 S60 sedans and 2012 model S80 sedans and XC70 wagons. HLDI is working with several automakers to similarly evaluate the loss experience of other crash avoidance systems technologies as the features make their way into more vehicles.
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GM is Top OEM in Truecar.com June Performance Scorecard
Truecar.com, the pricing-analysis website, has determined the top manufacturer on the June scorecards was General Motors, followed by Porsche and Hyundai. Near the bottom of the list were Saab and Mazda. TrueCar.com says the brands that received the highest grades were Chevrolet, Audi and Porsche, and the brands with the lowest grades were Saab, Mazda, Chrysler and Infiniti. The site recapped the Performance Scorecards grades each manufacturer and brand on eight different measurements including pricing, sales, incentives, customer loyalty, market share and days in inventory data. “General Motors had a great sales month in June and a big drop in their discounts which propelled them to have the highest grade,” said a Truecar.com spokesman.“The Japanese automakers continued to be on the bottom of the scorecards due to low inventory, leading to low retail sales change and a decrease in market share change.” The biggest gainers among manufacturers from May to June were GM moving from a A– to an A+, and VW moving from a B to an A–.
Crashes Increase at New York State’s Roundabouts Although roundabouts are built to ease congestion and lessen serious injuries, data obtained by the Albany Times Union show the number of collisions increased after most of the roundabouts opened in New York State’s Capital Region, according to Insurance Journal. Crashes increased at 15 of the 20 roundabouts built where a previous intersection existed, with fender benders even more likely to rise, sometimes dramatically, at two-lane rotaries. And while crashes were reduced at all the single-lane roundabouts built by the state, they rose at almost all those built by counties and towns. Aggressive drivers speeding through rotaries and failing to yield the right of way are the cause of most accidents occuring in roundabouts, said Mark Kennedy, director of traffic and safety for the state Department of Transportation in the Capital Region. “We have found that single-lane roundabouts definitely reduce accidents,” he said, referring to the state rotaries. “With multi-lane round-
abouts, some are better, some are worse. There are two that are somewhat problematic.” In Malta, the roundabout at Route 9, Route 67 and Dunning Street went from an average of 7.8 crashes a year before the rotary to 45.7 a year afterward. In Bethlehem, the number of accidents at New Scotland Road and Route 140 jumped from an average of 9.6 a year to 38.3. Two years ago, the state changed the signs and pavement markings at the Malta roundabout to help lessen the number of accidents. “Those measures were not effective,” Kennedy said. Accidents in roundabouts tend to be less severe than at intersections with traffic lights. Rather than crash into each other head on or smack together in a T-bone crash, as drivers making lefts at conventional traffic lights often do, drivers in roundabouts tend to sideswipe and rear-end each other. “The potential for high-speed, severe accidents is eliminated,” Kennedy said.
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At the Malta Diner, owner Steve Gouvis has a close-up view to the Capital Region’s most treacherous roundabout. He said it has greatly lessened congestion but he is not surprised to hear crashes have risen. “You hear a lot of honking during the course of the day,” he said. “They control traffic effectively. You never have to wait more than five, six, seven seconds. They do work. I was a big skeptic.” But Gouvis said drivers appear not to always know the driver already in the roundabout has the right of way over those entering. “Most of them are minor accidents from people not accustomed to handling roundabouts,” he said. “It’s a hell of a lot safer than making left turns.” At the Bethlehem roundabout, town resident Andrew Wickert said he became one of the accident statistics after the rotary opened. About a year ago, he rear-ended the car in front of him when he turned to look at traffic coming up alongside him and See NY Roundabouts, Page 41
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This article first appeared in the I-CAR Advantage Online, which is published and distributed free of charge. I-CAR, the Inter-Industry Conference on Auto Collision Repair, is a not-for-profit international training organization that researches and develops quality technical education programs related to collision repair. To learn more about I-CAR, and to subscribe to the free publication, visit http://www.i-car.com.
I-CAR Tech
Thin-Film Technology Comes to Collision Repair If you were asked for a short description for anti-corrosion compound, the material that is sprayed onto the backside of panels and inside rails after repairs, it is likely that “thin film” and “fine mist” would not be included in the wording. However, that is exactly the description given to a new type of anti-corrosion compound now available that uses what is collectively called thin-film technology. Thin-film technology products are polymer resin-based, anything more descriptive than that is proprietary. They’re a completely aerosol system being distributed by at least
Figure 1 - The thin-film technology corrosion protection products are all aerosol
two product makers, Bonding Solutions with their Like90 Corrosion Protection System, and Sherwin Williams with their Shield Corrosion Protection System (see Figure 1). The two systems actually come from the same source that has its origins in the aerospace industry. The same material that’s being recom-
Figure 2 - The dedicated spray wand for the anti-corrosion compound is stiff, but flexible to allow a 360° spray pattern to reach all areas of a cavity
mended for spraying inside rails and panel cavities has been used for years on aluminum welds and sealing joints
on aircraft. Besides an anti-corrosion compound, the line also includes a weld-through primer, also polymer resin-based, and a solvent-based cleaner.
Thin-Film Anti-Corrosion Compound Most anti-corrosion compounds are wax-based, and even though applied as a fog spray, can quickly build up a heavy coating with the consistency of honey. The thin-film technology products start out thin, and the resulting coating is thin. This allows the material to not only coat the interior surfaces, but also wick out between the welded flanges from the inside. There is a dedicated wand that fits onto the aerosol spray can nozzle with a 360° fan pattern tip on the other end (see Figure 2). Like other anti-corrosion compound systems, the wand is for inserting into existing holes or into rails to apply the material onto areas that cannot be easily reached. The thin-film nature of the material, combined with its creeping capability, allows applying it to joint edges after welding. On panel applications where there are no cavities, such as a welded radiator core support, the same cavity compound can be applied to the outside of the joints (see Figure 3). Just like it does from the inside, the thin film penetrates between the flanges from the outside, wicking around the welds to replace the weldthrough primer that burned away. Excess material is cleaned off with the solvent-based remover, since it is not a good base for painting. There are two anti-corrosion compounds in each system. With the Shield system, there is a clear and a black compound, both identical except for the color. With the Like90 system, there’s a dry film compound for sealing the joints after welding. The compound for cavity protection is a wet film that’s self healing, similar to conventional anti-corrosion compounds.
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Product specialists say it’s perfectly OK to apply more coats of the cavity compound inside cavities,
Figure 3 - On welded joints, the anti-corrosion compound can be sprayed on the outside of the joint after welding to allow it to wick into the joint
and even apply another brand of conventional wax-based anti-corrosion compound over the thin-film technology product, but it’s not necessary. Weldable Weld-Through Primer The thin-film technology weld-through
primer differs from other weld-through primers available in that it is not zincor copper-based, so it’s not conductive. This allows the thin-film technology weld-through primer to be welded through. Our experience showed no problems with porosity when welding GMA (MIG) plug welds without cleaning the material. The instructions say to apply a very light coating on both mating surfaces and wait ten minutes before welding. The primer is still tacky at that point. Any weld-through primer on surfaces that will be refinished is cleaned off with the solvent remover.
Future Collision Repair Applications Thin-film technology is also being considered for spraybooth masking and liquid masking applications. Liquid masking was actually the first collision repair application for the technology some years ago.
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The new plans are to improve that product. The product makers are also showcasing the benefits of thinfilm technology to vehicle makers, though there are no specific recommendations or endorsements as of yet. Thin-film technology products are one of the new offerings for automotive corrosion protection. The polymer resin-based aerosols are being offered as a thin anti-corrosion compound and weld-through primer with some unique qualities. To learn more about different types of corrosion protection materials, repair considerations, and manufacturer processes attend I-CAR’s instructor-led (live) Corrosion Protection (CPS01) course. For information about the Advantage Online, please contact I-CAR at advantage@i-car.com.
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NY Roundabouts
didn’t realize the person in front of him had stopped. “What I’ve learned is to stay in the far lane,” Wickert said. “Even though I am a statistic, I am for it just because it keeps the traffic moving. Before, it was worse with the stoplights.” This summer, both the Malta and Bethlehem roundabouts will get additional signs telling drivers to “Yield to All Lanes in the Circle.” Markings that narrow as drivers approach the roundabouts will be added to the pavement to give drivers the impression their speed is increasing and they need to slow down. In Bethlehem, the previous intersection was changed from one lane in each direction to two to reduce congestion. The result, however, has been that drivers enter the roundabout going too fast, Kennedy said. Variable message boards warning drivers of their speed will be placed there this summer to get motorists to slow down, he said.
“We’ve learned quite a lot about the design and operation of roundabouts” over the past five years, said James Boni, assistant to the state DOT’s regional director. “If we were to design these problematic roundabouts today, we would have designed them quite a bit differently.” In reviewing crash data, DOT officials said they learned the accidents are not being caused by older people or those from outside the area. To fully reduce crashes, drivers need to be more careful, said Carol Breen, a DOT spokeswoman. “People do need to watch the pavement markings, watch the signs and be cognizant of their speed,” she said. “People need to be very cognizant about yielding. If we can get at that driving behavior, we can bring these accidents down.”
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Chrysler is Free and Clear After Paying Back Federal Loans
After almost two years with the federal government owning a sizable chunk of Chrysler, the once bankrupt automaker is now free and clear of Uncle Sam. June 2 Chrysler parent Fiat paid $500 million for the U.S. Treasury Department's 6% stake in Chrysler. For CEO Sergio Marchionne, no longer having Uncle Sam as a shareholder frees up the company to do more in the capital markets. He has made it clear Chrysler's access to the capital markets means the company will be able to do more on a quicker time frame, and do it more efficiently. While Marchionne won't give a timetable for a Chrysler IPO, it's definitely on the way. Also on the way in the next 18 months are more fuel efficient cars. Chrysler still skews more towards trucks and SUV's than its competitors and with gas prices expected to remain high, that is a head wind Marchionne needs to minimize as much as possible. But most of all, look for Marchionne to give Chrysler the freedom to do what it does best: design and build models with that turn heads and make people want to buy them.
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Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who writes on a variety of fields and subjects, and grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.
Egon’s Auto Repair: A Custom Shop for Custom Work in NJ with Chasidy Rae Sisk
Unlike standard production shops, Egon’s Auto Repair of Carneys Point, NJ, specializes in custom auto body work. They are experts at restoring classics: Porsches, Corvettes, BMW, Rolls Royces and so forth. They also
perform custom work on boats, planes and motorcycles. According to owner, Egon Necelis Jr., “we’re not high volume, but we’re high quality”. Egon Necelis Sr. opened Egon’s Auto Repair in Carney’s Point in 1977, and he ran it until his death in March, 1996, at which point his son took over the business. Extending the start given to him by his father, Egon Necelis Jr. is largely self-taught. He began restoring his first vehicle while still in middle school, following in his father’s occupational footsteps, but learning and experimenting a lot on his own. The Necelis family has done their homework on long-ago projects, following many restorations long after they leave their shop. They recently located the very same 1941 Buick Roadmaster that Egon Sr. and Jr. restored many years ago. The car was sold in the late 1990s, but the family searched for and found the car for sale on EBay in In-
diana in 2009. They bought and retrieved the car, and Egon Jr. and his son, Egon III, plan to restore the vehicle to its former competition condition. Egon’s Auto Repair is comprised of two separate automotive businesses. Half of Egon’s shop is an auto body shop, while the other half is a mechanical shop. The shop consists of two 2400 square foot buildings connected by an office in which Egon displays articles, thank you letters and pictures of custom work he has completed. Two mechanics work at the shop, in addition to Egon, his wife and his son, Egon III. Egon’s used to have more employees in the auto body shop; however, due to the economy, Egon Jr. now does all of the auto body work. Egon averages about two or three basic auto body jobs each week, but he is always working on custom work which has taken up to two years when he is completing a full restoration. The shop uses a Buske frame machine, a DeVilbiss spray booth, MIG welders, plasma cutters, lifts and portable lifts. Egon’s paints with Lesonal from AkzoNobel, but this may change next year if New Jersey passes laws mandating the use of waterborne paints. Egon Necelisa Jr. is also able to construct parts out of fiberglass and sheet metal when necessary.
Employees at Egon’s Auto Repair have taken various classes by ASE and other organizations, and the shop is appropriately licensed by the state of New Jersey. Egon’s does not
42 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
participate in any direct repair programs; in fact, he does not process insurance whatsoever, although the customer is free to turn claims in to their insurance company if they qual-
ify. Egon Necelis Jr. ended relationships with insurance companies after losing money three years in a row, which he attributes to working for them, and not the customer. He says, “you have to get paid fairly for your work, or don’t do it.”
The shop does a lot of mechanical work, and Egon has friendly relationships with other local businesses who help as necessary. One of his friends owns a local towing company, so Egon knows where turn when he needs a tow. He also works with local shops, sending standard auto body work to production-based shops that, in turn, send the more custom requests to Egon. He has molded his business around his idea that “I’m my own guy. I pick and choose my work.” Egon also serves on the advisory committee for the local vo-tech high school. Egon’s Auto Repair 64 S. Pennsville Auburn Road Carneys Point, NJ 08069 856-299-3591
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NSF International Launches New Aftermarket Parts Distributor Certification Program NSF International has launched a new program to certify distributors who sell automotive aftermarket collision parts at the Collision Industry Conference annual meeting this July. The new NSF Automotive Aftermarket Collision Parts Distributor Certification Program is designed to close the gap in the supply chain between part manufacturers and body shops. The Automotive Body Parts Association (ABPA) sponsored and worked closely with NSF to develop the new program to meet critical supply chain requirements, including parts traceability. The program meets the needs of collision repair shops, insurers and ultimately consumers, as it requires distributors to have quality management systems in place that address traceability, service and quality issues with regard to both certified and non-certified parts. NSF certified distributors will be required to have records systems and inventory tracking systems in place that can track customer defective part complaints, trace a part to a body shop and trace a part sale. This gives the in-
dustry the ability to track all defective part complaints and trace parts from the manufacturer through the distribution channel to the body shop. “For many years the collision industry has asked for an effective system to track and recall, if necessary, any defective safety parts. The new NSF Distributor Certification Program accomplishes that goal. The NSF program provides collision repairers and their customers’ peace of mind that certified distributors are focused on delivering quality parts and service,” said ABPA Board Chairman Dan Morrissey. Requirements for distributors to earn NSF certification include: ● an ISO 9001 certified quality management system, ● a part traceability and inventory tracking system, ● a defective parts procedure including a customer part complaint process, and ● the ability to administer a manufacturer’s recall. Distributors meeting the certification requirements will be able to use
the NSF Certified Distributor Mark on their website and promotional materials indicating they are an NSF certified distributor. Certified distributors also will be included in NSF’s online certification listings. All NSF certified distributors will undergo ongoing quality systems inspections to maintain certification. “The NSF Automotive Aftermarket Collision Parts Distributor Certification Program certifies a distributor’s ability to meet rigid performance standards and was developed in support of NSF’s mission to create programs that help protect and improve public health and safety,” said Bob Frayer, Director of NSF International’s Automotive Aftermarket Certification Programs and the NSF Engineering Laboratories. The NSF Distributor Certification program complements the NSF Automotive Aftermarket Parts Certification Program, which certifies that automotive aftermarket parts (e.g. steel bumpers, step bumpers, brackets, rebars, sheet metal, lighting and absorbers) meet rigid quality, safety and
performance standards in terms of form, fit and function. For more information about the NSF Automotive Aftermarket Certification Programs email Kirk Hansen, call 630-379-9661 or visit nsfautomotive.com. NSF International provides management systems registrations delivered through NSF International Strategic Registrations, Ltd. Recognized globally as one of the premier registrars of automotive manufacturing facilities, NSF is one of the top three ISO/TS registrars in the U.S. with more than 350 automotive-focused auditors supporting the program. In addition to NSF’s headquarters and laboratories in Ann Arbor, Mich., NSF has offices in key automotive markets such as Taiwan and China, a new testing laboratory in Shanghai, and serves more than 6,000 organizations worldwide. NSF International is accredited by the American National Standards Institute (ANSI), the official U.S. representative to the International Standardization Organization (ISO).
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The Devil in the Details—Measuring Metrics Properly by Greg Horn, VP Industry Relations, Mitchell International
The Q2 2011 Mitchell Industry Trends Report (ITR) contained a feature I wrote about how repairable estimates can best be executed, “Are You Measuring Your Auto Insurance Claims Metrics Properly?” I argued (persuasively, I hope) that defined metrics and a clear plan can help make your business great, achieving measurably better auto insurance claims processing outcomes in the process. The key is to understand who your competitors are and if you can replicate their performance. Only then can you have an achievable performance improvement goal that allows you to focus on the person, part and process that can be improved. Determining what is great estimating performance, and whether this great performance can be replicated, requires a large sample size to allow for a statistically significant evaluation. In addition, the ability to drill down and segregate vehicles by type, age and country of origin as well as factoring in the geography of the repair estimates are all necessary in order to truly have an accurate comparison. Comparing your performance against the industry average by identifying the best performers isn’t a simple, mindless process, and nor is analyzing the data and setting performance benchmarks. Adding to the complexity is the constantly changing mix of vehicles coming through the repair process. As an example of how specific metrics need to be in order to be meaningful, consider this—there can be more than an hour difference in labor time in Removing and Replacing a used bumper assembly vs. overhauling an existing damaged bumper system. That hour difference can be important in an area with extremely high labor rates. To measure metrics properly, looking at the distribution of the claims by inspection type (sometimes called appraisal channel) can help you let the data help your business. It is quite revealing in terms of distribution of claims severity. Removing the lower dollar estimates alters the overall average paid severity (not sending independent appraisers out on small hits and relying on claimants to fax in
estimates for example), reducing repair vs. replace, paint hours metrics and part use when comparing estimates to appraisal channels that routinely see those smaller hits. Similarly, Direct Repair averGreg Horn, VP age paid severity is Industry Relations, actually a measure Mitchell of the completed International repair orders and not the average of an appraisal written by a staff appraiser. Why is that? Because some claimants will make a claim and not repair the vehicle, so any hidden damage or price changes would not be reflected in these appraisal totals. Again, no easy task to ensure the data is as close as possible for comparison, and next up is measurement scale: do you want to measure your company performance against the average or the best in class? Both are advisable; measuring merely against the industry average only provides a comparison to the middle, and not the best that can be achieved. Rather, you need to find where the best performers are in your given data subsets, those in the 75th percentile and above. Establishing a bestin-class goal that is achievable because it considers the types of businesses (standard vs. non-standard insurer, vehicle mix, etc.) you are indicating are your closest competitors along with other factors, such as geography, is a worthy goal – one that will help you meet your particular performance goals. All the data means something. The key is identifying what the data means to your business performance. And this brings us to the importance of understanding what to measure. Many industry measurements and metrics are somewhat flawed, and need to be revisited, or refined with a second measurement, in the name of proper measurement and dependable metrics. In addition, many best-inclass metrics are a moving target. There are multiple factors in flux that keep the definition of best performance ever-changing: Americans are moving towards smaller and more fuel-efficient cars, so the repair vs. replacement of panels performance metric will change. Smaller cars, thinner
44 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
gauge metals, changing metallurgy, and the low cost of alternate parts will reduce repair opportunities. On the topic of changing metrics, currently we see OEMs and their price-matching programs having an interesting impact on market share assessments. OEMs’ price-matching programs help them sell more parts. But lowered OEM parts prices make it look as though OEMs are losing market share to aftermarket and used parts, at a faster rate than measuring the number of OEM parts specified on the average repair. In fact, today the percentage of alternate parts use on estimates is overstated when using the industry standard metric of ‘percentage of parts dollars’. When measuring the number of parts by part type, we see that used parts have remained fairly steady at a little under 1 part per estimate, and aftermarket parts at bit over 1 part per estimate. Looking at parts use in this way gives us another important measure of parts performance and provides better visibility into the performance metrics that matter to your business.
The industry needs more complete picture of parts use. I suggest keeping the existing metric and industry standard and then for true insight, add the number of parts on the estimate by parts type. This approach does go against the prevailing wisdom, but understanding the real metric here is important—because by supplying the majority of parts on a Repair Order, the OEMs are the pivotal parties of cycle time, and shops need to maintain good communication with all of their parts vendors and understand what is in stock and when the delivery will be made. Starting in the third quarter of 2011, the next Mitchell Industry Original BMW Parts Trends Report will include this new North C metric, in a bid to help tame the devil in the details and help the industry bmwusa.com (800) 56 measure metrics properly.
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Original BMW Parts Statements and opinions ex- North C pressed in this article are solely those of the author. They are not offered as bmwusa.com and do not constitute legal advice or (800) 56 opinion of Mitchell International, Inc.
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QMT 1000, New Metal Tester, Saves Time and Ensures Safe Repairs The advanced metals used in our late model cars are the result of the combination of government CAFÉ standards that set mileage targets and the 5-star crash requirements used to promote safety.
These new steel composites are both lighter and stronger, thus providing the strength and reduced weight that aids the car manufacturers to meet or exceed the mileage and safety goals. “This has created a problem downstream,” says John Leddy, President of LDC equipment and a leading instructor in auto body repair. The advanced metals require different methods of repair than older auto bodies and
very few shops are equipped to identify the metal under repair. Improper identification and repair methods will result in a compromised auto frame that can no longer stand up to the rigors of a 5-star crash test, according to various OEM repair manuals. During the last 5 years, automobile manufactures have been forced to significantly modify their designs because of US CAFÉ laws and crash safety requirements. These changes have resulted in the use of both lighter and stronger composite metals and fibers. The lighter weight allows for obtaining better mileage. The downside however, was the need for additional strength. The OEM’s obtained this strength with new and stronger metal composites that they use especially in the side door beams and passenger area. This has allowed most of the OEM’s to reduce the weight thus assisting in achieving the mandated CAFÉ standards and to be able to achieve the required crash safety commitments of the industry.
The problems associated with these forward changes are seen in the collision repair business. This is because these composite metals such as Boron, Trip and DP Steels cannot be heated nor bent without fracturing or significantly changing the structural nature of the metal. When improperly welded, heated, stressed or bent, the metal is no longer structurally sound enough to perform the safety functions (protection) it was designed to meet. Most new automobiles now incorporate these exotic metals, and many of the OEM’s provide some color coded pictorial views of the different structures and metals. However, access to these documents are limited and in many cases hard to read as the drawings only marginally reflect what the autobody mechanic sees in the physical and bent autobody he/she is attempting to repair. Prior to these new materials, the auto body repair technicians simply used brute force with hydraulic pulls and heat in addition to cutting & weld-
ing structure in place. This method can no longer be utilized and still maintain the integrity of the original automobile Uni-body and Frame. Auto body technicians have quickly needed to update their training in materials recognition and repair methods. Even rudimentary training that provides the ability to reference the body structures from OEM manuals or third-party data companies is now a requirement. The average time spent reviewing the manual information and assessing the material content can take more than half an hour for each section.
QMT1000 Autobody Analyzer An alternate approach is the use of a metal probe such as The “QMT1000 Autobody Analyzer” from LDC Equipment. LDC Equipment is a leading distributor of equipment used in the auto body repair business and has introduced a breakthrough technology to enable autobody technicians to quickly assess the metal content under repair. See QMT, Page 48
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Northeast News
Chasidy Rae Sisk is a freelance technical writer from Wilmington, Delaware, who works in a variety of fields and subjects, but grew up in a family of NASCAR fans. She can be contacted at crsisk@chasidyraesisk.com.
Reedman-Toll in Langhorne, PA, Finds Ways to Boost its Bottom-Line with Chasidy Rae Sisk
By focusing on growth in the service mindset, Reedman-Toll has doubled department of Reedman-Toll Auto the number of service customers seen World in Langhorne, PA, President each month in the past five years. with Chasidy Rae Sisk Besides offering a wider margin Bill O’Flanagan of profits, selling parts also aids cushas improved the tomer retention because customers are bottom line of his more likely to buy a second car from dealership. In fact, the same dealership if they have dehe claims that last veloped a relationship by servicing year was the most profitable year their automobile at the same location. they have seen, de- O’Flanaghan compares his goal of an Bill O’Flanagan, all-inclusive relationship with his cusspite the economiReedman-Toll cal recession the tomers to a consumer’s relationship President country is dealing with Walmart: Reedman-Toll services with, and Reedman-Toll is on target to all of the customer’s needs. Because O’Flanaghan sees brakes, produce even better results in 2011. batteries, tires and windshield wipers When O’Flanaghan and his partas the standard point of defection when ners took over the dealership seven a customer breaks their relationship years ago, Reedman-Toll was not fowith the dealership, he offers daily cused on sales in their service departdeals on these items to encourage cusment; however, according to tomers to turn to Reedman-Toll for all O’Flanaghan, “there is no way to make a business successful unless all of the of their service needs. On Mondays, the dealership offers oil changes for departments are profitable”. With this
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$9.95, Tuesdays offer free tire rotations with a minimum of a $50 service visit, and on Wednesdays, oil changes cost the check-in time in 24-hour format (i.e., 4 P.M. is $16). Customers receive free front wiper blades and a compli-
The Sales Floor at Reedman-Toll
mentary one-day car rental with the purchase of a 30K, 60K or 90K mile service check, and Reedman-Toll offers 15% off the service bill for all 2005
and older models on Fridays. O’Flanaghan encourages his sales team to guide customers toward the service department by offering monetary incentives. Salespeople can earn an extra 2 percentage points in their commission if at least threequarters of their customers return to Reedman-Toll for their first oil change, and this bonus averages around $45 for each car they sell. Sales managers emphasize the importance of the bonus program with great response as sales employees generally reach the goal and obtain the extra commission. Service managers are expected to be as aggressive as the sales department when it comes to promotions because according to O’Flanaghan, “they are still sales managers— they’re just selling
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parts.” His strategy is to build the shop business aggressively, though he knows that building the service and parts departments must be a long-term approach, rather than a quick solution
as many dealership principals expect. O’Flanaghan is happy with the results thus far of his attempt to build the service department. Because service and parts income is more stable, improving this business decreases the pressure on the dealership as a whole since they have an idea of their monthly profit through service and parts. Currently, Reedman-Toll uses some wholesale crash parts in their shop, but they also sell some crash parts to outside body shops. Because aftermarket competitors make and recycle these parts at a lower price, the dealership is forced to sell them at no profit or, in some cases, even a loss, but there is some additional opportunity in selling them to other organizations, such as Fred Beans
Automotive in Doylestown, PA. The next order of business at Reedman-Toll is to improve the wholesale and accessory sales departments. The dealership has not utilized these areas of potential profit in the past, but O’Flanaghan hopes to begin focusing on customizing vehicles to the customer’s desires as well as to get into wholesale to provide a healthy
The collision drive through at Reedman-Toll
parts inventory, thus improving customer retention by supplying all of the customer’s needs which will, in turn, benefit the business as a whole. Reedman-Toll Auto World 1700 East Lincoln Highway Langhorne, PA 19047 (800) 396-0474
Mazda 3 ‘11
Assured Performance and CARFAX Join Forces Assured Performance Network announced that they have entered into an agreement with CARFAX to report when a vehicle is repaired using 100% OEM Collision repair parts if it is already reported as damaged. The repair reporting also requires the shop and consumer’s permission. Buyers and sellers of used cars will now have information about how the vehicle was repaired after being damaged. Participating Network certified shops can also elect to report that repairs were performed by a “Certified Collision Care Provider” on the CARFAX® Vehicle History Report™. “Our research shows that reporting repairs helps build consumer confidence in previously damaged vehicles,” said Nancy Fiorino, National Director CARFAX. “Our new partnership with Assured Performance may help boost the resale value of previously damaged vehicles and contributes to the overall safety of our highways.” The reporting helps to address consumer full disclosure requirements often neglected by the industry. Assured Performance will supply repair
information that may help reestablish vehicle value by showing that the vehicle was repaired after an accident. Assured Performance will leverage their auditing capabilities used in the 100% Write Rebate Rewards Program created in concert with auto manufacturers (OEM). The unique incentivereward program already provides the body shop with an exclusive “Certificate of Authenticity” to present to the customer verifying the use of 100% OEM collision repair parts. The same automated data-driven audit process will be used for the CARFAX report. “Oftentimes, the fact a vehicle is in an accident is already being reported to CARFAX. Now, we can report the positive aspects that it is being repaired using 100% OEM collision repair parts, and by a Certified Collision Care Provider,” said Scott Biggs, CEO of Assured Performance Network. “The infrastructure we created through 100% Write and our shop Certification programs allows us to report to CARFAX the positive information related to the safety, craftsmanship, and repair quality.
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Dealership-based Body Shops Down by 24% Since Recession Began The number of body shops operated the dealer-owned body shop populaby automobile dealerships has tion has shrunk by nearly 24 percent, dropped by nearly 24 percent nationor more than 1800 shops nationwide, wide since the beginning of the recessince the end of 2007. sion, according to the latest data The financial performance of released by the National Automobile new-car and -truck dealerships did imDealers Association (NADA) in its prove in 2010 despite a slow economic annual State of the Auto Industry Rerecovery says Paul Taylor, chief econport. omist of the NADA. “New-car dealerAt the close of 2007, according ships improved their profitability in to NADA at that time, an estimated 37 2010 through strict cost control, such percent of the nearly 21,000 automo- as reducing rent and real estate costs, bile dealers in the country operated cutting advertising expenses and mainonsite body shops. Using the NADA taining lower floorplan costs,” Taylor estimates, there were approximately said. “However, the difficult economic 7,685 dealership body shops in the www.autobodynews.com recovery and brands leaving the marcountry. ketplace caused 760 dealerships to CHECK IT OUT! Now, four years later, after the close in 2010.” closure of thousands of dealerships The average revenue of the through the recession, combined with dealer-operated body shops also the rising trend of dealers continuing ticked up slightly in 2010, according to opt out of the body repair business, to the report. In 2010, the average just 33 percent of the surviving 17,700 shop would have earned an estimated advertise dealerships continue to operate body $1.09 To million dollars in revenue for call at:recession shops. the Advertising year. That is upSales from the With these latest NADA esti- low of $1.02 million in 2008, 800-699-8251 but still mates, there are now approximately more than 12 percent below the avere-mail: 5,841 dealer body shops remaining. If advertising@autobodynews.com age $1.24 that NADA estimated each the association's estimates are correct, shop earned in 2007.
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Business was up slightly in the service and parts departments in 2010 as well. Total franchised dealership “In order to avoid the heavy liabilservice, parts, and body shop sales ity exposure faced by collision repairs reached nearly $78 billion in 2010, shops, they will need to spend hours in and sales by the typical dealer were up learning OEM manuals and advanced by 5.2 percent, as many car owners training or employ the QMT1000 on drove their cars and trucks longer. the frame structures to get instant readCompared to pre-recession levings and certificates of metal content els, however, there is still ground to and procedures,” said Leddy. make up. In 2007, NADA estimated “We are pleased to have LDC that total franchised dealership servEquipment represent our metal tester in ice andus parts salesopinion reached almost $84 North America,” Jan Stark of Give your on matters affecting the said industry. billion, up from $80.5 billion the preJNE SE. vious year. “The European collision repair In 2010, NADA reported that the market has lead in its ability to coraverage customer mechanical labor rectly repair these advance metals and publisher@autobodynews.com rate was $93, an increase from $91 in our metal tester was an instant success. 2009. We are pleased to have LDC Equipment representing the product because John Leddy has been a leader in advanced methods and repairs.” The quick metal testing instruTo advertise ment, a QMT1000 provides the user The source for timely call Joereading Momber with an instant that at: reveals information that every the composition of the auto body 800-699-8251 body shop needs! metal in need ofe-mail: repair or the composition of non-OEM replacement comjmomber@autobodynews.com
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Continued from Page 45
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Trust your order to the collision parts specialists at these fine Dealers
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 tcspeedster@yahoo.com
Hey Toby!
Are Your Repair Methods Ten Years Out of Date? with Toby Chess
The other day I received a report form What was written in the introduction Aaron Schulenberg, the Executive of the study is what I and others have Director of the Society of Collision been preaching for years. Repair Specialists, about a study done “The new materials mean that in Germany on collision repairs. body shops must continuously ensure Crash-test results and analysis of the that they are conversant with the requirements for new tools, procedures impact of a non-professional repair on and information about the repair the performancewith of the David side structure McClune processes. New welding machines of a car (VW Passat) by KTI GmbH& need to be used, training is required, Co. of Lohfelden, Germany. The study took a late model VW and OEM information has to be acPassat, with ultra high strength steel cessed to make sure that the correct reinforcements in the rocker and “B” repair methods will be applied. Withpillar, conducted a side impact at out this knowledge it is likely that an about 30mph, detailed all the damage, inadequate repair will be the result, and rebuilt the vehicle using used potentially placing the car and its ocparts, MIG welds, and an older cupants at much higher risk in a later Squeeze Type Resistance Welder. crash.” They did not usewith any OEM current reJohn Yoswick “In parallel to the introduction of placement data, but they utilized com- new materials, single component parts mon accepted repair methods used in of earlier vehicles have been replaced the collision industry. They referred to by highly integrated, multi-material those in the article as “10-year old recomponents on more recently depair methods.” signed cars. The production of a mod-
ern Body-in-White is characterized by complex manufacturing processes and bonding techniques. Taken together, the technical progress made by the OEM’s has resulted in corresponding new challenges for the repair shops. Repair shops must ensure they have well trained staff and are equipped with appropriate tools to cope with the techniques needed for professional repairs on today’s cars when they are damaged in an accident. If such techniques and knowledge are not available, a nonprofessional repair may lead to a significant reduction in the safety and quality of these cars.” “Unprofessional repairs may result from of all or any of the following: ● Incorrect method and/or sequence of repair ● Poor assembly of correct/incorrect spare parts, components and sub-systems ● Fitment of low-quality spare parts, components and sub-systems ● Incorrect assembly and connection of electrical/electronic systems and sub-systems ● Absence of correct, special or custom tools ● Repair of damaged parts when actual replacement is necessary.” Let’s take a look at the study. I going to give you a condensed version for this article, but you may read the entire study at the SCRS website (www.scrs.com) or at autobodynews.com (see my column section). The following scenario, including two high-speed crash tests was carried out, and then analyzed: 1. The car was damaged by a side impact similar to an intrusion by the front of another car into the passenger side of the test vehicle, according to the side-impact tests of Euro NCAP. 2. A repair was carried out as if done in a car body shop or garage with no information about the correct way to repair this particular car and without the correct tools or welding machines. The repair conforms to a typical standard carried out about 10 years (two car generations) ago. This would be considered as a non-professional repair by today’s standards. 3. After the repair, this vehicle
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was involved in a follow-up crash simulation in the same configuration i.e., a side impact on the repaired passenger side, at the same speed. The picture below shows the set up of the side impact test.
“After the side impact the car was severely damaged on the passenger side, as intended. The sill and the floor/undercarriage behind it were particularly distorted. Additionally, the doors and the B-pillar were considerably damaged. There was no damage to the screen pillar or windscreen glass. The pyrotechnic protection/restraint systems (Front and rear passenger side airbags, front passenger belt pre-tensioner and passenger side curtain airbag) were correctly deployed. Overall the car body structure deformed and behaved as expected. As well as the visual analysis, electronic measurement of the car body was carried out. This showed the maximum intrusion to be 161 mm.” The vehicle was repaired after the test and these were the procedures followed:”
NON-PROFESSIONAL REPAIR The damaged car was repaired with an older spot welding machine with fixed pressure and 6.4 kA maximum current. Note: It is recommended that an Inverter type welding machine is used with 10 kA maximum current and a variable pressure (maximum 10 bar) to join the high strength steel safely. The deformed inner sill, made from ultra high strength steel, was reshaped and partially replaced on a bench then re-fitted using a MAG welding process. Note: The “Professional” repair would include complete renewal of the B-Pillar and other deformed structures with components made
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 49
from high strength steel. A partial repair of such steels is not acceptable, as the structure and therefore the strength of the material will be severely degraded while welding and reforming.”
MIG Welding instead of Spot welding
Sectioning instead of full panel replacement
“After the vehicle was repaired, the vehicle was crashed again and
all the noted areas in the first crash were compared with the second crash. It was immediately evident that there was a substantial difference, with far more comprehensive deformation of the car body after the second impact. The B-pillar had noticeably higher intrusion into the passenger compartment in comparison with the first crash, especially at the lower part at the connection with the sill. Note: Later measurements of the car body confirmed there was 60mm more intrusion after the second test, compared to the first crash. Other differences were noticeable at the cant rail/roof and the transmission tunnel which both displayed severe deformation not seen in the first crash. It seems that the load paths were quite different in the second crash. It was also noted that the top right corner of the windscreen was damaged in the second crash, further indication of changed load paths. These comparisons made it evident that a change of load paths and therefore of the energy dissipation was due to the unprofessional repair. The pyrotechnic protection/restraint systems
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(Front and rear passenger side airbags and the front passenger belt pre-tensioner) were correctly deployed but the passenger side curtain airbag failed to operate.”
Crash Test 1
To make clear the differences between the two tests, we compared photographs, sequences of high speed crash-movies and electronic measurement of the car body. With the help of the time analysis in the high-speed crash-movies we can for instance compare the time of highest intrusion. The analysis clearly shows higher intrusion at the same moment in time in the second crash test. Note that the side curtain deployed in the first crash test, but failed in the second one. I have video show-
Crash Test 2
ing the effectiveness of side curtains on vehicle occupant safety. In the first 2009 Prius, the side curtain was deployed and measurements of the crash dummies were taken. The result was minor injury to the front and rear passengers. In the second scenario, the side curtains was disabled and another tC 2011
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Crash Test 1
Crash Test 1
Crash Test 1
Crash Test 2
Crash Test 2
side crash test was conducted at 35 mph. The result was horrific. The driver’s head was struck by the crashing barrier, which would result in a death. The rear dummy sustained major injuries to the neck, shoulder and left arm. This is the reason that by the year 2013, all vehicles sold in the US will have side curtain air bags.
Crash Test 2
Note the great amount of damage to the rocker and B-pillar in the second crash test. This is very evident by the next set of pictures showing the damage to the passenger seat in the second crash test. “After removing all the seats and necessary trim, the deformation of the transmission tunnel after the second Lexus IS 2011
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test was clear to see. The cross-member which supported the front seat had pushed into the transmission tunnel, distorting it severely. In comparison, there were no measurable changes at the transmission tunnel during the first attempt.” As I stated in the beginning of the article, the complete test results can be found at the web sites. I strongly urge you (repair owners and managers) to
print out the OEM’s recommended repair procedures and give them to your techs and estimators. The liability is too high not to follow OEM procedures. Think about the safety of your customers and what it may mean in a second collision.
www.autobodynews.com
New Vehicle Dealerships’ Sales for Service, Parts, and Body Shop Sales Total $78M CHECK IT OUT!
Total franchised dealership service, parts, and body shop sales reached nearly $78 billion in 2010, and sales by the typical dealer were up by 5.2 percent, as many car owners drove their cars and trucks longer. Dealerships faced increasing competition from independent service centers and quick-lube centers, but dealers continue to attract customers with competitive pricing and upgraded facilities. Last year’s service sales were powered by stronger light-vehicle sales in addition to continued recall activity for some makes and service needed for the aging vehicles. New-vehicle dealers have made a major investment in service and parts to increase sales and customer satisfaction. To boost customer convenience and make full use of their facilities, 78 percent of dealers offer evening service hours, weekend hours, or both. The average dealership service department is open for business 56 hours per week. In recent years, more dealerships have opted to remain out of the
body shop business (see previous story). NADA Industry Analysis estimates that just 33 percent of new-veTo advertise hicle dealerships had body shops in call Advertising Sales 2010, down from 2009. Autoat: body work performed by all new vehicle 800-699-8251 dealerships remained at just over $6.4 e-mail: billion in 2010, down from about $6.6 advertising@autobodynews.com billion in 2009.
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Custom Corner
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
Lesson Learned—Re-Painting a ‘57 Thunderbird with Rich Evans
This month I’m working on a project to the paint where I’m not really causthat I call re-do, nobody likes to do reing myself any more work and I’m dos. About 6 to 8 months ago I did a ‘57 Thunderbird and I repaired the front end. I wrote a story for Autobody News (April 2010, Working On a ‘57 Thunderbird With Old School Tools & Techniques, which you can easily find Thomas Franklin in my columnwith section at autobodynews.com) about it, but what I want to talk about this month is making choices and taking the extra time to take it all the way back. What I mean is why I made decisions to do it one just blending the Bondo™ into the way and not another and why they paint thickness, which wasn’t too bad. came back to bite me: 1) costing me So, as I got the Bondo™ to meet up to my labor and 2) material, and 3) an in- the paint, the additional paint that I left convenience for the customer. All of on the hood—which is a laquer—was the above are red flags for future re- kind of gummy. That was another reapairs. son why I didn’t want to strip it down. I was planning to come in with with Dick Strom some PCL Primer, which I did, and loaded it up because that pretty much hardens itself and it’s been pretty much bullet-proof since I’ve been using it. Taking it to that point, we blocked the hood, got it painted, put it on the car and sent the car off. The customer came back about 3 weeks later pointing out it had some wrinkling around the edges and I was Going back to this ‘57 Thunderlike, “man that’s really close to where bird, I took the with hood, Lee we stripped it Bondo™ meets the paint.” So I AmaradiotheJr. down around the edges just so I could brought the car back in and sanded get the gapping right. I made a deci- down the wrinkled area. I didn’t really sion not to take the paint all the way break the clear coat, so it seemed like off because 1) I didn’t want to find I was able to get it out. Then I went more body work and 2) I didn’t want back and re-cleared it, put some more to warp the hood and cause a need for product on it, finished it, put it back more body work. on the car and sent the car off. Then about 2 months later the customer comes driving back, and he pulled in my driveway and I was like “wow.” I mean this car had bubbled and it was bubbling right in the area with Sheila Loftuswhere the Bondo™ meets the paint. So I was like “wow, what’s going on here?” And I saw it kind of bubbling around the scoop area as well so I took a putty knife and dug into it and it was lifting from the bottom of the hood. I What I did was grind and remove could get my putty knife completely about 12 inches of paint on the front underneath the paint and pull it off in where I did the repair and then I took sheets. about 3 inches all the way around the So I studied the area to see what hood just to get the build up of the was going on and what I realized was paint. I thought I would come in, that the PCL primer sealed the paint Bondo™ around it, true it up right up and the Bondo™ area. It was only
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coming up where the painted area was and that tells me that gasses were trapped in there. As the motor would heat up, it would reactivate the paint. So whatever kind of paint they used in etching primer, which looked more like a laquer, was the problem. When it heats up, everything starts to move again and that paint doesn’t fully dry. When I was grinding into it it was kind of gummy, and it looked like the paint was 15 or 20 years old.
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What I did to fix this problem was to grind all the paint that I didn’t remove the first time, (which obviously I should have done in the first place.) If I had I never would have had this problem, but then again, I am still learning. Sometimes it’s not good to work over old paint that’s way out dated and that could have a chemical reaction that causes more labor, costs more time, uses more product, not to mention creating an inconvenience for the customer. Hey, let’s do it right the first time.
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52 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
After removing all the paint on the hood I was able to reverse the process I did the first time and come back and block where I had the Bondo™, 36 grit, and feather it into the metal so I didn’t have a step-up in the Bondo™. I actually removed more material, did a better finish, and I came back in with some PCL Primer, which is the 901Grey. I applied three
heavy coats. Then I came back and blocked it with 80 grit—guide coated it first, then blocked it with 80 grit, then I guide coated it again and blocked it with the 150 grit, and guide coat it yet again and block it with 400 grit. Now I was ready for my base color, which is black, so I’m going to put three coats of black, which I always do. Then I’m going to come over the top of it with a top coat of Transtar—three total coats of Transtar on it. After doing this for my third time, the third time is the charm, I can almost guarantee that this customer will never have to come back again. I don’t really practice having come backs, I always practice on what works and what doesn’t work and obviously the choice that I made in this project didn’t work just because I was
trying to avoid some obstacles. What I realized is that it caused me more obstacles by avoiding those original obstacles. If you’re working on a panel, and it’s in a heated engine compartment area, and you’re not sure about how old the paint is and whether or not it’s laquer, remove it all! It’s best to start with a bare foundation than to be working on top of somebody else’s work. If you do that you’re taking a chance on having a problem like the one I ran into which then ends up costing you money in the long run. Time is money, we all know that. I haven’t had this type of reaction come up before (I don’t think ever) since I’ve been using the PCL. With other primers I’ve had reactions but with using the PCL I don’t think I’ve ever had a reaction so I’m attributing the cause of all of this to the old paint,
and really a combination of the heat and the old paint, because I did feather up against some old paint on the right
fender and I didn’t have a chemical reaction like this. So, between the heat, the old paint, the chemical reaction, and the PCL Primer sealing it and
holding it in where it can’t breathe is where we had the lifting problems.
So, another tip for what to do and what not to do and hopefully you guys will be able to put this notch under your belt without having to spend the time or the money that I had to spend on re-doing this. I wanted to share it with you because some of the best of us come across these issues and they come back to bite you. I definitely got bit on this one. Three times is the charm as they say, but now, out of mind out of sight. Car looks good, customer’s happy, job’s done right. Still, in my mind I did the job right the first time, but old product came back to bite me, Lesson learned. Don’t work over old product, strip it down to the bare metal. That’s key, strip it down to the bare metal and start with a clean foundation. That will save you a lot, especially if you’re not using the best primer. PCL Primer is definitely key to saving me a lot of rework. Great product out there. Thanks to 3M for all the product and support they give me with the sandpapers, all the materials, and all the other companies out there that help me do what I do—we can’t build cars without you.
I’ve got some great stories coming up for next month, I’m going to talk
Continued from Page 48
QMT
about installing panels without welding, which seems to be a pretty innovative technology to get past that welding point. It’s what’s coming up in the future versus what’s being used now, so you have to make these changes as you’re growing and improving. I’ll talk to you next month, I’ll have some new, cool projects I’m working on. Visit me at richevansdesigns.com or go to my Rich Evans Designs Facebook page to follow my daily progress on projects I’m working on and what I’m doing and the next cool thing. You can also see my twitter and facebook feeds from my column section at autobodynews.com. Alright guys, talk to you next month!
ponents. It allows for the technician to simply probe the metal and assess the readings and quickly down load a certificate of content and repair to understand and verify the metals composite prior to commencing repairs. The QMT1000 is quick, easy and eliminates doubt while providing the proper protocol for each metal assessed. Liability concerning proper repair techniques will soon become a major issue for collision repair facilities and insurance companies. Failure to follow proper techniques compromises the safety standards incorporated into modern vehicle design. The use of improper techniques such as heating, welding, pulling and bending will result in a safety compromised vehicle and would expose the repair facility to heavy liability exposure if the vehicle were to experience another collision event. The QMT1000 is available immediately from LDC Equipment or online at http://www.qmt1000.com.
In a potentially far-reaching decision, the California Court of Appeal has overruled a previous trial court decision, to say that an Insured is entitled To Bring A Claim Against An Insurer Under California’s Unfair Competition Law For Violating the state’s Anti-Steering Statute. This ruling appears to allow for insurance companies to be sued for violations of the state’s anti-steering law, Insurance Code section 758.5. In this specific case, the insured was awarded his legal costs in bringing the case against Progressive. The California Court of Appeal, Second Appellate District, published its decision on June 15 which reversed a dismissal in favor of an insurer of a claim filed under California’s Unfair Competition Law (UCL). The UCL claim was premised solely on the insurer’s alleged violation of Insurance Code, section 758.5, which prohibits an insurer from steering (requiring or even suggesting its insured use certain automobile repair shops). In the trial court action, California resident Chris Hughes, while in-
sured by Progressive Direct Insurance Company, was involved in an accident on August 15, 2005. Hughes advised Progressive Direct of the accident and informed it he wanted his automobile repaired by a specific repair shop that was not a DRP facility. Progressive Direct responded to Hughes’s claim by telling him he should take his automobile to Champion Collision & Paint (Champion) in El Cajon, California, which participated in the DRP, explaining that his claim would be approved and the repairs on his car completed more quickly there. Progressive Direct did not inform Hughes of his right under section 758.5 to select the facility that would repair his vehicle. Hughes alleged in the suit that although he informed Progressive of his preference for a certain repair shop, Progressive recommended Hughes take his car to a shop belonging to Progressive’s Direct Repair Program. Hughes further alleged that Progressive failed to inform him of his right under Section 758.5 to select his own shop.
California Appeals Court Rules Consumers Can Sue Insurers For Steering in ‘Hughes’
www.autobodynews.com | AUGUST 2011 AUTOBODY NEWS 53
Hughes took his vehicle to the DRP-affiliated shop, but was dissatisfied with the work. He suspected substandard or used parts had been used. On November 23, 2009, Hughes filed suit against Progressive on behalf of himself and a proposed class of persons (1) who are or were a residents of California, (2) who had claims covered by Progressive automobile insurance policies, and (3) who had their vehicles repaired by shops belonging to Progressive’s DRP. Hughes asserted a single cause of action against Progressive for allegedly violating the UCL (California’s Business and Profession Code section 17200). Hughes alleged that while Progressive assures its insureds that DRP facilities “are carefully selected to provide only the highest quality of work, those shops are actually selected based on their agreement to Progressive’s demands to reduce the costs to repairs.” Progressive demurred to Hughes’s complaint, meaning they filed a document objecting to or challenging they pleading filed by Hughes. Progressive argued that Hughes did not state facts sufficient to constitute a cause of action, meaning the facts were insufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. Specifically, Progressive alleged that a 1988 case, Moradi-Shalal v. Fireman’s Fund Ins. Co., prohibits private actions to enforce provisions of the Unfair Insurance Practices Act (UIPA), found at Insurance Code section 790 including claims under the UCL. Progressive argued this could not support a UCL claim even if Hughes proved Progressive violated Section 758.5. Hughes opposed the demurrer, arguing Section 758.5, while part of the Insurance Code, is not part of the UIPA. Hughes contended that MoradiShalal and the cases that followed it have never been extended to preclude a UCL claim based on violations of a non-UIPA provision. Progressive responded by analyzing the legislative history of Section 758.5 and argued this history demonstrated that the Legislature did not intend to create a private right of action, but only a right of action for the California insurance commission. The trial court agreed and sustained Progressive’s demurrer, meaning there was not sufficient cause of action. Hughes appealed in a timely manner.
The Court of Appeal examined the scope of the UCL and MoradiShalal. It recognized the breadth of the UCL, noting that parallel actions for unfair competition under the UCL are proper even though a specific statutory enforcement scheme exists. UCL claims are barred only where the statutory scheme precludes cumulative remedies. The Court found that Moradi-Shalal, and the cases following it, stand for the proposition that the UIPA was not “intended to create a private civil cause of action against an insurer that commits one of the various acts listed.” Thus, violations of the UIPA alone cannot give rise to claims under the UCL. The Court of Appeal then evaluated the intent and language of Section 758.5. It noted this statute was enacted to prevent insurance companies from using coercive tactics to steer consumers to particular automobile repair shops. No private right of action is provided under Section 758.5. But Section 758.5 grants the Insurance Commissioner the power to enforce the section in the same manner as UIPA violations. Given the breadth of the UCL, and the absence of any “express” language repealing the cumulative remedies generally made available by the Legislature under the UCL or any intent to transform Section 758.5 into simply another unlawful practice under the UIPA, the Court of Appeal concluded an alleged violation of Section 758.5 may serve as the predicate for a UCL claim. The Court of Appeal confirmed a plaintiff may not rely on conduct that violates the UIPA, but which is not otherwise prohibited, as a predicate for a UCL claim. However, alleged violation of other statutes applicable to insurers, whether part of the Insurance Code or otherwise, may serve as the predicate for a UCL claim absent an express legislative direction to the contrary. Accordingly, the Court concluded Hughes’s allegations that Progressive violated Section 758.5 properly stated a cause of action for unfair competition. It therefore reversed the trial court’s order dismissing the action. As originally introduced by thenCalifornia-Senator Jackie Speier, Senate Bill No. 551—the “Auto Body Repair Consumer Choice Act of 2003”—was intended to add a new section 758.5 to the Insurance Code, which would have prohibited steering and added a private cause of action
54 AUGUST 2011 AUTOBODY NEWS | www.autobodynews.com
(the right of a private party to sue) to enforce the new law: “An insurer that violates this section shall be liable for any damages suffered by the claimant or auto body repair shop, including compensatory, special and exemplary damages...” However, subsequent amendments removed all reference to enforcement (either by the Commissioner or by private cause of action). In 2009, Insurance Code section 758.5, subdivision (b), was amended to authorize an insurer to provide a claimant with “specific truthful and nondeceptive information regarding the services and benefits available during the claims process,” including “information about the repair warranties offered, the type of replacement parts to be used . . .” and other information about the repair process. Therefore, until this ruling, it was up to the Insurance Commissioner to enforce the state’s anti-steering regulation as state law had always been interpreted to insulate insurance companies from lawsuits arising from Insurance Code violations such as section 758.5. One of the appellate justices expressed his reservations about the decision saying that while he agreed
with the decision “my concurrence in the opinion is accompanied by a desire to report storm warnings on the horizon.” Woods called the decision dependent on the single word “express,” saying that the Business and Professions Code may predicate a UCL claim absent an “express” legislative direction to the contrary. Woods expressed concern that this decision may impact future insurance rates, referencing the case of Royal Globe, in which the court stated that the case has “reportedly caused multiple litigation or coerced settlements and has generated confusion and uncertainty. No doubt Royal Globe had a profound impact on the cost of insurance in California, and which raised a storm of adverse comments throughout California and the nation.” Woods noted “High insurance policy rates are not a socially desirable thing in my opinion and perhaps our interpretation of Insurance Code section 758.6 when juxtapositioned next to the UIPA and its manifested policy will dampen most desires to bring marginal or superficially meritorious lawsuits.”
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