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4 August 2021
New England Automotive Report
August 2021 • Volume 19, No. 8
DEPARTMENTS EXECUTIVE DIRECTOR’S MESSAGE by Evangelos “Lucky” Papageorg 6 | Perseverance: A Lesson to Learn From LOCAL NEWS 10 | AASP/MA Members, Legislators Meet to Discuss Consumer Reimbursement Reform by Joel Gausten
CONTENTS AASP/MA FEATURE The Road Ahead: AASP/MA Members Work toward Post-Pandemic Normalcy
14 | AASP/MA’s Papageorg Named Saint Catherine’s Parishioner of the Year VENDOR AFFINITY PROGRAM MEMBER SPOTLIGHT 18 | Chosen Payments
26 | The Road Ahead: AASP/MA Members
SPECIAL ANNOUNCEMENT 20 | AASP/MA Receives Legal Opinion on Paint and Materials Charges
by Alana Bonillo
NATIONAL FEATURE by Joel Gausten 22 | The Next Big Challenge: Preparing for the Electric Vehicle Wave
Work toward Post-Pandemic Normalcy
COVER STORY
LEGAL PERSPECTIVE by James A. Castleman, Esq. 34 | Is Your Customer Legally Required to Use OEM Parts? JUST FOR FUN 42 | Famous Repair Shops of TV and Film
ALSO THIS ISSUE 7 | AASP/MA MEMBER APPLICATION 8 | AASP/MA GOLF TOURNAMENT SAVE THE DATE
30 | A Better Path to Profitability: AASP/MA Helps Lead the Way by Joel Gausten
19 | AASP/MA VENDOR AFFINITY PROGRAM SPONSORS
New England Automotive Report
August 2021 5
EXECUTIVE DIRECTOR’S MESSAGE
EVANGELOS “LUCKY” PAPAGEORG
Perseverance: A Lesson to Learn From
We all know that there are easier ways to make a living than being involved in the collision repair industry. Anyone who chooses this road faces adversities that others cannot truly appreciate. These hardships include dealing with insurers that fail to meet the obligations they undertook when they sold their policies and addressing vehicle technology that is changing at breakneck speed. The ever-diminishing pool of qualified, welltrained and young technicians is just another challenge that body shop owners are faced with on a daily basis. The lack of enforcement (or rather, “selective” enforcement) of the rules and regulations governing auto insurance and collision repair only adds to the daily frustrations of being a collision repairer. “Perseverance” is the key to ultimate success in any undertaking. Perseverance is defined as “the QUALITY that allows someone to continue trying to do something even though it is difficult.” It is indeed this quality that makes collision repairers who they/we are. Daily, we fight on behalf of the consumer (who, unfortunately, is not always an ally or appreciative of our efforts) to be properly reimbursed by their insurer for the parts and procedures required to return their vehicles to the safe and crashworthy condition it was in prior to the loss. We do so knowing that we are the experts in the repair process and ultimately liable for the repair in the long run once the vehicles leave our shops. It truly should not be as difficult a task as it is. Sadly, there are far too many shop owners who have succumbed to the
pressures exerted by the insurance industry to not buck the system and instead concede to an industry whose only concern is the bottom-line profits they can make for the shareholders at the expense of the vehicle owner and the collision repair industry. It is bad enough that they have artificially suppressed and controlled the rate of reimbursement to their insured, but they continue to expect the collision repair industry to subsidize the repair process. The insurance companies are allowed to do so through the lack of enforcement of current rules and regulations that are meant to protect the vehicle owners by allowing collision facilities to repair vehicles properly and for insurers to pay fairly for that work. One area where insurers often abuse and misinterpret current regulations is reimbursement for paint and materials. P&M has been an argument just as long as the per-hour reimbursement to the insured. In the case of P&M, the regulations speak clearly on how a figure should be determined by a collision repairer and an insurance appraiser, especially when there exists a difference of opinion. Regulation 212 CMR 2.04 states: “With respect to paint, paint materials, body materials and related materials, if the formula of dollars times hours is not accepted by a registered repair shop or licensed appraiser, then a published manual or other documentation shall be used unless otherwise negotiated between the parties.” [Emphasis added.] We are all aware that far too many insurers fail to adhere to this portion of the regulation. Worse yet, far too many collision continued on pg. 45
STAFF
AASP/MA EXECUTIVE COMMITTEE
PUBLISHER
President Kevin Gallerani
SALES DIRECTOR
AASP/MA STATEWIDE DIRECTORS
EDITORIAL DIRECTOR
Director At-Large Adam Ioakim
Thomas Greco | thomas@grecopublishing.com
Alicia Figurelli | alicia@grecopublishing.com
Joel Gausten | joel@grecopublishing.com
EDITORIAL/CREATIVE COORDINATOR Alana Bonillo | alana@grecopublishing.com
OFFICE MANAGER
Donna Greco | donna@grecopublishing.com
PRODUCTION COORDINATOR
AASP/MA DIRECTORS
Vice President Matthew Ciaschini
Treasurer Dana Snowdale
Legislative Director At-Large Tom Ricci
ZONE 1 Mike Penacho Dan Wenzel John Studer
ZONE 2 Ray Belsito Joshua Fuller Brenda Lacaire
Affiliate Director Rick Fleming
Affiliate Director Bill Spellane
ZONE 3 Andrew Potter Brian Stone Phil Morin
Secretary Gary Cloutier
Collision Director At-Large Rob DelGallo ZONE 4 Kevin Kyes Jim Marshall Paul Tuscano
Joe Greco | joe@grecopublishing.com
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
AASP/MA ADMINISTRATIVE OFFICE AASP/MA Executive Director Evangelos “Lucky” Papageorg
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 © 2021 by Thomas Greco Publishing, Inc. Images courtesy of www.istockphoto.com
6 August 2021
New England Automotive Report
AASP/MA Administrative Assistant Alana Bonillo
WWW.AASPMA.ORG
Affiliate Directors Frank Patterson Jeff White Don Dowling P. O. Box 850210 Braintree, MA 02185 617-574-0741
Membership Application 2021-2022
AASP-MA P.O. BOX 850210 Braintree, MA 02185 Phone: 617-574-0741 Fax: 973-235-1963 Email: admin@aaspma.org
Please complete this form and return to our office via mail, email or fax with your dues payment. Thank You! BUSINESS INFORMATION Massachusetts Shop Registration # __________________ Total number of Staff (Techs, office, Mgrs)________ Company’s Official Name: ________________________________________________________________________________________________ Business Physical Address: _______________________________________________________________________________________________ Business Mailing Address (If Different): ________________________________________________________________________________
Telephone Number: (______)-________-___________ Fax: (______)-________-___________ Website: _______________________________________________________________________________ Social Media: _FB: _______________________________________________TWITTER:_______________________________________________ DUES STRUCTURE Type of Membership (Collision): C: ____ Annual Dues: $495 / 12 Months* BUSINESS CONTACTS PRIMARY CONTACT ACCOUNTS PAYABLE Name: _______________________________________________________ Name: _______________________________________________________ Email: _______________________________________________________ Email: _______________________________________________________ CONTACTS WHO WISH TO RECEIVE NEWSLETTERS, EVENT INFORMATION, & LEGISLATIVE UPDATES Name: __________________________________________________ Email: _______________________________________________________
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 ___/____/2021)
Yes � Please send me information regarding the following MONEY SAVING BENEFITS: � Dental plan � Healthcare plan � Credit card processing � All three PLEASE ENCLOSE PAYMENT WITH YOUR MEMBERSHIP APPLICATION
Check# : _______________ (IF collision shop please note your RS# on the memo line of the check) OR CC #: ______________________________________________________________________ EXP: ________/___________ CID: _________________ Billing Address: ______________________________________________________________________________________________________________ Name On Card: _____________________________________________ Signature: ____________________________________________________ Are you a member of another State or National collision Industry related associations? Yes or NO, if Yes Select which ones, SCRS:_____, ASA:_____, STA:_____, Other: ____________________________________________________________ Are you I-CAR Gold Class:_______, ”On the road to Gold”: _______ Are you a member of APN Yes or NO Are you OEM certified Yes or NO? For which OEM lines: ____________________________________________________________ I hereby make this application for membership with the Alliance of Automotive Service Providers of MA (AASP/MA) for membership dues 2021-2022 as provided for in this contract. *Membership Dues are for a twelve month period commencing on your anniversary month of membership.
REV 07/21 New England Automotive Report
August 2021 7
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New England Automotive Report
August 2021 9
[LOCAL] NEWS
by Joel Gausten
AASP/MA Members, Legislators Meet to Discuss Consumer Reimbursement Reform As part of its ongoing legislative effort to ensure that consumers receive proper reimbursement from their automobile insurers for collision repairs, AASP/MA recently welcomed various legislators and association members for a special gathering in the Southeastern part of the state to discuss the many benefits of House Bill 1111/Senate Bill 709. Filed in the House by Representative James Hawkins of Attleboro and in the Senate by Senator Michael O. Moore of Worcester, the bill seeks to set a minimum reimbursement rate for auto body labor paid by insurers to Massachusetts claimants. This would enable the consumer to have a choice in selecting a facility and not be limited to just shops that are willing to work for a substandard rate. The legislation aims to increase the average auto repair consumer reimbursement rate in Massachusetts based on the increase in the Consumer Price Index (CPI) between 1988 and the present. Insurers would be allowed a two-year adjustment period to increase their consumer reimbursement rate to the appropriate amount, which is currently estimated to be approximately $68 an hour versus the current average rate of approximately $40 an hour. Addressing potential pushback on the bill by insurers, AASP/ MA Lobbyist Guy Glodis provided a realistic perspective on the common argument that passage of legislation of this nature would result in elevated insurance premiums. “The insurance industry is always going to say, ‘We can’t afford it.’ With that said, record profitability by the insurance industry is publicly disclosed. Warren Buffett has said that the most successful stocks over time have been insurance; they have consistently done well over the last three or four decades. But to flip it, when insurance reform started in 1988, we had one of the highest Labor Rates in the country. In 2021, we’re the lowest Labor Rate in the nation. One side has record profitability; on the other end, we have the lowest rate in the country. I think this bill really addresses that issue.” The need for a fair and reasonable consumer reimbursement rate is critical in today’s collision repair marketplace, particularly in light of the escalating equipment, tooling and training demands impacting body shops throughout the Commonwealth. Shops that have made the needed investments in order to perform proper repair procedures on modern vehicles are struggling to remain profitable under the average rates paid by carriers, thus leading them to make the difficult choice to pass these costs on to consumers.
“In order to keep pace with rising costs, shops are needing to start charging the consumer for the shortages that aren’t being paid for by the insurance company. That’s wrong,” AASP/MA Executive Director Evangelos “Lucky” Papageorg explained. “The insurance company is selling an indemnification policy that is supposed to be making the person whole again. The customer shouldn’t be put into the predicament of having to come up with money after they’ve already paid for their insurance policy.” AASP/MA Legislative Director at-Large Tom Ricci (Body and Paint Center; Hudson) explained that the need for this legislation stemmed from recommendations made several years ago by a special state-sanctioned committee comprised of auto body and insurer representatives that was created to study rate-setting practices in Massachusetts. At the completion of this study in 2008, then-Office of Consumer Affairs and Business Regulation representative Dan Crane recommended that the Legislature should act if insurers failed to do something to address the current reimbursement rate by the following year. With no action taking place since that time, the need for passage of House Bill 1111/ Senate Bill 709 is stronger than ever. AASP/MA member Jack Lamborghini (Total Care Auto Repair; Raynham) encouraged the legislators to spend time at association member shops to gain an even greater sense of the major issues affecting consumers and the repair businesses that serve them. “If there were no insurance, everybody here would be very comfortable competing for and posting their own rate – whatever it happened to be – based on what their cost of doing business was,” he said, later adding, “The insurance companies have interjected themselves in the middle of this, and we have big business trying to control small business to the detriment of every consumer and the entire collision repair industry.” Pleased to have had an opportunity to express AASP/MA’s hopes and concerns to the legislators in attendance, Papageorg remains confident that proper consumer reimbursement will soon be a reality in Massachusetts. “We have already made tremendous strides during this current legislative session to have our voices heard on behalf of consumers, and we look forward to further promoting this legislation when it is heard in the near future.” For more information on House Bill 1111/Senate Bill 709, please visit aaspma.org or contact Evangelos “Lucky” Papageorg at (617) 574-0741, ext. 2 or lucky@aaspma.org. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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10 August 2021
New England Automotive Report
New England Automotive Report
August 2021 11
12 August 2021
New England Automotive Report
New England Automotive Report
August 2021 13
[LOCAL] NEWS
AASP/MA’s Papageorg Named Saint Catherine’s Parishioner of the Year AASP/MA Executive Director Evangelos “Lucky” Papageorg recently received the Parishioner of the Year Award at the Metropolis of Boston Ministry’s awards ceremony at Saint Catherine’s Church in Braintree. Papageorg’s honor was originally slated for 2020 but delayed to this year in light of COVID-19. Papageorg credits his father, Xenophon, for his strong family ties, work ethic and commitment to community. As a child, he and his family attended services at the Annunciation in Boston before becoming parishioners of Saint Catherine’s while at its Quincy location. He has been a strong and devoted member of the church since its move to Braintree and has served in many capacities. He currently assists with Sunday services as the sexton as well as overseeing the altar boy ministry. Those who have attended and worked at Saint Catherine’s Greek festival recognize him as a tireless worker whose main goal is to keep the food serving lines well stocked from the kitchen. Papageorg looks forward to serving Saint Catherine’s Church and the community for many more years to come and is extremely honored and humbled by the recognition bestowed upon him as a Parishioner of the Year. Congratulations, Lucky!
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
14 August 2021
New England Automotive Report
Top: left to right: Bostonia Braoudakis, 2021 Parishioner of the Year Award winners Ann and Dr. Spyros Braoudakis, Father Theodore Barbas (Saint Catherine's Greek Orthodox Church, Braintree) and Lucky Papageorg Bottom: left to right: Father Theodore Barbas (Saint Catherine's Greek Orthodox Church, Braintree) Juli Ra-Goodman, His Eminence Metropolitan Methodios of Boston and Lucky Papageorg (Photo by Areti Bratsis)
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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New England Automotive Report
August 2021 15
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16 August 2021
New England Automotive Report
[VENDOR AFFINITY PROGRAM] MEMBER SPOTLIGHT
Chosen Payments AASP/MA is pleased to announce that it recently formed an exclusive strategic partnership with Chosen Payments (a division of Aurora Payments), which has signed on as a Silver-level participant in the association’s Vendor Affinity Program. Through this new partnership, the national credit card processor now provides AASP/MA members with discounted, member-only credit card processing rates. These special rates are only available to independent automotive professionals and represent another member benefit provided by the association. Through Chosen Payments, AASP/MA members will receive exclusive low-cost credit card processing. In addition, members have access to automated clearinghouse (ACH) check processing, check guaranteeing, customized white-label mobile applications and other payment processing applications and financial services. Valuable member benefits also include drastically reducing AASP/MA members’ costs for accepting credit card transactions. More than a partner, Chosen Payments serves as a business consultant for merchants nationwide that accept electronic payments. Thrilled to offer its expertise to the AASP/MA community, Chosen Payments is committed to providing personalized services, support and solutions to every member business that takes advantage of the benefits available.
throughout the nation. The company offers a Free Credit Card Processing program that can eliminate credit card fees forever – meaning higher profitability for member shops! The new partnership includes a bold, side-by-side comparison of all AASP/MA members’ current credit card processing fees. If Chosen Payments is unable to beat the current processing rates of any AASP/MA member, it will pay the member $500 for simply participating in a rate comparison. Additionally, all AASP/MA members receive a lifetime rate guarantee. To help AASP/MA shops get the most out of Chosen Payments’ services, McKee suggests that they first need to get an understanding of how their team members are currently running credit card transactions. “Take a look at your statements for the last two or three months and your fees divided by your volume. Then, look at how your shop is accepting payments. I was recently at a body shop, and I asked the woman behind the counter how they enter the card’s security code on the screen when she accepts a credit card payment over the phone. She replied that she either skipped it or entered the shop’s zip code. Doing that carries a big risk if you have a chargeback, because you’ve entered bad data.” Best of all, AASP/MA members receive exclusive benefits and incentives unavailable to the general collision repair industry in
“One of the biggest things we talk to people about when we’re trying to explain the importance of their credit card processing is that a lot of companies know their FedEx driver or parts delivery person by name but are not really familiar with the people handling their money,” Sarah McKee, Chosen Payments’ vice president of strategic partnerships and alliances, observes. “We’ve decided to take a 100 percent partnership approach with our customers in the automotive industry through continuously educating our merchants to ensure they have the best systems in place. We don’t just ship a customer a terminal; we want to understand how the business is operating and how we can advise them to be more efficient. We’re accountable to your industry; that makes AASP/MA members – our customers – feel better because they know we are going to take care of them.” Chosen Payments has a large presence within both the nonprofit and automotive sectors, including businesses of all sizes
Massachusetts. “One of the biggest benefits of being a part of an organization like AASP/MA is that instead of being looked at as a $20,000- to $40,000-a-month shop, you’re looked at in bulk volume,” McKee says. “They’re going to get the processing fees as if they were doing $500,000 a month. We’re going to look at members’ individual statements and analyze them, see how they’re processing credit cards now and reduce those costs.” Lock in your processing rates today with Chosen Payments’ unmatched customer service and exclusive low rates for AASP/MA members. For more information about the partnership, contact Sarah McKee at (616) 607-0051 or Sarah.McKee@chosenpayments.com or Sean Broderick (sales representative) at (443) 866-1786 or sean. broderick@risewithaurora.com.
18 August 2021
New England Automotive Report
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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August 2021 19
[SPECIAL] ANNOUNCEMENT
AASP/MA Receives Legal Opinion on Paint and Materials Charges In an opinion letter recently received by AASP/MA, attorney James Castleman provides a legal perspective in regard to the requirements for paint and materials charges. In particular, the letter addresses AASP/MA’s inquiry regarding the effect of the Agreement for Judgment entered in the case of Commerce Insurance Company, et al v. Auto Damage Appraiser Licensing Board. The association asked Castleman for his opinion on how the case may impact the determination of such charges and whether an appraiser is required to use a published manual or other documentation to determine paint and materials costs if the formula of dollars-times-hours is not accepted by a registered repair shop or BEST CHEVROLET_NEAR0320.qxp_Layout 1 2/12/20 licensed appraiser.
Castleman’s opinion letter states that the below current version of the ADALB’s regulation is clear as to what is required as is not affected by the holding of the Commerce v. ADALB case: With respect to paint, paint materials, body materials and related materials, if the formula of dollars times hours is not accepted by a registered repair shop or licensed appraiser, then a published manual or other documentation shall be used unless otherwise negotiated between the parties. [Emphasis added.] “In my opinion, the Commerce v. ADALB case has no applicability to current 12:02 PM Page 1 requirements for determination of the cost
of paint and materials when a licensed auto damage appraiser is preparing an appraisal of motor vehicle damage,” he writes. “That was because the case was based on specific language that was in the regulation issued by the ADALB but which is no longer in the regulation. The ADALB amended its regulation soon after the Agreement for Judgment was entered, and did so in response to the Judgment, in order to address and negate the effect of the case – as has been confirmed to me in no uncertain terms by a member of the ADALB at the time.” Castleman’s complete opinion letter to AASP/MA (and the basis for his position) is available in the Members Only section of aaspma.org.
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August 2021 21
[NATIONAL] FEATURE
The Next Big Challenge:
by Joel Gausten
Preparing for the Electric Vehicle Wave This industry is never short of moving targets in terms of automotive technologies, but the rise of electric vehicles (EV) is one item that needs to be on top of every collision repair facility’s list of things to know about now. If you think EVs are simply an exotic and specialized segment of the automotive market that will not impact the work you perform, it’s time to take a closer look at where automakers plan to be in just a few short years. For example, General Motors recently made headlines by announcing plans to stop making gasoline and diesel-powered vehicles by 2035. GM drove home its commitment to EVs in a statement posted on its consumer-facing website (gm.com/electric-vehicles.html): GM is on its way to an all-electric future, with a commitment to 30 new global electric vehicles by 2025. We are aggressively going after every aspect of what it takes to put everyone in an EV, because we need millions of EVs on the road to make a meaningful impact toward building a zero-emissions future. GM is positioned to design, engineer and produce EVs for every style and price point, and we are rapidly building a competitive advantage in batteries, software, vehicle integration, manufacturing and customer experience. 22 August 2021
New England Automotive Report
Of course, motions by GM and other car manufacturers to board the EV train with greater frequency mean that experienced technicians are needed to properly repair and service such vehicles – and the learning curve will be massive. As just one example of the change about to hit shop floors, EVs generally have fewer than 20 moving parts versus the more than 2,000 found in traditional combustible-engine vehicles. For some OEMs, the seeds for EV training are largely being planted at the dealership level for the time being. As of this writing, Audi is one OE that is focusing on getting its dealers up to speed on EVs first before branching out to other facilities. “If you look at the tool packages that are required, the investment is fast approaching $100,000 just for hardware – and then there is that pesky tech training issue,” Mark Allen, collision and equipment manager for Audi of America, explained in a recent conversation with New England Automotive Report. “These are highly specialized skills with a danger quotient applied.” For its part, I-CAR has been actively working to stay ahead of the EV trend and provide training to the industry at-large. The following is a small sampling of the I-CAR EV-related courses currently available, with some developed and launched within the last handful of months:
Hybrid Vehicle Identification & Damage Analysis This course explains the different types and parts of hybrid and electric vehicles. Hybrid vehicle identification and important safety procedures when inspecting electrified vehicles, including steps to disable a hybrid system and an overview of the cooling systems for a high-voltage battery, are also covered. Introduction to Electric Vehicles This course introduces the different types of EVs on the road today and identifies the unique parts of an EV and the purpose of those parts. Video is also included to highlight the steps for operating an EV for the first time. Understanding High Voltage Safety This is a course that explains the elements of electricity and the relationship between voltage, current and resistance with highvoltage systems. This course describes the effects of electricity on the body and lists the required PPE when working around high voltage. Electric Vehicle (EV) Initial Inspection & Handling This course discusses initial inspection and safety considerations for EVs upon arrival at a repair facility. Precautions and considerations for high-voltage batteries and systems and vehicle staging/handling of damaged vehicles are also covered.
Electric Vehicle (EV) Damage Analysis This course reviews necessary safety precautions when working with EVs. It provides detail on an EV’s high-voltage components, safety precautions and relevant non-high-voltage parts. Jeff Peevy, I-CAR’s vice president of technical products, programs and services, pledges that the organization will be there for technicians and owners every step of the way as they work to quickly adapt to working on this new breed of automobile. “Today, the big thing seems to be battery-powered electric vehicles, but that’s just the next thing – there’s stuff lining up behind that. I-CAR is not unlike a collision repair shop; we have a lot to invest in and a lot to learn. We needed to set ourselves up so that we culturally could take our ability to expedite new technology, research it, learn, work with the car manufacturers and convert that into training quicker and quicker – and just be more efficient and effective at it.” Although shops have plenty to contend with in the here and now, electric vehicles are poised to greatly impact – and perhaps overwhelm – any facility that is not staying on top of the trend and the resources currently available to prepare for the near future. Look for ongoing news and information on this topic in future issues of New England Automotive Report. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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August 2021 23
[AASP/MA] FEATURE
by Alana Bonillo
The Road Ahead: AASP/MA Members Work toward Post-Pandemic Normalcy
To say the last 18 months have been a challenge would be an understatement. But as the collision repairers of the Commonwealth have proven time and time again, it takes a lot to keep this industry down. Now that the COVID-19 threat has begun to subside and things are finally beginning to resemble regular life, AASP/ MA and its member shops are brushing themselves off and picking up in order to emerge stronger than ever. Thankfully, the association never missed a beat during the entire crisis. AASP/MA worked daily to provide members with vital resources about PPE protection and PPP loans and continued to bring shops together by way of monthly virtual educational seminars and training meetings. With busier times on the horizon for shops as the summer months come into play, the association is now working to help make the transition for its members as smooth as possible. “We will continue as we did throughout the COVID-19 time to provide the assistance to our members, their customers and the industry,” AASP/MA Executive Director Evangelos “Lucky” Papageorg comments. Looking back over this past year plus, he believes there were some positives among the hardships in the way member shops continued to come together in a web-based format. “Through meetings and seminars via the Zoom platform, we stayed in touch with our membership so that they knew they were not alone in the battle to survive. We will continue to service their needs in whatever way they need. 26 August 2021
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“In some instances, the further apart we were forced to stay, the closer together we became,” he adds. “Being forced to communicate through electronic methods in many instances was a time-saving benefit.” Unfortunately, the contactless methods that insurers adapted created downsides in the way shops were forced to negotiate. Papageorg says there were far too many instances of insurers taking advantage of the situation. However, he does see an unexpected benefit in that shop owners had to improve their methods of documentation and pay more attention to what they were getting back from insurance companies. On the downside, this also created more administrative tasks for shops with no increase in reimbursement. Thankfully, things are looking up for collision repair businesses, as many are reporting an increase in the amount of vehicles they see coming in. Of course, compared to this time last year, it’s easily like comparing night and day. The better news is that it appears as though business is beginning to resemble what it was like before the pandemic started. Rick Roberts of Midway Collision Center confirms business is looking up at his Norton-based shop. “Things are starting to pick up and get busier. We are on the road to getting back to where things were.” AASP/MA Zone 3 Board member Andrew Potter (North Amherst Motors, Inc.; North Amherst) is witnessing business coming back but is experiencing understaffing in light of the pandemic. As a result, he has been forced to be more handson than he has been in the past.
“We’re picking up momentum, but we are still staffed thinner [than before].” Things are on the upswing at Auto Body Builders, Inc. in Middleton, where AASP/MA Zone 4 Board member Paul Tuscano is seeing his schedule increase. Additionally, he has begun to venture into other possible avenues beyond the traditional auto body realm, including work on heavy equipment, trucks or other larger vehicles. “Even though there are more cars out there, we have noticed a slight decrease every year as cars are getting more advanced and are equipped to avoid accidents.” As COVID-19 cases continue to decline and more of the population becomes vaccinated, AASP/MA looks forward to once again hosting in-person events and hopes to conduct its first face-to-face event in October. Papageorg also plans to attend AASP/NJ's NORTHEAST® Automotive Services Show in Secaucus, NJ this September 10-12. “Once we are able to resume faceto-face interaction, visit shops and hold meetings where attendees actually see others around them, AASP/MA will once again gain the momentum we were experiencing in local chapter meetings and an increase in membership. There is a lot to be said for seeing a colleague in the room with you versus their face in a little block on your computer screen. The in-person interaction is more conducive to conversation and the exchange of ideas while nurturing true camaraderie. We are an ‘Alliance’ that is truly strengthened when we are together.” PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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New England Automotive Report
August 2021 27
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August 2021 29
[COVER] STORY
by Joel Gausten
A Better Path to Profitability: AASP/MA Helps Lead the Way
There isn’t a single business in collision repair that doesn’t want to make more money, but sometimes a shop neglects to realize that the key to improving its bottom line is already in its hands. This was the critical takeaway from AASP/MA’s most recent General Virtual Membership Meeting, which featured “Estimating Solutions for Profit,” a guest presentation by Lee Rush of Silver-level Vendor Affinity Program (VAP) sponsor Sherwin-Williams Automotive Finishes. The hourlong discussion provided attendees with insights into how to incrementally improve profitability through greater estimate accuracy, eliminate in-shop inconsistencies and – perhaps most significantly – potentially beat insurers at their own game. A large portion of Rush’s presentation detailed what he called the “five-to-10 percent strategy” of increasing profits through consistent processes and procedures. By addressing “leakage” such as not-included items and small material compensation that is consistently missed on estimates, a facility could develop ways to add five-to-10 percent increases to each repair, gradually adding up to considerable additional revenue over time. “The missing piece would be that small, incremental increase that we would get that falls straight to net profit.” 30 August 2021
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Most important of all, shops that utilize this “five-to-10 percent” philosophy could succeed in counteracting similar methods already employed by the insurance industry. “It’s the same strategy that’s being used in reverse against the shops. The insurance companies have rarely come to our industry and hit us hard with massive reductions in compensation. It’s usually small, incremental and tolerable decreases […] The reality is, for 20-something years, they’ve been eroding the compensation that we get to restore vehicles. “We’ve got to flip the script and begin incrementally and cumulatively improving the consistency of our compensation,” he added. Rush recommended a host of resources that could benefit shops in developing a strategic plan for improved estimatics and profit, including the Society of Collision Repair Specialists’ (SCRS) Guide to Complete Repair Planning, oem1stop.com, the I-CAR Repairability Technical Support Portal and the quarterly “Who Pays for What?” surveys conducted by Collision Advice and CRASH Network. Although OEM websites are obvious resources for recommended/required repair procedures, he cautioned that end-users must access them on a regular basis to receive the most accurate and up-to-date information.
Above all, Rush stressed that the collision industry needs to focus greater attention on providing consistent training to employees. “You can be an expert in a particular repair operation for a particular make and model, but you could wake up in the morning and be a novice.” Not surprisingly, he noted that a “five-to-10 percent” strategy would only thrive if a shop puts in the work to establish a system of checks and balances to identify and address missed profit opportunities. “The opportunity for us lies within consistency. I’m sorry, but if you’re depending upon your memory, then you’re going to have some oversights. You’re going to miss those small, incremental, compensable operations or materials – and you’ve got leakage.” Additionally, he emphasized the importance of inshop standardization as one tool to achieve higher profits, encouraging attendees to create scenarios where “every station – whether it’s a laptop or a PC in the front – is standardized to ensure consistent analysis and easy access to all the data in your estimating systems.” Above all, Rush stressed that the collision industry needs to focus greater attention on providing consistent training to employees. He noted that while shops typically train their front-end staff every three to five years, insurers do the same for their adjusters and appraisers every 45 to 60 days. “There’s a training deficiency in the industry, and it’s in the front of our stores in general.” AASP/MA members are strongly urged to view the entire “Estimating Solutions for Profit” video presentation, which features discussion points and information beyond what is featured in this article. The entire presentation is available in the Members Only section of aaspma.org. HELPFUL LINKS: OEM1STOP: oem1stop.com SCRS’ Guide to Complete Repair Planning: bit.ly/SCRSguide “Who Pays for What?” surveys: crashnetwork.com/collisionadvice I-CAR Repairability Technical Support Portal: rts.i-car.com Sherwin-Williams Automotive Business Development Training courses: ecoleanuniversity.com PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
New England Automotive Report
August 2021 31
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New England Automotive Report
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New England Automotive Report
August 2021 33
[LEGAL] PERSPECTIVE by James A. Castleman, Esq.
Is Your Customer Legally Required to Use OEM Parts? I want to start by saying that I have no personal stake in opposing the use of aftermarket parts when making vehicle repairs. I do recognize, however, that original equipment manufacturer (OEM) parts are often of better quality, fit and function than their aftermarket replacements. And at least in some circumstances, aftermarket parts may be less safe to use than OEM parts. But I also recognize that some aftermarket parts are better than others, usually cost less than OEM parts and that your customers sometimes are willing to trade a lower cost of repair for what they perceive as just a lesser cosmetic appearance or a part that may not last quite as long or come with the same manufacturer warranty as an OEM part. I further recognize that regulations issued by the Commissioner of Insurance appear to require in many instances that a rebuilt, aftermarket or used part be specified by appraisers when determining the cost of an insurance-covered repair. Nevertheless, there are times when your customer legally may be required to use new OEM parts when their car needs to be repaired, and there may be other times that the use of OEM parts may be to their significant advantage even if really not legally required. The Leased Vehicle If your customer’s vehicle is leased, make sure that they read their lease before they authorize repairs! All leases require that lessees repair their vehicles if they get damaged. Many leases – if not most – also REQUIRE (to varying degrees) that the lessee use only OEM parts when making repairs. A sample clause from one major lessor’s standard lease says: You will maintain and repair the vehicle to keep it in good condition. Replacement sheet metal must be new original equipment manufacturer parts. Other replacement parts must be original equipment parts or parts of equal quality and design. (If insurance will pay for repairs, ask your insurance company to specify original equipment company sheet metal.) [Emphasis added.] With regard to sheet metal, the lease absolutely requires the use of new OEM parts in all instances, and further requires your customer to affirmatively ask their insurer to specify OEM sheet 34 August 2021
New England Automotive Report
metal. If aftermarket sheet metal is used, then your customer has defaulted on their lease to the same extent as if they had stopped making their lease payments. (By the way, if an insurer refuses to pay for OEM sheet metal, it may be worth suggesting that your customer call their leasing company to ask them to contact the insurer, since the lessor – which is a named insured under the applicable policy – possibly could have more clout with that insurer.) Even for other parts, the lease requires the use of either OEM parts or parts “of equal quality and design.” But let’s face it: Are aftermarket parts ever “of equal quality and design” to the OEM parts they replace? Unless an aftermarket part is an exact replica of the OEM part (being made of the exact same materials, having the same weight, having gone through the same manufacturing process and having met the same strength, safety and quality tests as the OEM part), how can you ever say that it is “of equal quality and design” as the OEM part? I don’t believe that you can – unless the aftermarket manufacturer has stolen the trade secrets of the OEM manufacturer and illegally made the exact same part. Other leases may not have the exact same contract terms in regard to use of OEM parts. But they all do require the lessee to make repairs to a damaged vehicle, and they all do require the use of high standards when repairs are to be made. A sample clause from a different major lessor’s standard vehicle lease says: You are responsible for all maintenance, repair, service, and operating expenses of the Vehicle. You agree to keep the Vehicle in the same condition as when you received it, except for reasonable wear, to maintain the vehicle so that any warranties or similar agreements remain effective… [Emphasis added.] While this lease clause does not specifically refer to OEM or aftermarket parts, it does require that the lessee keep their car in the SAME condition as when they got it, except for “reasonable” wear. It is suggested that if an aftermarket part is used for repair, then the vehicle is no longer in the “same” condition as when the lessee first received it, and use of an aftermarket part would not seem to meet any objective definition of “reasonable” wear. continued on pg. 36
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New England Automotive Report
August 2021 35
[LEGAL] PERSPECTIVE continued from pg. 34 Moreover, when the lessee received their vehicle, it had all OEM parts. All of those parts were covered by an OEM warranty. If an OEM replacement part is used in a repair, then that part still has the OEM warranty, and the whole car continues to be covered by the existing OEM warranty. On the other hand, when an aftermarket part is used, it never is covered by a warranty issued by the original vehicle manufacturer, and the use of the aftermarket part in fact may void the original manufacturer’s warranty for the entire vehicle. If that aftermarket part subsequently fails, then the original manufacturer is not going to cover the cost of replacement of that part, nor is it going to cover the cost of OEM parts that are damaged or that fail as a result of the failure of the aftermarket part. Additionally, the original manufacturer is not going to be on the hook for any personal injuries that may result from the failure of the aftermarket part – including from failure of that carefully engineered vehicle to perform properly when it is in a subsequent accident.What are the consequences of a lessee authorizing the use of aftermarket parts for repairs of a leased vehicle? Well, it would be a violation of the terms of the lease, allowing the lessor to take whatever actions it believes appropriate under the circumstances. These include declaring the lessee to be in default, thereby allowing the lessor to terminate the lease, repossess the vehicle and to charge the lessee for damages incurred – potentially including re-repair of the vehicle with OEM parts or charging the lessee for the decrease in value of the vehicle caused by the use of those parts. At the very least, it allows the lessor to add such charges to the amounts owed at the end of the lease. It also potentially may expose the lessee to being personally liable for a claim for personal injuries resulting from the failure of an aftermarket part. The Financed Vehicle Vehicle owners who have a car loan should also carefully read their finance agreement. Upon review of only a few such agreements, I did not see clauses that specifically refer to aftermarket parts. However, such clauses may exist, and I would not be surprised to see them being used in the future. But similar to leases, all finance agreements do require the vehicle owner to properly maintain their vehicles and to repair them if they are damaged – and to always protect the finance company’s interest in the vehicle. That means that the vehicle owner is legally obligated to have proper repairs made that do not reduce the value of the vehicle so that the company’s financial interest in the car is not compromised. If the use of aftermarket parts makes the repaired vehicle less valuable, then the owner of the vehicle may well be violating their loan agreement. While it may be difficult for car owners to understand, they may well be compromising their own financial interests if they 36 August 2021
New England Automotive Report
While it may be difficult for car owners to understand, they may well be compromising their own financial interests if they authorize the use of aftermarket parts. authorize the use of aftermarket parts. After all, what happens when that vehicle is in an accident and is totaled six months later? One of the factors that the insurer will consider when paying that total loss settlement is the condition of the vehicle at the time of the loss. And if they factor in that aftermarket parts were used to make repairs rather than OEM, then that total loss payment may well be lower than it otherwise would have been. So, once the finance company gets paid its share of the insurance proceeds, the excess amount being paid to the car owner is going to be less – or the deficiency being charged to the car owner is going to be greater – than it would have been. No Lease and No Loan Even if a vehicle is not leased and if there is no loan remaining, your customers should understand that, even if legal, their authorization of the use of aftermarket parts may be greatly to their disadvantage. Unless they are going to drive their car into the ground, then the reduction in value of the vehicle because of the use of aftermarket parts is going to be felt when it comes time to trade in or sell that vehicle. Even if they are going to drive their car into the ground, then the salvage value of the vehicle may be reduced because of the use of such parts. Do they think that no one will know that they used aftermarket parts? In today’s world of “show me the CARFAX,” everyone is going to know. How much can a dealer reduce the value of your customer’s trade-in once they know that aftermarket parts were used to repair the car? How much less can an independent buyer purchase the car for once they know the issue? What is the salvage yard buying the vehicle for, and what parts do they think they can actually use? It is important that your customers know that authorizing the use of aftermarket parts now may reduce the value of their vehicle in the long run. That may encourage them to contact their insurer now to try to get it to pay for OEM, or perhaps it may get them to pay the additional amount out of their own pocket if they know it is going to cost them more later. continued on pg. 38
New England Automotive Report
August 2021 37
0620_Volvo_Quarter.qxp_Layout 1 5/11/20 4:53 PM Page 1
[LEGAL] PERSPECTIVE continued from pg. 36
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Conclusion It is important for your customers to know what they are legally obligated to do in regard to the use of aftermarket parts in the repair of their vehicles. If their car is leased or financed, it is imperative that they read and understand their lease or finance agreement. They may be surprised as to what they are required to do. It is important to know what the legal and the financial consequences are of authorizing the use of aftermarket parts and what your customers may be giving up in doing so. Even though they are not legally required to use aftermarket parts, your customers should understand the long-range financial and safety-related consequences of doing so. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
Please contact the following dealers for your Volvo parts needs: Prime Volvo Cars 1030 Hingham Street Rockland, MA 02370 Parts Direct: 781-927-3520 Fax: 781-927-3592 www.volvocarssouthshore.com
Volvo of Wellesley 962 Worcester Street Wellesley, MA 02482 Parts Direct: 800-247-3033 Fax: 508-651-1220 www.volvoofwellesley.com
MASSACHUSETTS
Attorney James Castleman is a managing member of Paster, Rice & Castleman, LLC in Quincy, MA. He can be reached at (617) 472-3424 or at jcastleman@prclawoffice.com.
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Cleveland Auto Body, The Sopranos Run by Big Pussy’s widow, Angie Bonpensiero, the shop appears in only a few episodes of the HBO hit TV series, but it made for a memorable storyline. In one episode, Phil Leotardo shows up in a neck brace, looking to cause all sorts of drama over the repair of his vehicle. Declaring, “This is unacceptable,” he points out any mark he can find and insists the passenger seat is “askew.” Tony Blundetto reasons that the repaired car “seems okay,” while a frustrated Angie declares that Phil is “hosing” her business “for a $2,000 factory seat.” We think the problem may have been Phil.
Delta House, National Lampoon’s Animal House Although the iconic fraternity Delta House of the 1978 movie National Lampoon’s Animal House may have been home to many activities, auto body work wasn’t usually among them. However, when Flounder wrecked his older brother’s Lincoln Continental, the Deltas turned it into the “Death Mobile,” causing quite the commotion – and collision – at a parade to get revenge on Dean Vernon Wormer. Looks like maybe some Deltas could have had a career in the repair field.
Reno's "Jump Pass" Auto Body Shop, The Best of Times Auto repair shop owner Reno Hightower (Kurt Russell) thought his football days were over until an obsessed banker and failed former player, John Dundee (Robin Williams), blackmails him into giving the game one more try for a chance to get the financing to save his struggling business. As we learn from one scene where Hightower welds a front-end while wearing a tuxedo, his reborn football career doesn’t stop him from working on cars.
D•T Precision Auto Shop, The Fast and the Furious If any set of movie characters needs a repair shop the most, it’s this street racing crew. So, it’s a good thing that D•T Precision Auto Shop is run by their leader Dominic Toretto (Vin Diesel). The shop is first shown in the debut 2001 installment of the long-running film franchise. Brian (Paul Walker) shows up with a wrecked Supra that the crew winds up restoring. Once it’s all shiny and new, Dom and Brian take it for a test drive and – of course – wind up challenging a Ferrari F355 Spider to a race. After all, they are fast and furious!
Teller-Morrow Automotive Repair, Sons of Anarchy In the world of Sons of Anarchy, Teller-Morrow was an automotive repair facility and a whole lot more. When cars weren’t being driven in and out of bays to serve the people of the fictional town of Charming, CA, it served as a front for a close-knit outlaw motorcycle club: Sons of Anarchy Motorcycle Club, Redwood Original (SAMCRO).
Cervantes Mufflers and Brakes, Chicago P.D. The police drama Chicago P.D. has kept millions riveted for nearly a decade now. One such fan is an AASP/MA member who coincidentally called us just as we were putting the finishing touches on this month’s “Just for Fun” to say that he spotted Cervantes Mufflers and Brakes, a colorful shop in the heart of the Windy City, in the background of a scene while catching up on a past season. If a TV show aims to present real life, then the chances are high that a body shop will turn up on the screen sooner or later!
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Famous Repair Shops of TV and Film
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EXECUTIVE DIRECTOR’S MESSAGE continued from pg. 6
repairers have laid down and given up on getting properly paid for their costs and a fair markup on P&M. They are accepting “BECAUSE I SAID SO” as the final word. Recently, an AASP/MA member shop took on the battle and ultimately persevered against a national insurance company that considered itself “exempt” from Massachusetts laws and regulations. One aspect of the anti-trust laws prohibits one from discussing the “specific business practices of particular collision repair shops, suppliers or insurance companies;” therefore, the following is a recount of the general actions of both parties without identification. This is not an isolated event; we need to be aware and educate ourselves, as this is indeed a lesson learned. The major national insurance carrier’s appraiser wrote an initial estimate and calculated a P&M reimbursement rate based on a dollars-times-hours calculation that left a significant deficit to the repair facility. After having provided the staff appraiser a copy of the shop’s Mitchell RMC (Refinish Materials Calculator) and discussing the issue, the shop was told that the insurer was no longer paying based on the guide and only using $XX per refinish hour. The appraiser basically ignored the regulation and added that any further discussion would have to be with the appraiser’s supervisor. Some shops stop here. This is what happens when you don’t. As we all experience too often, contacting the supervisor is not an easy task in and of itself. Messages, emails, phone calls and voicemails often go unanswered. Once reaching the supervisor, the shop was told that the insurer’s new policy was that $XX per hour was all it was willing to consider. Pointing out the regulation language and following up the conversation with numerous emails as documentation to both the supervisor and the insured and explaining why that insured would be charged the difference, an agreement was reached that from this claim forward, the P&M would be calculated using the shop’s Mitchell RMC documentation. The process described has been vastly shortened, as it actually took nearly two weeks of perseverance to get this accomplished. This fact alone is what makes shops give up the fight, which is exactly what the insurer is banking on. Now, if you can afford to subsidize the insurance industry, wonderful for you. But if you are like the majority of shops that are being abused and manipulated by insurers and are finally tired of it, NOW is the time to do
something about it. One very important way is to learn from this example and know you are “NOT THE ONLY ONE” pursuing this and other issues. The regulations are worthless unless you use them as intended and file complaints. The Auto Damage Appraiser Licensing Board (ADALB) is going to start meeting face to face again as of August 3. If you need assistance, we are here to help you file a complaint. Do as this and many other shops are doing, which is to take the time to DOCUMENT (via email) all conversations you are having with everyone involved at the insurance company. Keep your customer informed of what is going on as well. Just like other professionals (such as physicians), explain who is ultimately responsible for the bill if the insurer refuses to pay. Provide copies of the regulation excerpts pertaining to the issue to the insured, and have them make the insurer explain why it is ignoring the laws and regulations. Stop feeling sorry for those appraisers who are more concerned with keeping their jobs than doing what they are supposed to do based on their licenses. Remember that these are the same appraisers who are basically stealing from your customers – and, in turn, from you and your business. No appraiser, staff, independent or shop is above the rules, laws and regulations. Saying, “My supervisor said I can’t pay for that,” or, “They said that is all I can allow” is unacceptable unless you let it go on. No appraiser is entitled to a “get out of jail free” card using these lame excuses! As with the case of the shop discussed in this message, if you do have an issue, please contact us. When you succeed, please share your story with us so other shops will understand that there is a way to beat the insurers’ battle cry of, “We don’t pay for that.” This is just one issue that can be won, but ONLY IF YOU CHOOSE TO PERSEVERE!
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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New England Automotive Report
August 2021 45
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