A Dinosaur Has Awakened.

August 25, 2004 by
Filed under: Uncategorized 

You know, I just love to point out and make fun of stupidity. And though sometimes stupidity can hurt yourself or others, it is often hilarious. Even harmful stupidity can be funny, and the following is no exception. What you?re about to read is meant for amusement. However, if you find yourself humiliated or cursing at me, calling me the stupid one, I?ve accomplished another goal?giving you a literary slap upside the head.

Someone recently faxed me this flyer from a West Haven Connecticut body shop. Click the link and have a look. Pretty amazing stuff, isn?t it. These people are either some of the best business managers in our industry, or they are some of the biggest idiots. What do you think?

The people at this Connecticut Ford dealership are quite the magicians. Apparently their shop is so good, so efficient, that they can repair a vehicle, swallow your deductible up to $500, give you a $25 oil change and a set of floor mats (they must be worth at least another $50), pay all the bills and make an acceptable profit to boot. Pretty damn impressive.

Pretty damn moronic is more like it. Labor rates in the West Haven Connecticut are offered by insurance companies right now are about $45. A smart, hard fighting shop manager can probably squeeze $50 an hour without having to commit fraud or go to court. I?m sorry, but these people just don?t seem smart enough to be able to get $50 an hour from any insurance company. So how the hell are they doing it? Why are they doing it?

The only way Mantilia Ford can afford to give a customer a five or six hundred dollar discount on their repair and not lose money is by breaking the law. They have to be committing fraud or losing money. If they are not losing money they either have to be screwing the insurance company (which is getting harder to do these days) or they?re screwing their customers. For those of you who disagree, let?s do some calculating. What?s the average repair order these days, $2500? OK, let?s double that to be fair. Let?s take a $5000 repair and give the customer a $575 discount. According to industry benchmarks the average net profit for collision repair shops is less than 10%. Some shops do much more, many do much less, but the average is just shy of 10%. So on a $5000 repair the profit would average shy of $500. Unless these Neanderthal geniuses are committing fraud, they are paying their customer $75 for the privilege to repair his vehicle. Mommy must be proud. I?d just love to see the quality of the work.

It?s no secret that many dealership body shops are little more than an accounting dumping ground for every mistake made by the sales and service departments. Many dealership body shops never show a profit because they get no credit for parts sales. Many dealerships consider having a body shop a necessary evil; something more like a convenience service offered to retain sales and service customers. So it would be no surprise to me if the dealer principle had no idea his body shop was losing money. And if the shop isn?t losing money, one has to wonder if the dealer principle knows that, a) his body shop manager is ripping off his customers, or b) his body shop is cutting corners and hacking up cars so they can afford to deprive their customers the honor of paying their deductibles.

So we now know how Mantilia Ford is able to be so generous, let?s look at why. That?s an easy one. The people in charge don?t know what the hell they are doing. Business must be real slow. Why is it so slow? It?s a dealership body shop. Every car they sell is a potential new customer. Is their collision repair work that bad? Is their reputation bad enough that people who buy cars from this dealer, people who have their cars serviced at this dealer refuse to have their body work done at this dealer? It can?t be that this body shop?s prices are too high. They?re working for free! Maybe the manager has real bad breath or body odor. I can?t say, I don?t know the man. He could be a great guy and a capable manager with a boss who insists on being a moron.

I called to find out. ?Hi, a friend of mine was shopping for a car at your dealership and picked up this flyer that offered to save my deductible up to $500. How can you afford to do that??

?Well, it?s a special they decided to run,? the body shop manager answered.

?I?ve got an insurance estimate for about $2500 and a $500 deductible. I won?t have to pay any of my deductible??

?Nope?

?Aren?t you losing money??

?Well, you?d have to talk to the owner about that,? he told me. He didn?t sound thrilled.

?And I get a free oil change and a set of floor mats also??

?Yup, that?s the special.?

So I felt a little better knowing that it probably wasn?t the shop manager?s idea. He didn?t sound too enthusiastic about the deal. But what the hell is going through the owner?s mind? Does he even know he?s giving away thousands of dollars?

More importantly, and this is the part that really pisses me off, does the owner know the damage he is doing to our industry? This clown has just reaffirmed to his customers that body shops are making so much money they can afford to just write off $500 from their bill. This myopic moron is furthering the notion that no one pays deductibles. That deductibles are just a way to lower your insurance premiums.

And what about the insurance industry? What do they think? Those damn body shops are making so much money they can give it away. And what about the legality? One could argue that this practice is illegal, even if the shop doesn?t take any short cuts and charge for things they didn?t do. It?s not like discounting a pair of shoes you?ve had in your store for a year and you just want to get rid of them to make room for the new models. This is discounting future sales. It?s like making shoes knowing your going to lose money on them when you sell them. It doesn?t make any sense. When writing an estimate you know you?ll be taking a hit for the deductible. You?re going to try to make up for it. You?re going to be committing fraud. Does the owner of this business even understand what he?s doing?

I?ve said it a hundred times and I?ll proudly say it again. This industry was built by idiots. This industry is still run by idiots. Just when you think things are getting better (and they are, slowly) something like this comes up and reminds you of the third world roots we all have in the collision repair industry. It brings on flash backs of the first couple shops I worked in?the hell holes. It tastes of my tour of Mexico body shops in the mid 1980?s.

They say in about a decade no vets from WWII will be alive. It will be the end of a great generation. How long will we have to wait for the extinction of the dinosaurs still roaming our industry? When will the end of a not-so-great generation come?

Oh, and by the way, I encourage anyone with the suitable gonads to call the dealer principle of this dealership and let him know how impressed you are with his ?Body Shop Special.?

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Comments

6 Comments on A Dinosaur Has Awakened.

  1. DP on Thu, 26th Aug 2004 5:11 am
  2. we have even bigger morons in this neck of the woods here in kalamazoo mi. Progressive is only paying their direct repair shop half of the paint time on repaird panels, example.1 99 grand prix 1hr partial paint with full clear refinish,rear bumper 1.3 same description. I refused to accept their rediculess offer and told them that I will just have to charge the customer. 45 minutes later he (the Progressive adjuster) called me back and agreed to properly pay me but informed me that in the future he would tell all of my potential progressive customers that they would have to pay additional charges if they choose our shop for repairs. I then called one of their shops & they confirmed that they was accepting this paint reduction practice but they was fighting it tooth & nail. HA!!! you talk of IDIOTS. their attempting to change the prevailing practice on proper repair techniqes as well as cheating them out of the proper amount of Paint matterials. This is also Just anouther example of why DRP programs should be Illeagle the shops that are on them live with the threat of being dropped if they dont accept their indesant proposals. then also use these shops as model examples of what the prevailing rate & practices become, like just because their DRP shops are IDIOTS the rest of the shops should BE. I guess If you could catch fish with a bare hook why by bait? Idiots Morons more IDIOTS More MORONS. and speaking of IDIOTS HOW ABOUT ALL THE TECHS OUT THERE SUPPORTING DRP SHOPS BY WORKING IN THEM???? Support your local conglomerate so that they can destroy our industry & wage structure. CORPORATE AMERICA IS DESTROYING AMERICA.

    RESPONSE FROM THE AUTHOR: Now, now, it’s not corporate America destroying America, or our industry. It’s the ignorant morons who insist on whining and doing nothing to help themselves. Corporations are in business to make money. As long as people continue to worship them like hungry dogs begging for food, they will continue to feed you exactly what you will accept. Every person has the power to bring a large corporation to its knees. They just need to learn to use it.

  3. ANDY FOLEY on Thu, 26th Aug 2004 5:47 am
  4. I am a shop manager who has seen these practices unfold over the past 15 years in columbus ohio. allstate started the cut back on paint time back in mid 90’s at that time i was a asst. mgr. I got into a big arguement with the top dog from allstate and his adjuster over materials. I refused to cut the paint time back just because thge repair was in the front corner of the hood. since they won’t pay body supplies I was not going cut paint time. He went to the owner, the owner backed me up. we got full paint time, two months latter we lost the drp account. Black mail at its best!
    We should be able to raise our labor rates like the ins. industries do when every they have losses.

  5. Mike Grant on Thu, 26th Aug 2004 7:44 am
  6. Yes, morons. But I rather like it that way. One could always move to the hypercompetitive tech sector and enjoy real competition – we think we have stress now? If we only had to deal w/ these types of moronic competitors, it wouldn’t be so bad. And as your title suggests, "Dinosaur", it is an older and far less utilized phenomena. Even better, I can’t remember the last time a customer assumed or even asked about saving a deductible, so I think the dinosaur is pretty much extinct.
    More important, for those who still like to badger DRP programs my advice is to squeeze out the shop’s inefficiencies – that’s where one is losing gross profit. Granted, there are a few companies (sounds like Progressive is an example) who really don’t want a sound and long term partnership w/ shops. And I wouldn’t suggest lining up w/ them. On the other hand, there are many DRP’s which pay a fair ticket and most of the lost dollars are in operations. Can you say "waste"? "rework"? "comebacks"? "scheduling"? "parts management"? "estimate accuracy"? "management system"? "productivity"? "training"? Those are just a few of some key areas that need to be focused on and managed.
    I’ve never written in to one of these before and I probably won’t ever again – my main message: we should spend less time bitching about the injustices we are victim to and more time making our own operations shine.

  7. Hammer on Fri, 27th Aug 2004 7:35 am
  8. John,

    From what I have read, you appear to be very intelligent and articulate, especially in matters relating to the collision repair industry. Although we do know each other, I more often than not find myself supporting the positions you promote.

    However, with respect to this latest article, while I understand your frustration and again agree with your underlying premise, I wish to urge some caution. This industry cannot afford to have any more of its passionate defenders silenced because of silly mistakes.

    Specifically, I referring to your suggestion that the “dinosaur” you profiled must be doing something “illegal” or “committing fraud” to be able to make such an outlandish offer. No one can argue that such misguided “promotions” hurt the entire industry, but to label such activities as “illegal” or “fraudulent” without proof (with truth being a defense) is, in my opinion, reckless, and more importantly unnecessary. For example, are you certain that this effort is nothing more than a legal marketing ploy to sell more vehicles? In other words, when the customer comes in for the estimate, the dealership’s real intent may be to attempt to convince the customer to “trade-in” their damaged car. I think you get the idea, so I’ll stop here.

    My sole purpose for this response to urge you to reconsider how you have presented your argument. Maybe a rewrite might be worthwhile? Your message is great, however it might get lost if what I fear may happen, happens.

    For what it worth…..

  9. Scottb on Mon, 30th Aug 2004 10:34 am
  10. John; GREAT ARTICLE!!! But you left out one important thing Mantilia Ford may be doing that is just as bad of a business practice as saving a deductable and all the other fluff. They may not be losing as much money as you have calculated if they are short sheeting the TECHS. God forbid they are doing that, but I have seen independent shops as well as dealerships do just that when things get slow. I can do you one that is just as bad. We had an independent body shop in the Kansas City area that advertised in the yellow pages that he would save your deductable! THE YELLOW PAGES!!! I called him and asked if I could sublet my work to him. He asked why. I said I could make 15 to 18% and not lift a finger using his advertising. Of course he still had to warranty all of his work, it all had to be done to each manufacturer’s specifications, with my inspection being the final determination as to weather the finished product was repaired to pre-loss condition. Needless to say, he did not accept. The funny part, or I should say, the sad part is he still did not understand that if you lose money on a job, you lose more money on more jobs. This is just an example, as is your’s, of the mentality of one entity hurting an entire industry. As you have stated before, "I have met the enemy and he is us."

  11. AAB on Tue, 31st Aug 2004 8:13 pm
  12. Now I think this dealership got some bad marketing advice. I can not think that the owner intended to create fraud,or damage his customers cars ,with inferior repairs.
    The dealerships bodymen are on strike in our area right now and a creative bodyshop ran an ad in the help wanted ads,"Spend your strike with us",some might think it was in bad taste,maybe so, but you have got to say it was creative.
    Maybe this dealership will get real busy with a bunch of customers to cheap to go to our shop,but they would still nit pick the job to pieces,even after saving a big deductible.
    My suggestion to all who think this is terrible,kill the shop with kindness,send them all your cheap and picky customers,They may have one foot in the grave now, and you can help them put the other foot in the grave.Send them your problem customers.
    The American way is sometimes achieved thru creativity,so be it that we judge this shop with out all the facts.
    Yes ,it may be a black mark on us ,but like outers have said,Rise aboue this.

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