16 minute read
Car Pros Kia
When Jeff Peevy was named chairman of the Collision Industry Conference (CIC)in2019,heplacedanempty chair on the stage at each meeting. The chair represented “the consumer ,” those who are in accidents and have their cars repaired. During the last CIC meeting of 2019 in Las Vegas, Peevy filled that empty chair with special guests Marcia and Matthew Seebachan. The Seebachans were the owners of the Honda Fit that was in
Jeff Peevy, chairman of the Collision Industry Conference (CIC) and president of the Automotive Management Institute (AMi)
the accident resulting in a $42 million lawsuit. Peevy and his wife, Marie, interviewed the couple about their experience as well as the human impact of poor repair decisions.
Following the impactful interview, Dave Luehr, owner of Elite Body Shop Solutions, invited Peevy to talk about the personal impact of the interview during an Elite Body Shop Academy webinar. Peevy’s presentation also included recommendations on how collision repair businesses can lead the ethical movement in the industry. “Listening to the discussions at CIC, I started to realize that more times than not, the consumer , the motoring public and their families are riding in vehicles our industry repaired and get very little consideration during our discussions,” said Peevy, who is also the president of the Automotive Management Institute (AMi). “I thought it would be important for us to keep the people riding in the vehicles that our industry repairs at the forefront of our decisions and discussions.”
Peevy realized how a cross-section of the industry began to refer to the chair. “I’m really proud of attendees at CIC for respecting what that chair represents,” he said.
Many have read industry publications and heard presentations about the Seebachans’ experience and Peevy said the young couple was often looked at as people out of a storybook. “My goal with the empty chair was to make the people who have impacted our industry real,” he explained. What Peevy didn’t realize when he set up the interview was how it would impact him personally. He soon learned that his daughter and son-in-law are the same age as Marcia and Matthew, and had purchased a preowned Honda Fit vehicle around the same time as the Seebachans. Also, Peevy’s daughter is going to school to become a licensed clinical social worker—the same job held by Marcia.
These parallels resulted in the experience becoming more personal to Peevy and he recognized that the accident could have happened to anyone. “I don’t think I was fully prepared for what it would do to me and I probably have become a little less compromising around doing the right thing and making sure we think about the vehicles we are repairing,” said Peevy.
Leading the Ethical Revolution DuringtheElitewebinar , Peevyasked attendees to consider whether they place the value of human life at the top of everything. “We’ll typically say ‘yes,’ but then follow up with a ‘but’ and blame some other segment of the industry,” observed Peevy. “We always need to put the value of human life above all else. I believe it’s unethical if we do anything that jeopardizes anyone in the cars we repair.”
Peevy shared a quote from Marcia Seebachan that she said during the interview at CIC. “One of the things drilled into us from day one in any social work course is our code of ethics and part of that is only using evidence-based practices with our clients…” she said. “We are trained to look into practices and theories and methods that are supported by evidence and there has been research and proof showing why this interventionis effective with this
specificdiagnosisorneedwithaclient and I just can’ t fathom practicing any other way.” Peevy said the same is true in many professions. “Somehow , in our industry, we’ve taken liberties and not always used evidence-basedpracticesandOEMprocedures,”saidPeevy. “IthinkOEMprocedures are probably the closest thing to evidence-based procedures that we have. We can all agree there is a lot of research and design that goes into the design of vehicles.”
As a result, he recommended that collision repair businesses ready to help with the ethical revolution in the industry , start with OEM procedures.
An essential part of this is educating consumers.
“The law says consumers have the right to decide where to take their car … they often get help from family and friends,” said Peevy. However , he pointed out that the majority of those making the recommendations are unqualified and as a result, the consumer ’s life can be put in risk. “W e need to do what we can to educate consumers because they are put in the position to make a decision and more than likely will be uninformed,” said Peevy.
Then, after making that choice, consumers are asked if they are happy with the repair.
Although cycle times and Customer SatisfactionIndexing(CSI)are important, Peevy said just because consumers say they are happy with the repair and received the car on time, the carpet is vacuumed and the paint is shiny, those are not assurances the vehicle was repaired correctly and safely . “W e don’t really have any good measurements,” said Peevy.
He encourages collision repairers to think about how to best address this in the future. During theinterview , Peevysaid Marcia shared a vital observation.
“She said that getting hit by a car was an accident; the extent of the injuries were not but based on deciSee Ethical Revolution, Page 41
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Understanding and Performing Required Test Drive Procedures Isn’t an Option
In a recent column, I talked about why I believe shops need to separate out their charge for vehicle scanning from their diagnostic labor to address the results from those scans. Another key item I feel a lot of shops are overlooking is conducting, documenting and potentially invoicing for is the increasingly complex process of performing required test drives. Our “Who Pays for What?” survey last summer, for example, found that while almost one-third (31%) of shops that bill for necessary test drives they conduct post-repair say they are paid for that procedure “most” or “all the time,” about 2 in 5 shops (38%) say they have never sought to be paid such test drives. The statistics are even worse for test drives that are done diagnostically prior to repairs; 1 in 5 shops (19%) saidtheyare paidregularlyfor such test drives, but two-thirds of shops have never billed for those.
I want to emphasize that my concern here is not whether shops are billing for test drives. My concern is that they are performing them as a required step to safe and proper repairs.
“Test drives” aren’t what they used to be. In the past, you took a repaired vehicle out for a brief drive to check for wind noise, pulling conditions or vibrations. Now you’re doing that but also doing the drives to calibrate andconfirmthe functionofadvanced vehicle features and systems like adaptive cruise control, blind-spot monitors lane departure warning systems, satellite navigation and traction control. That’s why a Collision Industry Committee has adopted a new definition for this type of test drive that they are calling a “dynamic systems verificationroadtest.” The automakers vary somewhat in what the terms they use for what we generally call “test drives.” Some use that term, but others talk about “road tests,” or “actions tests.” Some automakers reference it by saying vehicles must be “brought up to operating temperature.” Despite terminology differences, it’s important to understand what specific requirements an automaker has for the vehicle you are test driving. Does the OEM procedure, for
example, specify:
▪Howfarthevehicleneedstobedriven; ▪ How much time the vehicle needs to be driven; ▪Atwhatspeed(s)thevehicleneeds to be driven; ▪ What driving pattern needs to be followed; and or ▪ Whatroadconditionsarenecessary .
I recently was writing an estimate on a vehicle, and the OEM procedures said after I reinstalled the blind-spot monitors on the rear bumper assembly, I needed to test drive the vehicle in a straight line for two miles above 20 mph. On anothervehicle,afterwedisconnected and reconnected the battery, an initialization required us to drive the vehicle for at least 15 seconds above 20 mph on a road that had
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If you replace a windshield on a vehicle with a compass in the rearview mirror that may require that you drive the vehicle in a circle, or in a figure-eight, to recalibrate that compass.
I have seen a procedure for one automaker’s vehicle that requires six different test drives at six different speeds and stopping patterns to see if the seat belts are working properly. Unlike the relatively simple test drives we did for free in the old days, these can be exacting and time-consuming procedures. Depending on whether your shop is in an urban or rural area, you may need to drive miles away in order to meet the road and speed conditions required. Getting paid for them requires good documentation. I recommend estimators or repair-planners have dual monitors so they can copy the test driverequirementsfromtheOEM procedures and paste them into a line note on the estimate or invoice. Some shops are using a cell phone camera or GoPro to document the test drive. Even the owner’s manual for many vehicles talk about necessary t est drives. The last thing you want is a vehicle owner asking about a required test drive in their manual and not being able to show them that you did it. It’s also important that you let the customer know in advance about the test drives you will need to perform as part of repairing their vehicle. Onesidenote:WhenIownedmy shops, once a year I would submit my employees’ driver’s license information to our company’s insurance company to ensure they could be allowed to drive vehicles on behalf of my company. You can’t risk having test drives conducted by someone with a suspended driver’s license.
As always, what you decide to charge for is a business decision; but, understanding, performing and documenting the required vehicle test drives isn’ t an option for safe and proper repairs.
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sions made by others,” said Peevy. As a result, Peevy said the lives of this young couple will be changed forever and they won’t have the quality of life they should because of these decisions.
Marcia also made another statement that resonated with Peevy. “W e were fortunate that we got the answers that we have because I think it would be intentionally naïve to pretend that there aren’t people who have been injured or had fatal accidents that weren’ t impacted by something like this,” said Marcia.
The bottom-line, according to Peevy, is to recognize that it’s all about choices and the decisions made by those who repair vehicles. Rather than beginning to work on a car as soon as it arrives at the shop, repairing it as best and as fast as possible, moving it through the shop and trusting it was done correctly, Peevy stressed the importance of following OEM procedures and doing everything possible to repair the vehicle safely and correctly . This extends beyond liability and the economics of running a business. Peevy said that in some countries, there are bad accidents and vehicle owners still drive around because they are just trying to survive. If the cars are repaired, they are often patched up rather than repaired properly. However, in the United States,hesaidshopscanaffordtodo it right without compromise.
He recommended that anyone involved in the collision repair industry watch the video and digest what the young couple shared. “We needtostopsomeofthestuff we’re doing and really be sincere in reviewing everything we do to ensure human life is placed above all else,” he said. T o watch the free replay of this webinar, visit https://daveluehr. mykajabi.com/products/dave-luehr -s-elite-webinar-series/categories /1931663/posts/6467462. The entire Elite webinar series is available by signing up for free using the following link: www .elite bodyshopsolutions.com/academy.
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On Jan. 15, ASA’s January 2020 installment of its Webinar Wednesday series featured Becky Witt, AMAM, George Witt Service in Lincoln, NE, and former AMI president and instructor, who presented “Would You TakeaJobfor$200anHour?”Based on a university-level cost accounting class, the webinar was applied to an automotive shop to provide better understanding of how pricing should be determined as well as tools to increase profits.Wittexploredhowthe way people look at things impacts behavior, how shops leave money on the table because they don’t recognize the value in the transaction, and the use of cost accounting principles that can open new methods to increase profits. The webinar began with Tony Molla, ASA’s vice president of industry relations, welcoming attendees and introducing Witt. Witt began by clarifying that the seminar is a micro class, not a macro view, and should be treated as a buffet –some things may not apply to each attendee, while others may be extremely helpful. She added, “If you don’t learn anything, then you get validation that you’re great at business.” After stressing that he would not recommend any price or discuss pricing with the intent to set prices, she defined gross profit as “the amount left over from the sale after costs have been “deducted” and mark-up as “a calculation made on the cost of the part to arrive at a selling price.” Net profit is “what’s left over after you deduct operating expenses from yourgrossprofit.”Wittstressed,“You should all know how much it costs you to put that key in the door each morning.” Witt discussedhowtofindhours per repair order (total bill hours divided by number of repair orders) and net effective labor rate (total labor sales divided by total billed hours). She then explained how to calculate gross profit per billed hour, which she called “the most important number you’re going to use the rest of your life,” dividing total grossprofitbytotalbilledhours. Looking at tech sales per minute (totalsalesperbilledhourdivided by 60 minutes in an hour) “helps everyone understand the value of everyminuteandtheurgencyinefficiency.” Regarding hours per repair order, Witt urged “Forget the standard. It depends on the shop’s operation.Thesignificanceisinpotential and stability.” The net effective labor rate is what the average billed hour really sells for and is lower than the “standard” labor rate due to competitive pricing. “This number should be used forallfinancialplanning–knowthis number,” Witt urged. Witt continued, “Mark-ups are a very confusing term. It’s not a number. It’s a mathematical operation. For example, ifyourdesiredgrossprofitis 42%andyoubuyitfor$10.Inorderto sellitfor42%grossprofit,youdivide ten by .58 which gives you $17.24. What you’re going to do is take what you want and subtract it from 100 and divideit.Don’tmultiplycosttogetthe selling price.”
Demonstrating the difference between standard and matrix markup pricing, Witt used a labor gross profit of67%witha42%partsgross profitinthe standardmark-up which yield a total gross profit of60% on the job. Matrix mark-up pricing allowed a parts gross profit of63.4% andatotalgrossprofitof66%onthe job because “very low-priced goods can easily be marked up substantially more than higher-priced goods,” Witt explained. “This can have a significantimpactonyourprofitsattheend ofthemonth,endoftheyear–6%at the end of the year is a ton of money.” The standard formula employs one factor to mark up parts, along with a standard hourly labor rate. “This leaves the shop short of funds that are easily obtained using the matrix method,” she said, encouraging attendees to check their shop management system for matrix pricing adjustments. “Everysingle business should be using matrix pricing.” To ascertain the gross profit per hour, add up all expenses, reasonable profitandreturnoninvestment(ROI). Divide that number by hours billed per month for a personalized gross profitperhour(gph)requirement. W itt explored several examples using matrix mark-up pricing to demonstratehowalowgrossprofitcan still product a substantial gph. “Using the ‘standard method’ of pricing, you’d have marked it up too much and lost the job or sublet it or turned it away entirely. For get thepercentages–focus on grossprofitperbilledhour.” “Any time you do a job and the money just isn’t there, don’t blame the customer; YOU offered to do it for that,” Witt continued. “So, figure out how long it will take to really do it right and price it at the proper gph.” Explaining thatshoppingallover for the lowest prices on every part for each job causes a loss in gph, Witt suggested looking up the list in ALLDATAandsellingitforthepriceindicated there.
Cost accounting, the science of breaking down the steps in a process to see how much each step costs, can beusedtogainefficiencyandreduce costs. “We eliminate steps that add cost but not value,” Witt explained, moving on to talk about the costs of inventory. T urning to the topic of discount promotions, Witt asked, “Is it wise to giveawaymoney?Therearedefinitely people that are motivated by a discount. Now, I’m not saying to run ASA Webinar Wednesday: Would You Take a Job for $200 an Hour? with Chasidy Rae Sisk Old School Know How with Chasidy Rae Sisk Northwest Associations with Ed Attanasio Shop Showcase with Ed Attanasio Media Matters with Ed Attanasio Old School Know How with Ed Attanasio Advertising Advantages with Ed Attanasio Associations Assembling Association Meetings with Thomas Franklin Western Associations with Thomas Franklin See ASA Webinar, Page 49
