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Southern Automotive Journal
May 2012 Issue
Volkswagen Chattanooga Interns Host Spring Fundraiser,
Donate to Local Non-Profit
$2,700 given to Chattanooga Kids On The Block
Volkswagen Chattanooga handed over a check for $2,700 to Chattanooga Kids On The Block this week as the result of a fundraiser hosted by interns at the factory.
The fundraiser was organized by more than 20 interns, who sold chocolate bunnies and cards to Volkswagen team members for the Spring holidays to raise money for the charity.
Volkswagen Chattanooga currently employs 45 students and new graduates as part of the factory’s internship program. Interns, both local and international, participate in 3- and 6-month long internships across a variety of departments.
"Philanthropy is an important aspect of the corporate culture at Volkswagen Chattanooga and we are excited to see our young professionals also embrace it," said Hans-Herbert Jagla, executive vice president of Human Resources. "They have worked hard to put a plan into action and we are happy that the end result is a donation to a great organization, Chattanooga Kids On The Block."
Chattanooga Kids On The Block is a chapter of the international organization that provides educational programs to children with the use of child-size puppets. The organization seeks to empower children to lead safe and healthy lives. The programs address various disabilities, educational and medical differences and social concerns. The Chattanooga chapter has been active since 1979.
"Chattanooga's Kids on the Block is extremely honored to be chosen by the interns serving Volkswagen as beneficiaries of their fund raising event," said Kelly Williams, executive director of Chattanooga Kids On The Block. "The Volkswagen team has and continues to show its commitment to our community through their generous support of local charitable organizations and its dedication to enhancing the quality of life in our area."
Volkswagen Chattanooga currently supports 42 local non-profit organizations through the factory’s annual charitable funding cycle. Organizations include the Urban League, the Boys and Girls Club of Chattanooga and umbrella organizations like the United Way and Allied Arts that fund a number of organizations serving the city of Chattanooga.
About Volkswagen Chattanooga
Volkswagen has invested $1 billion in the local economy for the Chattanooga plant and created more than 2,200 direct jobs in the region. According to independent studies, the new Volkswagen plant is expected to generate $12 billion in income growth and an additional 9,500 jobs related to the project. The Chattanooga manufacturing facility is the world’s first automotive manufacturer to receive platinum certification from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) green building certification program. The factory was also awarded the prestigious Gold 2012 Edison Green Award. The facility manufactures the all-new 2012 Passat sedan, specially designed for the North American market and winner of the Motor Trend magazine 2012 Car of the Year award, Kelly Blue Books Family Car of the Year and Cars.com Best of 2012 award.
Florida Autobody Collision Alliance
Labor Rate Survey
The Florida Autobody Collision Alliance will soon be launching a labor rate survey in the state of Florida. Your business will soon be invited to participate. The purpose of this survey is to provide Florida collision shop owners with prevailing rates for labor and material so all of us can be paid fairly for the work we perform. Your response is needed to ensure all Florida collision businesses are represented.
The survey is being conducted by a neutral third-party, CSi Complete, a provider of customer satisfaction indexing to the collision repair industry.
The 2012 Collision Industry Repairer Forum "Day of Opportunity"
Moose Simmons with the OPA chats with Jack Helvin owner of
Classic Collision during a vendor exhibition held later in the evening.
Potential Economic Impact of Parts Bidding on Collision Repair
While the article was brief, Applebaum's post on the Aite site elaborated that "the U.S. collision industry repairs about 10 million vehicles annually, at an average cost of about US$3,000 each, for a total of approximately US$30 billion. Of that, parts represent 33%, or about US$10 billion. Given the level of influence carriers exert and that much being spent on parts, it is inevitable that carriers will seek to gain greater visibility into, and control over, the parts procurement process. After all, each percentage point is worth US$100 million to someone." Less than a year later, in the early months of 2012, the carrier began testing the program - an online parts-ordering/bidding software program developed by a New Zealand firm called PartsTrader - in areas of the United States such as Tucson, AZ and Birmingham, AL.
State Farm facilitated the rollout in test areas with both the parts vendors as well as the repair shops in their network. In a letter issued to parts suppliers, State Farm wrote "All repairers currently participating in the Select Service program have agreed to use automated replacement parts locating services or applications if requested by State Farm, and will be required to use PartsTrader. Suppliers registered with PartsTrader will have the ability to provide competitive pricing on the entire parts order through the quoting process which may provide opportunities to increase sales volumes." Other communications were sent to repair facilities outlining the electronic parts ordering and estimate workflow process. Under the program, State Farm instructs the repair facilities to follow workflow steps, such as:
1.Write a complete estimate with the OEM parts listed in the database and save in preliminary status.
2.Export the estimate to your EMS directory. The PartsTrader software will pull the parts list into the application automatically.
3.Within PartsTrader, forward the quote request to all part suppliers (quote time is adjustable by the repairer).
3.When the quote time expires, review quote responses and order selected parts.
4.Update the estimate with the selected part types and prices.
5.0 Upload the committed estimate.
Note: The same procedure should be followed on supplements. In cases where a "recycled" assembly is required, select the "recycled" part type on the estimate with a price of zero dollars so that the suppliers recognize the need for an assembly.
State Farm Auto Claims Consultant, George Avery, was quoted in a CollisionWeek interview discussing the new program in April of 2011, indicating that "the feel this time is a little bit different in that we are committed to exploring this because we see the benefit for the repairer, the supplier, the customer and, of course, us. The test before, there was a lot of learning there, that points to the fact that parts procurement offers a lot of efficiencies to be gained." However as the test rolls out, many in the industry are wondering what benefits truly exist for the repairer, the supplier and the customer? The benefit to State Farm is clear; there is an obvious savings for the carrier through the use of the program.
Below is a real example of the resulting quotes from the bidding process for parts necessary to repair front-end damage on a job requiring only 4 parts: 3 bumper components and a lamp.
These slides are screen captures of pricing bid on by OEM dealers where the PartsTrader program is currently testing in the United States. As you can see, one dealer maintained the OEM MSRP list price, while the other two offered a 15.46% discount off the list price, reducing the list price by $54.42. You will also notice that the margin on the discounted parts is 2% lower than the part with the MSRP pricing. What this means is that the repair facility will make $25.00 less profit on this part and the dealer will make $29.42 less in profit. The insurance carrier will save $54.42 due to the reduction in the list price. Will the consumer ever see any of these savings, or do these savings increase the carrier's profit margin?
On this part, the two of the dealers have offered a 23.52% discount on the list price, with a 2.01% decrease in margin. This equates to a $5.66 loss in profit to the repair facility, a $7.97 loss to the dealer and a $13.63 savings to the insurance carrier.
On this part, two of the dealers have offered a 23.39% discount on the list price, with a 2% decrease in margin. This equates to a $2.57 loss in profit to the repair facility, a $3.62 loss to the dealer and a $6.19 savings to the insurance carrier.
As you can see, on this part, two of the OEM dealers have offered a 22.09% discount on the list price, with a 2% decrease in margin. If the shop selected OEM, this equates to an $18.29 loss in profit to the repair facility, a $25.20 loss to the dealer and a $43.49 savings to the insurance carrier. However, this slide also contains 3 "Recycled Grade A" part options. The cheapest used part is listed at $25.00 cost. Hypothetically, if the repairer were to bill this part with a 25% markup, that part would list on the estimate for $31.25, producing $6.25 in profit to the repair facility. In comparison to the OEM part with the OEM MSRP, the used part could equate to a $62.65 loss in profit dollars to the repair facility, while saving the insurance carrier $165.61.
Looking at this scenario, a small repair with only 4 front-end parts, the numbers appear to be staggering. If the cheapest part was selected in each of these occasions, the overall parts order would result in the repair facility losing $95.88 in parts profit in comparison to if all the parts were ordered using traditional OEM MSRP; conversely, this program will save the insurance company $239.85.
Every collision repairer could ask themselves, is this a win-win situation? For anyone looking to understand the impact on their business, there are numerous resources available to repair facilities to analyze the economic impact that adjustements to profit centers, such as this, can have on your bottom line.
Aside from the loss of real money associated with parts dollars, there are additional expenses to consider as well. There is a waiting period before an estimate can be locked while the repair facility waits for quotes. Once those quotes are received, each part price needs to be manually re-entered into the estimate before it can be committed. This particular example only has 4 parts; how much administrative cost is associated with that task if there are 40 parts? What is the cost of potentially dealing with multiple suppliers to maintain the most "competitive price"?
It is too early to have answers to many of these questions, but repair facilities in the U.S. would be well served to start looking at how programs such as this impact your business now, and how you wish to react to them in the interest of your business' health and welfare.
INFINITI LAUNCHES NATIONAL CERTIFIED COLLISION REPAIR NETWORK
Infiniti launched a new nationwide Infiniti Certified Collision Repair Network, a dynamic, comprehensive program designed to recognize and distinguish body shops that meet or exceed standards for repair work, training, equipment and delivery of Infiniti customer service. The new certification program is open to both Infiniti retailer-owned and independent collision shops.
“The purpose of the certification program is to provide the resources to help ensure consistency of the repair of Infiniti vehicles on a national basis,” said Carnie Colliver, senior manager, Parts and Service, Infiniti Americas. “Each Infiniti owner that comes into these certified facilities presents additional face-to-face opportunities to reinforce the Infiniti Total Ownership Experience.”
The certification program will be conducted in conjunction with DuPont Performance Coatings (DPC), which will assist in the implementation of the program’s certification process, and I-CAR, the Inter-Industry Conference on Auto Collision Repair, which will conduct technician training.
“Facilities that have the willingness to participate in this program must have the commitment to achieve higher standards in the collision repair industry. This program will be a platform to satisfy all aspects of their customers’ automotive service needs,” said Colliver.
Infiniti Certified Collision Repair Facilities will be able to distinguish their facility from non-Certified repairers, by an ever expanding marketing package including but not limited to:
A shop plaque acknowledging to customers the facility is a member of the Infiniti Collision Repair Network and recognized as meeting the requirements set forth by Infiniti
Customer marketing materials explaining the benefits of using the certified shop network for repairs and the use of OEM collision parts
Exclusive website for Infiniti Certified Collision Repair Facilities to obtain program and technical information
Infiniti owner awareness marketing initiative
Shop locator for owners to identify Certified shops in their area
“The overriding goal is to provide a better customer experience – with an assurance of safety through the repair process and facility standardization, and the financial preservation of the vehicle to help minimize diminished value after collision repairs,” added Colliver. “Certified network collision repair facilities will deliver a professional relationship consistent with the Infiniti brand – and enjoy the added prestige of being recognized by Infiniti as meeting our stringent factory standards.”
I-CAR AND ASSURED PERFORMANCE NETWORK COLLABORATE ON NEW ROAD TO GOLD PROGRAM
I-CAR, the Inter-Industry Conference on Auto Collision Repair, has announced it is collaborating with the Assured Performance Network in the development of the Road to Gold program, a new dedicated planned approach to achieving the I-CAR Gold Class Professionals® designation for their network of 3000+ collision repair shops.
Organizations that enroll in the Road to Gold program commit to earning the I-CAR Gold Class Professionals business designation, which is a requirement for earning the Assured Performance Certification. The Gold Class designation is the highest training recognition available to businesses in the collision repair industry. Other businesses that have been recognized as Gold Class have reported less rework, retained customer satisfaction, and improved overall operational efficiencies.
"For our Assured Performance Certification, the I-CAR Gold Class Professionals® designation is essential to ensuring the shop has the training that is in accordance with industry repair standards."Scott Biggs, CEO of Assured Performance, explained. “With this new Road to Gold program, our members can enroll with a clear objective –Gold Class status, and get a plan to achieve and maintain it."
"I-CAR commends Assured Performance Network for its commitment to training. The inherit value delivered through the I-CARº Professional Development Program and the Gold Class designation will provide Assured Performance Network member shops with the training needed to perform safe repairs and retain vehicle integrity post-repair," said Jeff Peevy, I-CAR Senior Director of Field Operations and Segment Development.
Kia Motors Manufacturing Georgia Produces
500,000th Vehicle
Kia Motors Manufacturing Georgia, Inc. (KMMG) celebrated production of the 500,000th vehicle at the West Point, Ga. automobile manufacturing facility.
KMMG began mass production of the Kia Sorento CUV on Nov. 16, 2009, a vehicle that quickly became the brand's best‐selling product in the U.S. Then, on Sept. 2, 2011, KMMG began production of the Kia Optima mid‐size sedan, a vehicle that led the brand's U.S. sales in December 2011 and January.
Since opening, KMMG has added two additional shifts of production with more than 3,000 team members hired by the plant to date. In 2011, KMMG completed a $100 million expansion that pushed the plant's total capacity to 360,000 units per year.
Vehicle number 500,000 was a snow white pearl Optima SX and will now be allocated to one of KMA's more than 755 dealerships nationwide.