New England Automotive Report August 2020

Serving the New England Collision and Mechanical Repair Industry

"Your Massachusetts Auto Body Association"

AUGUST 2020 U.S.A. $5.95

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

navigating THE NEW: AASP/MA Hosts Virtual Membership Meeting PLUS: FREE TIME ISN’T FREE CAN YOU CHARGE FOR OVERHEAD? THE LABOR RATE TWILIGHT ZONE

www.grecopublishing.com

We provide the highest level of customer-friendly service through our knowledgeable and helpful personnel!

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COLONIAL NISSAN 104 Mystic Avenue Medford, MA. 02155 Phone Number: 781-395-3025 FAX Number: 781-475-5063

COLONIAL HONDA OF DARTMOUTH 225 State Road (Rte. 6) Dartmouth, MA. 02747 Parts Direct: 508-997-2919 FAX Number: 508-730-6578

CITY SIDE SUBARU 790 Pleasant Street Belmont, MA. 02478 Phone Number: 617-826-5013 FAX Number: 617-489-0733

COLONIAL FORD OF PLYMOUTH 11 Pilgrim Hill Road Plymouth, MA. 02360 Phone Number: 800-233-8109 FAX Number: 508-830-1658

NORTH END SUBARU 757 Chase Road (Rte. 13) Lunenburg, MA. 01462 Phone Number: 877-289-0053 FAX Number: 978-582-9843

COLONIAL CHRYSLER JEEP DODGE-RAM 24 Coolidge Street (Rte. 62) Hudson, MA. 01749 Phone Number: 978-568-8000 FAX Number: 978-562-1213

COLONIAL FORD OF MARLBOROUGH 428 Maple Street Marlborough, MA. 01752 Phone Number: 888-460-1125 FAX Number: 508-460-3464

COLONIAL SOUTH CHRYSLER JEEP DODGE-RAM 42 State Road (Rte. 6) Dartmouth, MA. 02747 Phone Number: 508-984-1900 FAX Number: 508-996-5801

COLONIAL CADILLAC 201 Cambridge Road Woburn, MA. 01801 Phone Number: 781-935-7009 FAX Number: 781-933-7728

NORTH END MAZDA 757 Chase Road Lunenburg, MA. 01462 Phone Number: 800-322-1241 FAX Number: 978-582-9841

COLONIAL VOLKSWAGEN COLONIAL SOUTH CHEVROLET 89 Turnpike Road (Rte. 9) 361 State Road (Rte. 6) Westborough, MA. 01581 Dartmouth, MA. 02747 Phone Number: 888-322-6570 Phone Number: 508-996-6266 FAX Number: 508-616-0445 FAX Number: 508-979-1219 COLONIAL VOLKSWAGEN OF MEDFORD 162 Mystic Avenue Medford, MA. 02155 Phone Number: 781-475-5200 FAX Number: 781-391-3506

WELLESLEY VOLKSWAGEN 231 Linden Street Wellesley, MA. 02482 Phone Number: 800-228-8344 FAX Number: 781-237-6024 Contact: Dan Bettencourt / Wholesale Parts Manager

COLONIAL CHEVROLET 171 Great Road Acton, MA. 01720 Phone Number: 800-787-2787 FAX Number: 978-263-8587

COLONIAL WEST CHEVROLET 314 John Fitch Highway Fitchburg, MA. 01420 Phone Number: 978-345-5532 FAX Number: 978-345-1152

• We carry over $2,000,000 in collision & mechanical parts • Daily UPS shipping available • Servicing Massachusetts, Rhode Island and New Hampshire • We build our reputation on providing you the best SERVICE!!

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New England Automotive Report August 2020 3

TO OUR READERS, ADVERTISERS AND SUPPORTERS: THE PAST FEW MONTHS HAVE BEEN CHALLENGING, TO SAY THE LEAST. AS WE ALL LOOK AHEAD TO A BRIGHTER FUTURE, WE WOULD LIKE TO ACKNOWLEDGE THE SUPPORT OF THE MANY READERS AND ADVERTISERS WHO STUCK BY US THROUGHOUT THE PANDEMIC. YOUR LOYALTY SPEAKS VOLUMES. WE APPRECIATE YOUR OVERWHELMING SUPPORT AND FLEXIBILITY - WE QUITE LITERALLY COULD NOT HAVE GOTTEN THROUGH THIS PERIOD WITHOUT YOU. WE LOOK FORWARD TO CONTINUING TO SERVE YOU IN OUR DUTY TO KEEP THE AUTOMOTIVE REPAIR INDUSTRY CONNECTED AND INFORMED. THANK YOU AGAIN - THE BEST IS YET TO COME!

THOMAS GRECO PUBLISHING, INC. PUBLISHERS OF NEW ENGLAND AUTOMOTIVE REPORT

4 August 2020

New England Automotive Report

CONTENTS

August 2020 • Volume 18, No. 8

26 30 DEPARTMENTS VICE PRESIDENT’S MESSAGE by Kevin Gallerani

32

8 | Free Time Isn’t Free

EXECUTIVE DIRECTOR’S MESSAGE

by Evangelos “Lucky” Papageorg

12 | “...Only Makes Us Stronger”

LOCAL NEWS

18 | AASP/MA Member MassPay Hosts COVID-19 Webinars

By Joel Gausten

20 | Right to Repair Faces Increased Opposition by Joel Gausten 22 | Ford Pilots Anti-Coronavirus Technology in Massachusetts

NATIONAL NEWS

26 | VeriFacts Webinar Warns of Counterfeit Parts by Alana Bonillo

LEGAL PERSPECTIVE

36 | Cost of Repair versus Cost of Doing Business

ALSO THIS ISSUE 9 | AASP/MA MEMBERSHIP APPLICATION 16 | AASP/MA VENDOR AFFINITY PROGRAM SPONSORS 17 | AASP/MA GOLF OUTING SAVE THE DATE

ADVERTISERS’ INDEX Accudraft Paint Booths ................................OBC Audi Group ....................................................7 Balise Wholesale ............................................13 Best Chevrolet................................................22 BMW Group ..........................................................10 BMW/Mini of Warwick ..................................14 Boch Chevrolet............................................35,42 Boch Hyundai ..........................................35, 41 Collision Supplies ..........................................37 Colonial Auto Group ....................................IFC Empire Auto Parts..........................................40

FEATURES

30 | GUEST EDITORIAL by Tom Ricci

Stuck in the Twilight Zone of Labor Rate

32 | COVER STORY by Joel Gausten Navigating the New: AASP/MA Hosts Virtual Membership Meeting

Ford Group ....................................................27

Nissan Group ................................................19

Genesis of Norwood........................................42

PPG................................................................3

Honda Group ................................................15

Quirk Wholesale Parts ....................................21

Hyundai Group ........................................35, 41

Reliable Automotive Equipment ......................24

Ira Subaru ....................................................30

Sarat Ford Lincoln..........................................38

Ira Toyota of Danvers ......................................31

Sherwin Williams ..........................................23

Kelly Automotive Group ................................IBC

Subaru Group ................................................28

Kia Group......................................................41

Toyota Group ................................................34

Linder’s, Inc. ................................................35

Volvo Group ..................................................42

Long Automotive Group..................................29

VW Group ....................................................25

Mazda Group ..................................................6

Wellesley Toyota/Scion ..................................39

McGovern Chrysler Jeep Dodge Ram ................38

Wheel Collision Center ..................................40

Mopar Group..................................................11

New England Automotive Report August 2020 5

Superior service starts with superior parts.

Rely on what Mazda drivers already know-Genuine Mazda parts extend a car's life.

Designed specifically for Mazda vehicles Get the right part the first time We're an accurate, trusted resource as close as your phone Give us the opportunity to serve you

Contact these Mazda dealers for all your parts needs: Mastria Mazda 1545 New State Highway Route 44 Raynham, MA 02767 Phone: 877-272-8876 Fax: 508-802-4074 wholesale@mastria.com

6 August 2020

New England Automotive Report

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475 Balise Mazda 635 Riverdale St. West Springfield, MA 01089 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com One Call, One Truck for Eleven Brands!

Audi dealers strive to make you an Audi Genuine Parts fan •

Audi Parts professionals are your subject matter experts on collision parts, replacement components and mechanical items.

•

Many Audi dealers offer technical service support hotline access that can reduce your repair times and help you meet an on-time promised delivery.

•

Installing Audi Genuine Parts contributes toward improved cycle time that helps make both your customer and their insurance company happier.

•

Regardless of the age of your customer’s Audi, Audi dealers have access to over 200,000 part numbers.

No other supplier comes close.

Helping you do business is our business. Order Audi Genuine Parts from these select dealers.

Audi Natick 549 Worcester Street Natick, MA 01760 www.bernardiaudi.com 800.247.3033 Fax: 508.651.6841

Audi Peabody 252 Andover Street Peabody, MA 01960 800.774.8411 Parts Direct: 978.605.2182 email: pwalke@iramotorgroup.com www.audipeabody.com

Mattie Audi 80 William S. Canning Blvd.

Fall River, MA 02721 800.678.0914 Fax: 508.730.1283 www.mattieaudi.com

Hoffman Audi 700 Connecticut Blvd East Hartford, CT 06108 860.282.0191 Fax: 860.290.6355 www.hoffmanauto.com

New England Automotive Report August 2020 7

VICE PRESIDENT’S MESSAGE

Free Time Isn’t Free KEVIN GALLERANI

collision. Photos could be a good start if taken properly, but they do not provide the definitive word on what is necessary for a safe and proper repair.

Unfortunately, it doesn’t appear that the insurance industry got the memo on this. The ongoing need for social distancing has prompted insurers to refuse to send out appraisers to look at damaged vehicles, leaving us to essentially do this work for them. In many cases, this has resulted in shops experiencing delays in completing jobs as they are required to take more and more photos to get carriers to finally accept the level of damage that could have been identified in one in-person visit.

Constantly having to take photos and wait for the other end to get its act together results in added administrative burdens for collision facilities, very often without receiving appropriate compensation for these extra efforts. Auto body businesses are here to serve vehicle owners, not to serve as unpaid help for insurers.

I understand that COVID-19 came out of nowhere and continues to put a burden on every facet of collision repair. I’m sensitive to the safety of everyone who works at or visits my shop, and I would never willingly put anyone in danger.

As our industry moves through the summer, I hope everyone reading this is doing as well as possible and making things work. Fortunately, I know of many shops out there that have work coming in and have been able to maintain their employee numbers. For many of us, the past few months have provided an opportunity to use unexpected free time to improve our businesses.

Employees have caught up on training, while shop owners have done everything from spruce up their facilities to focus more attention on equipment and in-house procedures. Obviously, the insurance industry has had free time on its hands as well, but this hasn’t always worked in our favor.

Photo estimating has always been a controversial topic in Massachusetts. While estimating vehicle damage in this manner provides convenience in principle, it is clear that the extent of damage in certain jobs cannot be fully captured with a digital image. Collision repair is not a cookiecutter operation; every car that enters your shop is there as the result of a unique accident that occurred under unique circumstances. Some things can only be uncovered and acknowledged through a physical inspection that allows someone’s eyes and hands to truly experience what happened in a

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AUT M TIVE AASP/MA EXECUTIVE COMMITTEE

STAFF PUBLISHER

GRAPHIC DESIGNER

Thomas Greco - thomas@grecopublishing.com

Lisa M. Cuthbert - lisa@grecopublishing.com

SALES DIRECTOR

EDITORIAL/CREATIVE COORDINATOR

Alicia Figurelli - alicia@grecopublishing.com

Alana Bonillo - alana@grecopublishing.com

EDITORIAL DIRECTOR

PRODUCTION

Joel Gausten - joel@grecopublishing.com

Donna Greco - donna@grecopublishing.com

TREASURER Matthew Ciaschini IMMEDIATE PAST PRESIDENT Paul Hendricks LEGISLATIVE/ADALB COMMITTEE CHAIRMAN Tom Ricci

PRESIDENT Molly Brodeur VICE PRESIDENT Kevin Gallerani SECRETARY Gary Cloutier

AASP/MA STATEWIDE DIRECTORS PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963 www.grecopublishing.com

COLLISION DIRECTOR Rob DelGallo

AT-LARGE DIRECTOR Adam Ioakim

AASP/MA DIRECTORS Ray Belsito

Kevin Kyes

Rick Fleming

Frank Patterson

Joshua Fuller

Mike Penacho

Andrew Potter Dana Snowdale

Bill Spellane Brian Stone

AASP/MA ADMINISTRATIVE OFFICE -New England Automotive Report is published monthly by TGP, Inc., 244 Chestnut Street, Suite 202 Nutley, NJ 07110. Distributed free to qualified recipients; $48 to all others. Additional copies of New England Automotive Report are available at $5 per copy. Reproduction of any portions of this publication is specifically prohibited without written permission of the publisher. The opinions and ideas appearing in this magazine are not necessarily representations of TGP Inc. or of AASP/MA. Copyright © 2020 by Thomas Greco Publishing, Inc. Images courtesy of www.istockphoto.com

WWW.AASPMA.ORG 8 August 2020

New England Automotive Report

Evangelos “Lucky” Papageorg: AASP/MA Executive Director

Alana Bonillo: AASP/MA Administrative Assistant P.O. Box 212 Marlborough, MA 01752 617-574-0741

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YES Please list my business as an AASP/MA member in good standing on the AASP/MA website for consumers to consider using for the collision repairs and assistance with the claims process.

I understand this is a member benefit (_________ initials Date ___/____/2020) !

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New England Automotive Report August 2020 9

THEY’RE CALLED “ORIGINAL BMW PARTS” FOR GOOD REASON. FOR UNCOMPROMISING PRECISION AND INCOMPARABLE QUALITY, YOUR BMW CENTER IS YOUR ONE-STOP SHOP FOR EVERYTHING BMW. For Original BMW Parts, contact one of these authorized BMW centers: BMW of West Springfield 1712 Riverdale St. West Springfield, MA 01089 PH: 413-746-1722 FAX: 413-304-9009 bmwwestspringfield.com

BMW of Stratham 71 Portsmouth Avenue Stratham, NH 03885 PH: 603-772-0000 FAX: 603-772-9436 bmwofstratham.com

Tulley BMW of Nashua 147 Daniel Webster Hwy Nashua NH 03060 PH: 603-888-5050 FAX: 603-888-8427 tulleybmw.com

New Country BMW 1 Weston Park Ave. Hartford, CT 06120 PH: 860-240-7881 FAX: 860-240-7873 newcountrybmw.com

BMW of Warwick 1515 Bald Hill Rd. Warwick, RI 02886 PH: 401-821-1510 FAX: 401-823-0530 bmwofwarwick.com

BMW of Sudbury Wholesale Parts 68 Old County Road Sudbury, MA 01776 PH: 800-338-3198 FAX: 508-881-7578 bmwofsudbury.com

©2020 BMW of North America, LLC. The BMW name, model names and logo are registered trademarks.

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New England Automotive Report

FIT AND FINISH IS NO PLACE TO GET CREATIVE. CONTACT US TODAY FOR A COMPETITIVE QUOTE ON YOUR NEXT COLLISION REPAIR ESTIMATE. BALD HILL DODGE CHRYSLER JEEP 1035 Bald Hill Rd Warwick, RI 02886 Order Hotline: (800) 822-3015 17 delivery trucks serving RI, MA and CT daily!

BEST CHRYSLER DODGE JEEP RAM 520 Colony Place Road Plymouth, MA 02360 Order Hotline: (800) 932-7900 Fax: (781) 749-7804 www.bestjeep.com IMPERIAL CHRYSLER DODGE JEEP 6 Uxbridge Road Mendon, MA 01756 Order Hotline: (877) 272-0332 Call us for your wholesale parts needs!

MCGOVERN CHRYSLER JEEP DODGE RAM 777 Washington Street Newton, MA 02460 Order Hotline: (800) 741-7563 www.clarkandwhiteautos.com For the best customer service ask for Mando Bogosian PREMIER CAPE COD 460 Yarmouth Road Hyannis, MA 02601 Order Hotline: (888) 927-8261 Fax: (508) 778-0900 www.premiercapecod.com QUIRK AUTO DEALERS 115 E. Howard Street Quincy, MA 02169 Order Hotline: (877) 707-8475

KELLY JEEP CHRYSLER 353 Broadway Route 1 North Lynnfield, MA 01940 Order Hotline: (800) 278-8558 Fax: (781) 581-2490 Email: kjcparts@kellyauto.com Over $1,000,000 in stock to support your business, and fast free delivery!

Check out MoparRepairConnection.com for resources, promotions and technical information. ©2019 FCA US LLC. All Rights Reserved. Chrysler, Dodge, Jeep, Ram, Mopar and SRT are registered trademarks of FCA US LLC.

New England Automotive Report August 2020 11

EXECUTIVE DIRECTOR’S MESSAGE

STRONGER”

“…Only Makes Us EVANGELOS “LUCKY” PAPAGEORG

AASP/MA held its first-ever Zoom General Membership Meeting on June 24. We are all aware that this was necessitated by the social distancing restrictions we have been facing for the past several months. Rather than focus on the negative effects of the restrictions, we chose to focus on how the pandemic has brought on changes in how we must view and do business. What better way than with the positive view and approach of Mike Anderson (Collision Advice)? Anyone who has ever sat through a Mike Anderson presentation cannot help but be affected by his high-energy and positive approach to the issues faced in the collision repair industry. His Axalta Coating Systems-sponsored presentation “Capturing in a Crisis” was no exception!

We have all heard the adage of, “When life hands you lemons, make lemonade.” To do so, you need to know the recipe and have the needed tools in place. You cannot let the situation get you down, and you have to stay focused on the future while understanding the past. Mike’s presentation hit on all these points and more. The key theme throughout his presentation was on the positives that the current crisis has shined a light on, as well as the accelerated-pace changes that are going to take place. As an industry, we have gone from a slow burn to a wildfire of change. As we all know, we are resistant to change and do not usually adapt quickly. The current state of affairs dictates that we change – and do so quickly – if we plan to survive.

Our “new normal” is going to be driven by many factors that Mike touched upon in his presentation. His analogy of a frog in a pot of water set to slowly warm up versus a frog being dropped into a boiling pot is perfect for the situation we find ourselves in. Bring in COVID19, and the pot goes straight to boiling! As an industry, most shop owners have only been looking at and studying the bottom line and their sales dollars. That is only part of the picture. Unless you have been paying close attention to the actual number of claims coming through your door, you are seriously

12 August 2020

New England Automotive Report

You must adapt and understand the needs of your customers today and in the future.

fooling yourself.

Studies have shown the actual number of claims has been steadily declining for quite some time. This is the “slow simmer.” If you have only been looking at your bottom line and watching your sales dollars increase but have not been taking steps to capture more customers at your door, I would not hesitate to say that you were hit harder by the recent harsh decline in claims due to drivers being forced to stay home. This is the “pot boiled over.”

That’s right: As accident frequency has steadily declined, the severity cost per claim has been on the rise.

This has led those not paying attention to feel that everything is great. As we are too aware, the increase is NOT because we are collecting more per labor hour. The increase in severity is due to increases in parts costs and procedures, such as pre- and post-repair scanning, along with calibrations required as part of a proper repair.

I will not try to cover all the figures Mike shared in his presentation; however, one in particular makes the issue crystal clear. In Mike’s opinion, the number of claims you are seeing today because of COVID-19 are the ones we would have anticipated 15 years from now based on more vehicles having ADAS technology on board and other forms of crash avoidance systems in play. Vehicles will soon be able to communicate with one another and get out of each other’s way. Disastrous, right? The answer is a resounding NO if you have been paying attention and preparing now for the future of collision repair. One of the reasons is that new technology is going to flood the current vehicle fleet sooner because manufacturers are hurting. Their car sales are way down.

The opinion is that the government will incentivize the public to buy new cars in the near future to help bail out these manufacturers. This means newer vehicles with higher ACVs and newer technology. Those that are involved in collisions will change the concept of

“drivability’ after a loss. You will have to learn this and use it to your customers’ advantage and protection.

The minor “fender bender” or bumper-to-bumper contact could potentially disrupt the ADAS from functioning properly and create a road hazard for the vehicle owner and those around them.

As the “Capturing in a Crisis” presentation indicated, your ability to get a vehicle owner to your door and capture the job will be critical to your success. It is not too late to get started, but now is the time. Not a year from now. Not in six months. Now! As much as we may dislike the process of photo estimating, you must embrace it and learn how to best use it to draw a customer to your door, expedite the claims process with the insurer and ensure you will be paid properly for all the things you must do to guarantee your work and be able to accept the liability to do so.

Photo estimating is just one of the technological advances you must become familiar with. You must thoroughly learn and understand the technology in today’s vehicles and those of the future. You must adapt and understand the needs of your customers today and in the future. You must learn how to market your business to guarantee success. These are all points

covered in “Capturing in a Crisis.” Axalta and Anderson’s Collision Advice have made the presentation available to us, and our members can view it (as well as the full General Membership Meeting) online at aaspma.org/aasp-ma-membersonly. Please view the presentation as soon as you can to get the full impact of how you can better position yourself to dominate. There are so many other powerful factors covered in the presentation; you owe it to yourself to watch.

I was no less enthused and optimistic after watching Mike’s presentation the second time as I was during the first. The comments via calls and emails from our attendees echo the same sentiment. There is always a positive side if you are willing to look for it and understand that you have the ability to control your business and your ability to not only “survive, but to thrive” – one of Mike’s long-used expressions.

Another phrase he used a lot during the presentation was, “Winners beat losers, but dominators beat winners.” We are all part of a resilient industry, as shown by our ability to survive under the restrictive insurance controls unfairly imposed upon us. We all

Continued on page 27

WHOLESALE PARTS

WHOLESALE PARTS 800.992.6220

800.992.6220

GM PARTS .................Press 2 FORD.........................Press 5

O ne Call, One Truck and 11 franchises delivered to your Collision Center!

HONDA .....................Press 3

ѕ Team of 11 parts professionals to assist you with your wholesale parts needs ѕ 30 Trucks on the road daily serving MA, CT and RI ѕ Two deliveries per day in most markets ѕ tĞď ĂƐĞĚ ĚŝƐƉĂƚĐŚŝŶŐ ƚŽŽůƐ ǁŝƚŚ ƌĞĂů Ɵ ŵĞ d Ɛ ѕ Three Field Sales Professionals to assist you ѕ $6.1 Million in Inventory to support our Wholesale Customers’ needs

KIA ............................Press *

HYUNDAI ..................Press 7

LEXUS........................Press # MAZDA .....................Press 6 NISSAN......................Press 4 SUBARU ....................Press 8 TOYOTA .....................Press 1 VOLKSWAGEN ...........Press 9

New England Automotive Report August 2020 13

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· Fax or emailing your order will speed processing and delivery to your location. © 2020 BMW of North America, LLC. The BMW name, model names and logo are registered trademarks.

14 August 2020

New England Automotive Report

It Takes Genuine Honda Collision Repair Parts To Achieve a Genuine Honda Fit. Honda collision repair parts are engineered and manufactured to Honda standards.

In the collision-repair business, time is money, and you canâ&#x20AC;&#x2122;t waste time on parts that almost fit properly. Use Genuine Honda replacement parts. Your reputation depends on it.

For Genuine Honda parts, contact these Authorized Honda dealers.

Bernardi Honda 960 Worcester Road Natick, MA 01760 Parts Direct: 800-247-3033 FAX: 508-651-1220 www.bernardihonda.com

Kelly Honda 540 Lynnway Rt. 1A Lynn, MA 01905 Parts Direct: 800-779-7466 FAX: 781-595-2898 e-mail: mpsomosjr@kellyauto.com

Honda of Enfield 20 Palomba Drive Enfield, CT 06082 Toll Free: 800-222-6632 FAX: 860-253-5419 www.liahondaofenfield.com

Honda North 382 Newbury Street Danvers, MA 01923 Toll Free: 800-882-9797 FAX: 978-774-9483 e-mail: eadams@iclautos.com www.hondanorth.com

Schaller Honda 1 Veterans Drive New Britain, CT 06051 Toll Free: 800-382-4525 Direct: 860-826-2080 FAX: 860-826-2083 e-mail: jkiniry@schallerauto.com www.schallerauto.com

Lundgren Honda of Auburn 525 Washington Street Auburn, MA 01501 Toll Free: 800-777-2044 FAX: 508-721-0872 e-mail:pmccarthy@lhonda.com www.lhonda.com

Balise Honda 400 Riverdale St. West Springfield, MA 01089 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com One Call, One Truck for Eleven Brands!

Balise Honda of West Warwick 509 Quaker Lane West Warwick, RI 02893 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com One Call, One Truck for Eleven Brands!

Lia Honda of Northampton 293 King Street Northampton, MA 01060 Toll Free: 800-369-7889 Direct: 1-413-586-6043 FAX: 1-413-585-0502 www.liahondanorthampton.com

New England Automotive Report August 2020 15

A A

16 August 2020

/ SP

A M

New England Automotive Report

Thanks to our VAP members for their continued support during this pandemic crisis.

SAVE THE DATE 2020 AASP/MA

GOLF OUTING Tentative Date:

Wednesday, September 16 Blackstone National Golf Club (Sutton, MA)

More information coming soon!

New England Automotive Report August 2020 17

[LOCAL] NEWS By Joel Gausten

AASP/MA Member MassPay Hosts

COVID-19 Webinars Note: The following article is intended to provide a brief overview of information available as of our July 15 press deadline.

Readers are strongly encouraged to visit masspaysolutions.com/covid-19 for the most up-to-date details in regard to state and federal employment laws.

As businesses slowly begin to either fully reopen or resume a more active schedule, new AASP/MA member MassPay recently held two webinars aimed at giving shop owners and other employers critical information on evolving laws affecting employee rights during COVID-19.

In early July, MassPay hosted an hourlong presentation on topics including the Families First Coronavirus Response Act (FFCRA). In effect from April 1 to December 31 of this year, the Act provides paid sick leave or expanded Family and Medical Leave Act (FMLA) provisions for employees at companies with fewer than 500 workers. It has been structured to provide relief to employees who have been made to isolate/quarantine via a federal/state/local order or health care provider recommendation or are seeking a medical diagnosis due to experiencing COVID-19 symptoms. The Act also applies to employees caring for a child whose school has been closed due to the pandemic or another person who is quarantined for one of the previously stated reasons.

Under the FFCRA, employees are eligible for two weeks of paid sick leave for illness, quarantine or day care/school closures.

Full-time employees are entitled to 80 hours, while part-time workers are entitled to the average hours worked over a twoweek period.

“If you’re not able to have a set schedule and the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours,”

explained Sheri Heller, senior HR advisor for MassPay. For example, if the average time put in by a part-time employee is three hours a day, this would equal 30 hours for a twoweek period based on a five-day workweek.

Regardless of their employees’ work status, an employer must post and distribute an Employee Rights poster for the FFCRA at its business and provide it to new hires.

With summer typically the time for employee vacations, employers must consider the specific rules affecting their specific areas very carefully.

“There’s been no clarification from the federal Department of Labor,” Heller stated.

“As such, we have to examine these on a case-by-case and state-by-state basis.”

In Massachusetts, all visitors (including state residents who travel to another one) are “expected” to self-quarantine. An exception is currently being made for those traveling from New England, New York and New Jersey. (More information is available at mass.gov/covid19.) Heller added that if an employee comes back from vacation, does a 14-day paid self-quarantine and then tests positive and can’t come back to work, that employee has already used up the hours available to them under the FFCRA. On June 11, Paul Carelis, MassPay’s vice president of HR services, presented a webinar on the PPP Flexibility Act. Passed on June 5, the Act is designed to increase the likelihood of greater forgiveness for borrowers and simplify the overall forgiveness application process.

Additionally, it extends the timeframe for loan recipients to use the funds provided to them from eight weeks to 24. While this period has been extended, Carelis cautioned that funds must be used by December 31.

“If for any reason your 24 weeks bring you into 2021, that is not going to be allowed. You do need to use up the funds this year.”

The current deadline to apply for a Payroll Protection loan was August 8 at press time. For current and comprehensive information on COVID-19-related employer/employee issues (plus videos of the webinars discussed in this article), visit the MassPayCOVID-19 resource page at masspaysolutions.com/covid-19.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

18 August 2020

New England Automotive Report

GENUINE NISSAN PARTS

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Only Genuine Nissan Parts deliver the fit, reliability, and performance to meet your shopâ&#x20AC;&#x2122;s collision repair needs. So keep it original, and keep it real with Genuine Nissan Parts.

Contact these Nissan dealers for all your parts needs: Mastria Nissan 1305 New State Highway Raynham, MA 02767 Direct Toll Free: 800-248-2458 Direct Fax: 508-802-6118 E-mail: parts@mastrianissan.com Web: www.mastria.com

Kelly Nissan of Lynnfield 155 Andover Street Danvers, MA 01923 Toll Free: 800-698-9280 Fax: 781-598-8026 E-mail: BSherman@Kellyauto.com

Kelly Nissan of Woburn 155 Andover Street Danvers, MA 01923 Phone: 781-835-3510 Fax: 781-835-3580 E-mail: mbosma@kellyauto.com www.kellyauto.com

Balise Nissan of Warwick 1350 Post Rd. Warwick, RI 02888 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com One Call, One Truck for Eleven Brands!

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475

New England Automotive Report August 2020 19

[LOCAL] NEWS By Joel Gausten

Right to Repair Faces Increased Opposition Formed in 2020 by the Association of Global An effort by the Massachusetts Right to Repair Automakers and the now-defunct Alliance of Automobile Coalition (whose members include AASP/MA) to revise Manufacturers, the Washington, DC-based Alliance for the state’s current Right to Repair law via a ballot Automotive Innovation describes itself on its website initiative is facing increased opposition from automobile (autosinnovate.org) as “the singular, authoritative and manufacturers.

Currently boasting more than 100,000 signatures, respected voice of the automotive industry.” The group the Coalition’s ballot initiative aims to improve the claims to represent “the manufacturers producing nearly independent automotive repair and 99 percent of cars and light trucks service industries’ access to OEM sold in the US.” Members include “US repair information through the operations of international motor following provision (presented here vehicle manufacturers, original The Massachusetts with minor edits): equipment suppliers, technology and other automotive-related companies Right to Repair Commencing in model year 2022 and trade associations.”

Coalition takes and thereafter, a manufacturer of The Massachusetts Right to Repair motor vehicles sold in the Coalition takes exception to how the exception to how Commonwealth, including heavyAlliance for Automotive Innovation the Alliance for duty vehicles having a gross vehicle has represented the issue to weight rating of more than 14,000 legislators.

Automotive pounds, that utilizes a telematics “The opposition comes from our Innovation has system shall be required to equip competitors,” comments such vehicles with an interMassachusetts Right to Repair represented the operable, standardized and open Coalition Director Tommy Hickey. access platform across all of the “Car manufacturers know that they’ll issue to legislators. manufacturer’s makes and models. lose this at the ballot, so they try to Such platform shall be capable of confuse the issue by talking about securely communicating all cybersecurity, personal information mechanical data emanating directly from the motor and GPS location. But if people take a look at the vehicle via direct data connection to the platform. Such Attorney General’s summary of this, they will see that platform shall be directly accessible by the owner of the this is strictly about mechanical information necessary to vehicle through a mobile-based application and, upon diagnose, maintain and repair the car. The idea of this the authorization of the vehicle owner, all mechanical ballot initiative is to give the owner of the car direct data shall be directly accessible by an independent access to the diagnostic and repair information and let repair facility or a class 1 dealer licensed pursuant to them share that with an independent or dealership repair section 58 of chapter 140 limited to the time to complete facility of their choice.” the repair or for a period of time agreed to by the vehicle Hickey stresses that cyber security is already owner for the purposes of maintaining, diagnosing and addressed in the Coalition’s efforts to ensure universal repairing the motor vehicle. Access shall include the access to repair information. ability to send commands to in-vehicle components if “There have been a number of cyber security experts needed for purposes of maintenance, diagnostics and who have echoed the sentiment that this can be done in a repair. safe, secure and open standardized way. That’s what the 2012 Right to Repair law did, but car manufacturers have In a June 3 letter to the US House Committee on used technology to create a monopoly in the repair Energy and Commerce, David Schwietert, chief policy market again.” officer of the newly created Alliance for Automotive AASP/MA continues to support the Right to Repair Innovation, warned that the Massachusetts ballot movement. Earlier this year, Executive Director initiative would create new cybersecurity threats to Evangelos “Lucky” Papageorg appeared before the vehicle owners: Massachusetts Joint Committee on Consumer Protection to urge its support of House Bill 4122, legislation designed The ballot initiative has been disingenuously presented to achieve the same goals as the ballot initiative. to voters as a solution for fixing cars. However, this More information on the legislation is featured in the initiative is really about third parties seeking biMarch 2020 issue of New England Automotive Report. directional remote access to a consumer’s driving The complete text of the Alliance for Automotive habits, patterns and location in real-time. Such a farInnovation letter is available at repairerdrivennews.com. reaching mandate risks making personal data readily available to third parties and creates absolutely no safeguards for how consumer information is stored, protected or used afterwards.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

20 August 2020

New England Automotive Report

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

New England Automotive Report August 2020 21

[LOCAL] NEWS

Ford Pilots Anti-Coronavirus Technology in Massachusetts The Massachusetts State Police were among the participants in recent software trials conducted by Ford on new technology developed by the automaker to “neutralize” the spread of COVID-19 in automobiles.

Piloted in 2013-2019 Ford Police Interceptor Utility vehicles, this software has been designed to elevate passenger compartment temperatures beyond 133°F, which an official Ford press release states is “long enough to help disinfect vehicle touchpoints.” Once activated, the vehicle’s powertrain and climate control systems work together automatically to hit the desired temperature. The software warms up the engine to an elevated level, and both heat and fan settings operate on high. The software automatically monitors interior temperatures until the entire passenger compartment hits the optimal level. From there, that temperature is maintained for 15 minutes.

“This heated process can be used by law enforcement regularly to help sanitize vehicles when officers are not inside,” explained Ford in the press announcement.

“When used in conjunction with sanitization guidelines approved by Centers for Disease Control and Prevention [CDC], flooding the passenger compartment with elevated air temperature can help reach areas that may be missed by manual disinfecting procedures. Heat has the ability to seep into crevices and hard-to-reach areas, helping reduce the impact of human error in applying chemical disinfectants.”

“Law enforcement officers are being dispatched as emergency responders in some cases where ambulances may not be available,” said Stephen Tyler, Ford police brand marketing manager. “During one trip, officers may be transporting a coronavirus patient to a hospital, while another trip may involve an occupant who may be asymptomatic.”

According to Ford, safely heating the passenger compartment as a supplement to recommended cleaning methods can help ensure vehicles are properly disinfected before being deployed again.

“Officers can now use this self-cleaning mode as an extra layer of protection inside the vehicle in areas where manual cleaning is prone to be overlooked,” said Tyler.

“This virus is an invisible enemy, and we are proud to provide a solution to help the law enforcement community fight it.”

Additional trial participants included the New York City Police Department, the Los Angeles Police Department, the Michigan State Police, the Boardman Township Police Department in Ohio and the Seminole County Sheriff’s Office in Florida. Although Ford is looking into bringing this technology to additional Police Interceptor Utility vehicles, plans to introduce this technology to other lines were not announced at press time.

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MASSACHUSETTS

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New England Automotive Report

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New England Automotive Report

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Genuine Volkswagen Collision Parts Are a Call or a Click Away.

The best repairs start with the best shop-supplier relationship. Contact the following Authorized Volkswagen dealers by phone, fax or email to get the parts you need, when you need them.

Mattie Volkswagen 80 William S. Canning Blvd.

Fall River, MA 02771 800-678-0914 fax: 508-730-1283

Lia Volkswagen 140 Elm Street Enfield, CT 06083 860-698-6890 fax: 860-265-7840 www.liavw.com

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475

Volkswagen of Hartford 133 Leibert Road Hartford, CT 06120 Direct Parts: 860-543-6012 fax: 860-728-4408 email: ebautista@vwofhartford.com

Mastria Volkwagen 1619 New State Highway Raynham, MA 02767 Toll Free: 888-581-1146 Direct Parts: 508-802-9955 fax: 508-802-9966 email: vwparts@mastria.com www.mastriavw.com

Balise Volkswagen 525 Quaker Ln. West Warwick, RI 02893 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com

One Call, One Truck for Eleven Brands!

“Volkswagen“ and the Volkswagen logo are registered trademarks of Volkswagen AG. ©2020 Volkswagen of America, Inc.

New England Automotive Report August 2020 25

[NATIONAL] NEWS By Alana Bonillo

VeriFacts Webinar Warns of

COUNTERFEIT PARTS Any time a counterfeit part is added to a vehicle, it can cause injury to the driver, their passenger(s) and others on the road.

This critical message was recently shared by the Automotive Anti-Counterfeiting Council (A2C2) to a large webinar audience comprised of members of AASP/MA, parts distributors, insurers and other interindustry representatives.

Presented by Guild 21/VeriFacts Automotive, “Don’t Gamble with Counterfeit Parts” explored the dangers of fake automotive products and A2C2’s work to hunt down these items and prosecute those who sell them to unsuspecting shops.

Led by retired insurance industry veteran George Avery on behalf of VeriFacts, the webinar featured panelists Abe Jardines (special agent/national program manager for Homeland Security Investigations, National Intellectual Property Rights Coordination Center), John Lancaster (national wholesale parts manager for Subaru of America),Teena Bohi (senior brand protection analyst for Toyota Motor North America) and Andy Forsythe (brand protection and dealer parts loyalty for Nissan Group of North America).

A2C2 consists of multiple OEMs, including Volkswagen, Fiat Chrysler Automobiles, Ford, General Motors, Honda, Hyundai, Kia, Nissan Group, Subaru and Toyota. This collaboration among automakers and their partners strives to eliminate counterfeit automotive components that could harm US consumers.

Long before his career in law enforcement began, Jardines delivered car parts to collision shops in his home area. He was well known among these facilities and on a first-name basis with everyone he encountered, but he warned attendees that those days are gone.

“We knew our supply chain back then…Can you trust who you get your supplies from? Can you trust that the part that is going in the car will be safe if your own loved ones were to enter [that vehicle]?”

E-commerce plays a role in the infiltration of these counterfeit parts by making it difficult for shops to know the legitimacy of part sources.

“There is a lot you can hide behind when you sell online,” cautioned Bohi.

A2C2 has prosecuted multiple cases of counterfeit products that

were traced back to online points of sale. Although it’s believed that just about any part can fall victim to counterfeiting, some of the examples shown during the webinar included brake pads, oil filters, keys, wheel covers and airbags. Additionally, a video was shown about a case led by attorney Todd Tracy, known for his work in the litigation against John Eagle Collision Center, that involved Sarah Loughran, a young woman who died after a counterfeit airbag installed in her Kia failed to deploy.

“We are here to educate you on red flags,” noted Lancaster. “If you see something and aren’t sure about it, contact us and let us know.”

“If you suspect that your supply line is compromised, you are getting parts that are of suspect quality and something doesn’t feel right, flag that shipment,” added Forsythe. “Note how it arrived [and] its label[s] and contact the [Intellectual Property Rights] Center.”

After attending the webinar, AASP/MA Executive Director Evangelos “Lucky” Papageorg shared some additional viewpoints on the counterfeit parts issue – including the insurance industry’s potential role in its development – with New England Automotive Report.

“Obtaining properly manufactured replacement parts is challenging enough, but when a combination of poorly made aftermarket and – worse yet – counterfeit parts is added to the mix, the issue is compounded. This webinar points out how the supply chain has been corrupted by those unscrupulous entities looking to make a quick score with no concern as to safety and liability. Having the insurance industry force the use of specific vendors, as well as online purchasing sight unseen, only adds to the issue. It is challenging enough to establish a trusted relationship in today’s e-commerce. I feel that insurers are taking liberties to save themselves money with no concern for vehicle owners’ safety and repairers’ liability. Unlike unsuspecting John Q. Public, who may not know the risks involved when dealing with nonOEM parts, insurers are well aware of the issues with counterfeiting and poor-quality parts but continue to promote their use in the repair process.”

More information on A2C2 can be found at a2c2.com.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

26 August 2020

New England Automotive Report

VICE PRESIDENT’S MESSAGE

Continued from page 8

However, I’m also aware that insurers have used their downtime to take a closer look at their processes and how they can save money. I’m sure they’ve realized that keeping appraisers off the road saves them a fortune. I’m also very aware that they’ve been pushing photo estimating for many years despite protests from our industry. This pandemic has given insurers an opportunity to roll out their plans, and we are already seeing the results we’ve long feared. My greatest concern is that photo estimating will become commonplace long after the coronavirus crisis is fully addressed.

EXECUTIVE DIRECTOR’S MESSAGE Continued from page 13

have it within our power to THRIVE if we apply ourselves. As Mike indicated, “WHEN, NOT IF, we come out of COVID-19, we will look back and see this as the best thing that ever happened to us…It is like a crystal ball look into the future.”

As you’ve seen in recent issues of New England Automotive Report, AASP/MA is working hard to bring this issue to a greater spotlight and assist shops.

Please read all communications and updates from the association on this matter, and definitely reach out to us if you are encountering new obstacles due to this trend. Also, encourage anyone you know who is not currently an AASP/MA member to join us today. Our voices will be heard.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

AASP/MA VICE PRESIDENT KEVIN GALLERANI is vice president of Cape Auto Collision Center in Plymouth, MA. He can be reached at (508) 747-0316 or kevin@capeautobody.com

Working together as AASP/MA members and an industry will be a huge factor in making the adage of, “That which does not kill us only makes us stronger” true. AASP/MA is here to bring this to fruition.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

AASP/MA EXECUTIVE DIRECTOR EVANGELOS “LUCKY” PAPAGEORG can be reached at (617) 574-0741 or lucky@aaspma.org

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Contact these Ford or Lincoln Mercury dealers for all your parts needs: Imperial Ford

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Balise Ford of Cape Cod 90 High School Rd. Ext. Hyannis, MA 02601 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com

© 2019, Ford Motor Company New England Automotive Report August 2020 27

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28 August 2020

New England Automotive Report

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Stuck in the

[GUEST] EDITORIAL

TOM RICCI PAST PRESIDENT, AASP/MA & CMARA, OWNER, BODY & PAINT CENTER OF HUDSON

For those of us who are old enough to remember the original Twilight Zone, there were many episodes where people repeated their lives over and over. In the auto body world in Massachusetts, it seems we are stuck in the Twilight Zone of NO change in Labor Rate relief.

The following are real-life examples of the increases – or lack thereof – in the Labor Rate(s) over the last 19 years. The inflation figures used in these examples were derived from the Bureau of Labor Statistics’ inflation calculator:

30 August 2020

New England Automotive Report

of Labor Rate

Insurance Company #1 2001: $32/hour (“allowed”) 2020: $40/hour This is an $8 increase over 19 years. If we were “allowed” to keep up with inflation, the minimum rate would be $46.35. That is $6.35 more than what this insurer currently pays.

Insurance Company #2 2002: $32/hour (“allowed”) 2020: $40/hour

Continued on page 39

New England Automotive Report August 2020 31

[COVER] STORY By Joel Gausten

Navigating the

AASP/MA Hosts Virtual Membership Meeting

Times always change, but the strongest will change along with them.

On June 24, AASP/MA responded to current circumstances by hosting its first-ever online General Membership Meeting via Zoom. Facilitated by Bill Enross of AASP/MA Bronze Vendor Affinity Program Sponsor cPrax Internet Marketing, the two-hour online gathering updated members on the association’s ongoing efforts to address a number of critical industry issues and offered words of positivity and encouragement by veteran industry consultant and presenter Mike Anderson (Collision Advice).

Confronting Members’ Concerns In an effort to provide meaningful content for attendees, AASP/MA structured the first half of the meeting to directly respond to the top three issues identified by Massachusetts shops during a recent member survey. Not surprisingly, the financial impact of the COVID-19 pandemic was on the top of the list. With PPP loans proving to be a moving target for many small businesses, AASP/MA has been actively seeking collaborative efforts with a host of resources to help shop owners better navigate the process.

“A lot of people applied for those funds, and it’s been an ever-evolving program,” explained Executive Director Evangelos “Lucky” Papageorg. “So, when we saw this subject matter come up, we were very concerned that, as an association, we may not have the most current information and be able to give it and answer questions in this presentation.”

To help offer the Massachusetts automotive community the most accurate assistance possible, AASP/MA recently entered into a partnership with new association member MassPay (masspay.net), a Beverly-based business-tobusiness service specializing in payroll and human resources. MassPay’s services include regular online seminars 32 August 2020

New England Automotive Report

New: designed to help business owners stay ahead of developments in loan funding and other COVID-19related matters. Additionally, the association has partnered with COVIDsafe Services, an initiative created to (among other things) work with trade groups in developing best practices for their respective industries to better tackle the coronavirus crisis. (More information is available at covidsafe.services/associations/ automotive_service_providers_massachusetts.)

In addition to keeping their employees economically stable, many AASP/MA members have reported struggles in receiving proper compensation for applying disinfectant materials to combat COVID-19 during repairs. First and foremost, Papageorg advised attendees to practice caution in the verbiage they use for this procedure long before they seek payment for it, urging them to say “applying disinfectant” to a vehicle as opposed to “disinfecting” it.

“It may sound like a subtle difference or change in wording, but it’s very, very important that if you are including that as an upcharge on your estimates, supplements or final bills, you call it ‘the application of disinfecting materials.’ The thought process is that you’re minimizing your liability. If you’re stating categorically that you are ‘disinfecting’ the vehicle, you’re opening yourself up if someone does somehow contract it either at your shop or once a vehicle is returned to a customer at the end of the repair. By calling it an ‘application of disinfectant,’ you’re showing that you’re doing as much due diligence as you possibly can under the conditions to prevent the spread of the COVID-19 virus.”

With applying disinfectant still a relatively new procedure in the industry, Papageorg offered insight into growing battles between repair facilities and insurers over its legitimacy as a not-included item.

“The ongoing issue is whether or not that application of disinfectant is a cost of repair or a cost of doing business…The main question you need to ask – and making the point [about] when you’re approaching this

issue and putting it on your estimate, supplement and final bill – is whether this is a cost you would have incurred if the vehicle were not in your shop for repair. If that vehicle were not in your shop, you wouldn’t be having the potential exposure to the COVID-19 virus for your employees and subsequently when the vehicle is finished and given back to the consumer…The application of disinfectant is truly a cost of repair.”

Although some insurers have been paying shops for applying disinfectant, thus demonstrating (in Papageorg’s words) that “it is an acceptable process somewhere out there,” a considerable number of carriers are still refusing to acknowledge it on estimates.

Papageorg shared AASP/MA’s plans to submit complaints to the Auto Damage Appraiser Licensing Board (ADALB) against appraisers who are not listing all the costs – including applying disinfectant – associated with a safe and proper repair.

“Whether you’re going to get paid or not, it’s very important that you list it on your estimate, supplement and final bill. You’re not going to be able to backtrack and say, ‘I would have been paid here and here’ if we’re successful in the future with getting shops reimbursed for that.”

With the ADALB’s return to regular operations still unknown at the time of the meeting, he added that shops could address the issue in the interim by utilizing the Assignment of Rights to stand in the shoes of the customer to receive payment.

“It’s a nominal charge compared to the rest of the repair costs, so you should at least attempt to collect it from the customer. If you’re not going to do that but you have it on your final bill, you can take an Assignment of Right for that part of the process.”

Although coronavirus has halted many activities in and out of the industry, AASP/MA’s efforts on the Labor Rate front remain strong. As of the meeting, 360 Labor Rate Surveys had been completed in Massachusetts Continued on page 41

New England Automotive Report August 2020 33

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[LEGAL] PERSPECTIVE By James A. Castleman, Esq.

Cost of Repair versus Cost of Doing Business You have all heard it from insurance appraisers: “We don’t pay for that; it’s just the cost of doing business and not part of the cost of repair.” They tell you they are willing to pay the full amount to repair a vehicle to preaccident condition, but that they are not going to pay for a collision repair shop’s overhead.

General costs of doing business are not included as allowable charges in the industry’s computerized estimating systems, are not referred to in the regulations of the Auto Damage Appraiser Licensing Board (ADALB) and are not mentioned in the Massachusetts Attorney General’s auto repair regulations. Quite frankly, most people’s gut reaction probably would be that businesses have their own overhead expenses, and that overhead is not something a customer should be billed for directly.

But is this really true? If so, what is overhead and what are the costs directly billable to customers? In the collision repair industry, what items are elements of the cost of repair, and what actually are just elements of a repair shop’s overhead? What can you charge for, and what can’t you charge for?

What Is Overhead and What Is the Cost of Repair?

According to the Merriam-Webster online dictionary, overhead is “business expenses (such as rent, insurance or heating) not chargeable to a particular part of the work or product.” That seems simple enough, but it is not always so simple in practice. Beyond rent, insurance or heating, what else is just part of the cost of doing business?

Are salaries part of overhead? Generally, salaries would be considered part of overhead, but a key part of the cost of repair in the auto body business is the number of hours it is going to take a tech to make that repair.

While those hours may not directly be translated to the tech’s salary, they are certainly a determining factor. If the hours a shop charges for (at the Labor Rate that is being paid) are not going to cover their techs’ salaries, the shop cannot stay in business. Assuming the portion of a tech’s salary that is attributable to a particular repair can be determined – and it can be – is it really part of a shop’s overhead or is it chargeable to that repair?

How about the time it takes to write an appraisal or deal with the administrative costs related to a particular repair? To the best of my knowledge, it would be unusual for a repair shop to charge for the time that its appraiser takes to write an appraisal. Yet, the ADALB regulations require that repair shops prepare an appraisal for the purpose of negotiation. Clearly, that appraisal is attributable to the repair of a particular car. Why is the time for preparation of an appraisal part of overhead?

36 August 2020

New England Automotive Report

Maybe it shouldn’t be, and maybe repair shops should be charging for it and getting paid for it. Isn’t the time it takes to prepare an appraisal just as critical to a repair as the time it takes to install a part? Independent appraisers charge insurers for preparation of their appraisals, so why shouldn’t repair shop appraisers charge for preparation of their appraisals as part of the cost of repair?

Notably, the Attorney General’s auto repair regulations specifically allow for repair shops to charge for the cost of preparing an estimate of repair if they notify their customers in advance what its charge is going to be for that estimate. In light of this, why don’t shops charge for their appraisals?

In the same vein, why aren’t administrative costs related to a repair charged for or paid? It takes time to perform a vehicle intake, set up a vehicle repair file, contact the customer’s insurer, set up an appointment for an insurance appraiser to view the vehicle, negotiate the cost of repair with the appraiser, track down parts, negotiate a supplement, prepare a final bill, submit a bill to an insurer, chase down payment and perform other administrative functions related to a particular job. Since each of these tasks can be tied to an identifiable job, and since reasonable times can be determined for the completion of each of these tasks, perhaps repair shops should be charging for them. To me, these items do not seem actually to be part of the cost of doing business but rather seem to be chargeable to each particular repair a shop performs.

It also is astonishing to me that repair shops need to argue to get paid for certain procedures that are clearly attributable to a particular repair. A prime example is the recent battle that repair shops have been fighting regarding charges for pre- and post-repair vehicle scans.

With today’s cars, these scans are required to determine what needs to be repaired and whether a repair has eliminated performance issues that were compromised in a collision. Many vehicle manufacturers emphasize that scans are necessary, and the integrity and safety of a vehicle depend on the scans being performed. Vehicle scans are a relatively new phenomenon, and insurers were not used to paying for them. But they are now part of the repair of all recent vintage vehicles. Repair shops have the right to charge for them, and insurers should be recognizing their obligation to pay for them.

By the same token, certain new procedures have become necessary because of the COVID-19 pandemic. A key new procedure is applying disinfectant to vehicles, both when they come into a shop and before they leave.

Best practices require that this be done to protect both

the shop employees and vehicle owners and their families. If the COVID-19 curve is going to be effectively flattened, then proper steps must be taken to assure that vehicles are not causing the spread of the virus. The only way to do that is to apply disinfectants.

Perhaps other procedures are also now necessary. As an example, while certain shops previously may have provided pick-up and drop-off services as a courtesy and considered this as part of their overhead, now perhaps these services have become necessary to combat the pandemic and procedures that all shops should be performing as part of a repair.

Additionally, there are new procedures that shops must perform under the ADALB’s emergency pandemic appraisal directive, which allows an insurance appraiser to avoid personal inspection of a damaged vehicle but requires repair shops to provide additional documentation to the appraiser. There are the additional appraisals that the shops must perform, photos they need to take and upload, additional paperwork they must prepare, documentation they must develop and additional communications they must engage in with an insurer. Under these circumstances, perhaps all of these services should be chargeable to and payable in accordance with each repair.

Is It True That a Repair Shop Cannot Charge for Overhead?

According to investopedia.com, overhead “is important for budgeting purposes but also for determining how much a company must charge for its products or services to make a profit.” (Emphasis added.) If this is the case, why shouldn’t a repair shop (or any business) be able to specifically attribute part of its overhead to its bills for services? As shown by the examples given in this article, the dividing line between the direct elements of a repair and overhead is often a very grey area. There often is no clear distinction between the two concepts.

Further, despite the generally accepted notion that overhead expenses are not chargeable to a particular repair, there is no statute, regulation or legal case that prevents a repair shop from allocating a portion of its overhead to a particular repair and charging for it. It is not true that a repair shop cannot charge for overhead.

It is certainly done in other industries. One example that may be familiar to many readers is the fuel surcharge that the Department of Public Utilities allows tow carriers to charge when the price of diesel fuel exceeds a certain level. Isn’t the cost of diesel just an overhead expense for the carriers? Even so, it is recognized that

Continued on page 42

New England Automotive Report August 2020 37

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[GUEST] EDITORIAL Continued from page 30

This is an $8 increase over 18 years.

If we were “allowed” to use the same rate of inflation over that period of time, the reimbursement rate should be a minimum of $45.61.

Insurance Company #3 2001: $32/hour (“allowed”) 2020: $40/hour This is the same situation we’ve seen with Insurance Company #1, leaving an underpayment of $6.35 based on the same rate of inflation.

Insurance Company #4 SEE ABOVE EXAMPLES! Here are some strange/absurd facts to consider: Fact #1 All three companies are at $40/hour (as are many others in Massachusetts).

Fact #2 These three companies never – and I mean NEVER – surveyed the auto body industry. (Only State Farm does that.)

Fact #3 The “allowed” rate of $32/hour for all three examples is an average from 1988 through 2001. That equals an average increase of $4/hour over 13 years.

Fact #4 Every company licensed to write motor vehicle insurance in Massachusetts is required to become a member of Commonwealth Automobile Reinsurers (CAR).

Fact #5 Insurance companies believe that auto body shops in Massachusetts are making more money because the insurance industry’s “overall severity is up” although claim frequency is going down.

Therefore, they are paying more per claim, so their logic is we must “be making more money.”

Fact #6 There is a gross misunderstanding of gross sales.

Fact #7 A bumper for a Ford pickup has gone from $540 to $1,032.

Fact #8 A Mercedes-Benz headlamp recently went up from around $1,500 to around $2,500.

Can you say, “Price fixing and/or collusion”? Mr. Insurance Company, can you say, “ADAS”?

Another thing to consider is that “allowed” and “open free market” are entirely different things. “Allowed” simply means “permitted,” while an “open free market” means that prices and wages are determined by unrestricted competition between businesses.

Continued on page 40

New England Automotive Report August 2020 39

[GUEST] EDITORIAL Continued from page 39

I call on the Massachusetts Division of Insurance, the Massachusetts Office of Consumer Affairs and Business Regulation and CAR to stop the chokehold, price fixing and collusion (secret agreements) against independent body shops NOW! By the way, in 2008, a special commission created to examine Labor Rates (chaired by Daniel C. Crane, undersecretary of the Office of Consumer Affairs and Business Regulation) concluded in its report dated December 30 of that year that the Legislature should act if no change had occurred to the Labor Rate by June 30, 2009. This was made clear in this passage from the commission’s official recommendations:

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The Commission recommends that the General Court then consider whether or not alternate methods, including legislation, are necessary to ensure that the [L]abor [R]ate insurers pay to auto body shops for repair of damaged motor vehicles is fair and reasonable as a result of the transition to managed competition in Massachusetts motor vehicle insurance.

In closing, I’d like to provide this link to a document from the Office of Consumer Affairs and Business Regulation that ties into what I’m addressing in this editorial: mass.gov/doc/c201401-proposed-amendments-toperformance-standards-for-thehandling-and-payment-of-priva te/download. It is my opinion that this document is outdated and should be reconsidered in light of today’s automotive technology.

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40 August 2020

New England Automotive Report

[COVER] STORY

Continued from page 33

through National AutoBody Research (NABR), while more collision repair businesses continue to use NABR’s BillableGenie platform. Papageorg noted that the current survey results indicate a $57/hour average posted Labor Rate for both body and refinishing.

“We all know that’s a ridiculous figure, but it’s far above the average of $38.28 an hour and what we normally see of around $40 being reimbursed by insurance companies now.”

Additionally, the survey currently reports a $71/hour “above-average” Labor Rate and a “high rate” of $84/hour.

“None of those figures are outrageous…We have to get across that $57 an hour is only what we’re asking for on the low end, and we’re not even getting paid that amount.”

Progress Is Still Possible

0

While it is often difficult to look on the bright side in 2020, Mike Anderson believes that COVID-19 has given the collision repair industry more opportunities than it might imagine. During a video broadcast of his Axalta Coating Systems webinar “Capturing in a Crisis,” he discussed a variety of ways the pandemic could actually be used to shops’ advantage.

“What is one of the silver linings of COVID-19? It has given us the ability to look into the future…What you see right now with COVID-19 [and] the amount of work that’s coming through your door is how much work is

going to be coming into your doors 15 to 20 years from now.”

In Anderson’s mind, this phenomenon is being driven by constant evolutions in auto technology. Last year saw a drop in claims count in the US and Canada of at least two percent as a result of ADAS features in modern vehicles. Twelve months later, that decrease easily matches what it would have normally taken years to hit had this year’s lockdown not occurred.

“If COVID-19 had not happened, we might not have started to work on the skillset that we [were] going to need 10, 15 years from now when ADAS would be affecting claims count by 35 or 40 percent…I think what COVID-19 has done is brought our attention back to the things that made us successful that we should not have lost sight of.”

An industry consultant who works with shops across the country, Anderson was also quick to ease concerns that COVID-19 had led to business closings throughout the field.

“I have not heard of any shops going out of business.

I have heard of some shops that closed temporarily, but that was specifically in New York, because they’ve been hit really hard by the pandemic.”

These have not been the best of times, but the ideas and trends discussed in this most recent General Membership Meeting show that a bright future is still very much in reach.

For more insight into Anderson’s “Capturing in a Crisis” seminar, read this month’s Executive Director’s Message on page 12. For more information on AASP/MA, visit aaspma.org.

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[LEGAL] PERSPECTIVE Continued from page 37

they legitimately can tack on the surcharge to their bills.

It is also common in the legal services industry to charge for certain items that ordinarily would be considered overhead. Some law firms (particularly the larger ones) may bill clients for individual copy charges or secretarial (now often called “paralegal”) services. I know of one large firm that charges its clients for pastries and coffee served at meetings with clients at their office.

If these firms can get away with this, why can’t repair shops charge and get paid for costs that are seemingly much more directly tied to performing repair services?

What Can a Shop Do to Get Paid for These Items?

Whether you decide that you want to charge for an item you believe is clearly tied to a particular repair, an item that falls into a grey area or an item that clearly could be classified as overhead, the first thing that you must do is let your customers and their insurers know.

You can give them advance notice or conspicuously post a notice in your shop – something that is specifically approved in the Attorney General’s regulations if you want to charge for the cost of preparing an appraisal. You then must show these items on your appraisals and on your final bills.

Beyond this, the process for getting paid for these items is no different from what you might go through to

try to get paid for anything else. You are going to have to argue for these items when you negotiate with an insurance appraiser. You may decide that you want to charge your customers directly for items that their insurers won’t pay. You may want to get an Assignment of Rights from your customers and make a direct written demand to their insurer and then perhaps pursue the matter directly in court with their insurer.

It may not be easy to get paid for these items, but it is never going to happen if you don’t try.

Conclusion As it turns out, the difference between the actual cost of a repair and the cost of doing business is in the eye of the beholder. But it is worth thinking about what insurers traditionally have paid for and whether this truly reimburses you for what you need to operate your business. Consider what truly goes into repairing vehicle damage and what you may legitimately want to charge for. Do not just blindly accept the status quo or insurance company party line if you want to be able to stay in business for the long haul.

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Attorney James Castleman is a managing member of Paster, Rice & Castleman, LLC in Quincy, MA. He can be reached at (617) 4723424 or at jcastleman@prclawoffice.com.

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