A Rebuttal to CARSTAR’s Letter to the Industry

April 9, 2007 by
Filed under: Collision Repair Industry 

CARSTAR’s recent letter to the industry proudly published in ABRN shines a spotlight as bright as the Sun on the problems collision repairers face. It is exactly the sentiments expressed in this letter that plague our industry. If nothing else, this written plea for help exposes the roots of our problems. If nothing else, it exposes the thought process of those responsible for handing the hen house keys to the fox.

A quick read of CARSTAR’s letter would not challenge many independent minded shop owners. After all, it calls for industry unity and resistance to insurance industry pressures. I think it’s safe to say that most of us embrace those ideals. But the writers take great pains to convince you that no one is to blame for your predicament. WARNING, anytime someone tries to convince you that no one is to blame, chances are good that that person is trying to mask some guilt. This is a well known psychological technique, used most often subconsciously, that begs the reader to start over and read it again carefully

The writers make some remarkable points. So, here are my remarks.

It is in the third paragraph that CARSTAR reveals its position. While trying to explain the “fundamental law of economics” they write, “When excess of supply (collision shop capacity) exists, buyers (insurers) take advantage.”

Apparently the folks at CARSTAR believe the insurance companies are their customers. This most fundamental principal must be understood before anything else can be explained about how our industry works. That the heads of CARSTAR believe the insurance industry is the buyer of their services is astonishing. If they believe the insurers are their customers, then they must treat the insurers as such. Where does that leave the vehicle owner?

We hear this assumption that the insurer is the customer often from insurance companies and ignorant shop owners, but from corporate hotshots? Come on. This statement negates everything that follows it. For those who still believe the insurance company is buying your services, wake up! Insurance companies do not pay you. They do not even pay for repairs. They merely pay for the financial loss caused by an accident. Most insurers do see themselves as our customer. Most think they are paying for the repairs. People like those at CARSTAR who see the insurer as the buyer of their services enable the insurer to act like the buyer. And that is the cause of most of our industry’s problems.

To emphasize their position that the insurer is their customer CARSTAR follows up in paragraph six with, “If we, as an industry, cannot ensure consumer experiences that meet insurers’ expectations about how they want policyholders to be treated…” So here we are, now having to meet the expectations that the insurance companies believe our customer should have? The insurers now want to control consumer expectations? And CARSTAR believes we should aim to please the insurers?

In paragraph seven they write, “If, on the other hand, that kind of experience were what we delivered…..insurers even might be willing to pay us more for it.” Well, isn’t that nice? If we try harder to please the insurers they might pay us more? Doesn’t that sound exactly like what some insurance executive would say?

In paragraph eight, “Insurers are a relatively small community who concentrate huge buying power in relatively few hands.” Again, insurers don’t buy anything. But CARSTAR and a large segment of our industry help insurers to believe they do.

And just in case we still didn’t understand, in paragraph twelve they tell us we should be, “…bringing our own standards for consumer experience into line with those of our insurance customers.” I don’t know about you, but I’d be pretty upset if the standards at my shop were equal to those of my “insurance customers.”

It is clear that to CARSTAR, the insurance company is GOD. But one can sense a slight dent in their faith. CARSTAR is starting to feel the harm caused by worshiping the insurance gods, and now wants your help with what they call a “responsible push-back.”

What is responsible push-back? It seems you are to accept for now what the gods are willing to offer, but at the same time explain to the gods that you need more. Don’t upset the gods for they will cast upon you every conceivable misfortune. Talk with the gods. Make them understand your position. Show them you are worthy of their respect and kindness. Organize the followers but include the gods in your organization and consult with them at all times. Avoid confrontation. And this is my favorite: Do “what we must do to survive now, but taking every opportunity while doing so to respectfully communicate the injustice of our plight.” Can you believe they actually put that in writing?

You know what this letter really sounds like? If you ever read the rantings of a peace activist it will sound very familiar. Don’t aggravate the terrorists, it will only make things worse. Let’s try to understand them. If we sympathize with them they will leave us alone. Let’s embrace them, then everything will be just fine.

Go ahead, embrace them. Just leave us instructions on what to do with two pounds of body parts we recover after you are blown to bits.

I know nothing about CARSTAR or the individuals who wrote the letter. Judging by the content of this letter, and by the recent testimony given by a CARSTAR representative at a Connecticut public hearing opposing an anti-steering law, I’m going to take the wild leap and assume that CARSTAR is very much in favor of the DRP culture. Now it appears as if the insurers are, instead of rewarding their polite behavior, squeezing the life out of the CARSTAR shops. What a surprise. Who would have thought such a thing could happen?

And guess who they are looking to for help? They want you to waste a bunch of your time and money, packaging and delivering, in a “highly coordinated” manner, data to be used in a “research-based, visible and compelling campaign to influence” insurers, data providers, legislators and consumers. Doesn’t that sound like a bunch of bureaucratic crap?

I do agree with CARSTAR that we all must support our associations, and that only through some sort of collective effort will we be able to effect change. I agree with their belief that organizing is difficult because of the industry’s fierce competitiveness. It’s always been that way. And I also agree that there are only a handful of people who will step forward and become activists. This is unfortunate. Too many stay too busy working too hard to put themselves out of business.

Until the majority of shop owners understand who their customers are, until they understand their costs of doing business, until they understand what insurance is really for, until they develop the spine needed to prosper on their own efforts, without the illegal help from steering by insurers, until they understand that a partnership is based on respect and not fear of reprisal, until they operate honest businesses, being honest with their customers, the insurers, and more importantly, themselves, our industry will continue its decline into indentured servitude. We will become the sharecroppers of the modern, mechanized world, with little or nothing to show for our efforts.

This is not negative thinking. This is the cold, hard truth, a wake up call, a call to arms. And there is nothing more positive than that. CARSTAR asks who will step up. I ask those who think like the people at CARSTAR to step down. Get the hell out of our way.

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Comments

17 Comments on A Rebuttal to CARSTAR’s Letter to the Industry

  1. Panelbeater on Mon, 9th Apr 2007 3:59 pm
  2. That is why they don’t pay a lot per flag hour. It is always the techs that suffer.When you politely mention that is not fair, YOU are the one with an attitude, it is the Techs fault there is no money!!!!!
    I was in the trade for 30 years, and I got fed up with doing show winning work, for wholesale labor money, or less ie: free
    If it does not change, how can we expect young people to love it like we did?????

    Panelbeater

  3. Bob Winfrey on Mon, 9th Apr 2007 4:21 pm
  4. Look at the big Insurance A#* suckers begging for help now. Keep crying Carstar everyone is listening now LOL.
    Just hang out the for sale signs, but wait youve already sold out! Time for a business plan without insurer involvment LOL
    Who is thier customer anyway, who signs the RO??

  5. George A. Moore on Mon, 9th Apr 2007 5:25 pm
  6. Carstar as far as I remember approached us to become a member. Everything they offered we already were doing. We even had a number of DRP agreements. By the way, most if not all these agreements are very one sided akin to the fine print on a credit card contract. If one really reads a card agreement there`s not much there to look forward to and it is so lopsided as far as terms I really wonder.

    Carstar was prone to Insurer Direct Repair as a company philosophy so I can understand now as to why they finally came out with this statement. Sounds like to me that the cry for unity is coming from within the ranks and bubbling up to the corporate level finally.

    Remember as a business you cannot serve two masters. The only one should be your customer and it is your responsibility to make your customer “YOUR” customer. Stop depending on DRP`s for business and cutting your own throat while doing a slow bleed so that these multi-billion dollar corporations can keep making record profits.

    Lets let some of these organizations that supposedly represent the collision industry come together and really develop a unified path
    to follow before it`s really too late. REALLY !

  7. Panelbeater on Mon, 9th Apr 2007 6:20 pm
  8. What is poor poor CARSTAR’s problem ? Not making forecasts?
    Why are the same ins co’s they are afraid to dis, making 40% more profit than last year? Can CARSTAR say that? Can anybody say that?

    Panelbeater

  9. Jim Herman on Mon, 9th Apr 2007 8:01 pm
  10. I have to laugh.

    Carstar does not repair cars in itself, it is merely a franchise that used the ability to achieve an incentive to repair cars as a selling tool.

    The “plea” is a direct result of the “tool” being up for grabs.

    Who will be the next “tool”? LOL!

    Jim

  11. GABE SCOGNAMIGLIO on Tue, 10th Apr 2007 5:36 am
  12. OF COURSE CARSTAR IS PRO DRP, THAT IS HOW THEY MAKE MONEY BY THEIR SHOPS GIVING THEM A PERCENTAGE OF WHATEVER DRP CONTRACT THEY HAVE- 8% OF THE AP GOES TO THEM AT END OF THE MONTH.AS WELL AS OTHER COSTS

  13. Dokter Phil on Tue, 10th Apr 2007 7:23 am
  14. This is a move of desparation and a recruiting call. I personally plan to shove the letter under the noses of the insurance brats that come into my shop telling me how over priced I am and how CarStar shops are making a killing working on the cheap for them. Yeah right!I’m going to get all the mileage that I can out of this one.

  15. V.A.I. on Thu, 12th Apr 2007 7:20 am
  16. All the groups and organizations tell shop owners to stand up to the insurers. How can any shop fight “the good fight” when most are financially weak and begging for the next job for survival. The only way any change can ever come is thru unity and public awareness, or possible legal action. Maybe a class action suit or a wake up call to the sales tax man. What do you or any Auto body group do except blame us. There must be a way, possibly get everyone to take on one company at a time.

  17. Steve Wurtz on Thu, 12th Apr 2007 11:20 am
  18. Companies like Carstar have made these so-called sweetheart agreements with the insurance companies and now they don’t like what it created! When you give the fox the keys to the henhouse, this is what you get! Carstar is Reaping what they sewed! I’ll not shed a tear for them!

    Steve Wurtz
    Blue Ash Auto Body, Inc.
    Cincinnati, Ohio

  19. FED UP on Thu, 12th Apr 2007 11:30 am
  20. I fully agree. I would love to see insurance companies go by the wayside, then everything would be customer pay. I’m sure we would never hear a peep out of the customer when we ask them for 15% of the value of their car to repair a couple of 2 hr dents on a door and fender. Do you guys seriously think you would have half the busniess you do if insurance companies weren’t picking up the bills?

  21. CCBEnterprises on Thu, 12th Apr 2007 5:56 pm
  22. I hate to burst everyone’s bubble … but this letter to the industry was not about CARSTAR’s Corporate DRP programs, but rather, a call to the industry regarding what insurers are asking from collision repairers outside their corporate programs. Example, a recent document by an insurer (one of John’s favorites) shared with its DRP shops that they will only pay 50% of paint time on a repaired panel if the damage is in the front or rear 1/3 of the panel or another company who recently made their DRP partners switch estimating providers at the drop of a hat only to drop the new partner within months of that change. Note that neither of these two insurers were CARSTAR Corporate programs.

    Contrary to popular belief, CARSTAR’s programs are not about discounts, as a matter of fact, the programs I am involved with don’t require any discounts. And yes, we pay a percentage of gross to CARSTAR for national DRP programs they put into place on our behalf, and this percentage also covers a fully staffed insurance department that supports franchisees on a daily basis, negotiates new programs, and assists with educating insurers on why procedures/processes are required and yes, to help us as franchisees understand the challenges insurers face as well.

    I was once a non-DRP shop and very anti-DRP. And what this got me was a slow bleed of business every year. I also was becoming bitter and angry and hated coming to work each day. Since joining CARSTAR I have had the privilege to network with many very successful shop owners who have improved my knowledge, morale, and interest in this business. I also accepted that you can partner with insurers and keep your dignity (as long as you are selective about your parnterships). Does this mean I have to ‘give’ some. You bet. But I pick my battles. My business is slowly increasing each month and I see some light at the end of the tunnel.

    From what I can tell, insurance DRP programs are not going away any time soon. And yes, the vehicle owner is our customer, however, I have found it possible to take care of my customer (who will always be my priority) and work with insurance partnerships.

    CARSTAR is not perfect and they have suffered some pains as they have worked through a change of business model in recent years (moving away from franchises mixed with corporate owned stores to solely a franchised based business). They are working very hard to bring value and support to their franchisees and I am proud to be a part of this network.

    I hope each of you can learn to respect another opinion and find your own way to make a difference in your business.

  23. Bob Skrip on Sun, 15th Apr 2007 6:00 pm
  24. I, like most of us, read the CARSTAR letter, over and over again. It is comforting that a network as large as CARSTAR is trying to make changes to these problems that face shop owners every day under the strong thumb of the Insurance Industry.
    Its obvious that the writers realize there are problems within our industry.
    It is obvious that the problems may affect their franchise shops because of shrinking profits that the DRP contracts dictate. It is also good to see that the smoke has finally cleared from the “volume” of work illegal steering has filled their shops with, and they may have finally realized that they are making less profit than my non DRP shop, or the guy that just fixed their copy machine, frame machine, or their kids bicycle for that matter. It may have become apparent to some shops with DRP arrangements that it IS time to change. Maybe lets stop thinking the insurance companies are our partners, and the person that owns the car is our customer and the one we ultimately need to satisfy.
    The insurance company took a risk when they wrote the insureds policy. They took a chance, and in the event of a loss…. they lost.
    When one loses, one must win. I want to be a winner, I want winners as partners..not losers. This is also obvious…
    So decide where you want to be, join an association that has the nerve to make a stand, stop sitting on the fence and figure out where you want to stand. Read the sign that hangs outside your shop, are there any “partners” names on it? Or just yours…..
    Be a winner.. Enough is Enough.

  25. Tom Rompel, Factory Paint & Body, Inc. on Tue, 24th Apr 2007 2:04 pm
  26. How right you are. The insurance company “is not”, I repeat, “is not” the customer. The vehicle owner is. Trying to place nice with the insurance companies is the easy way to your quick trip into oblivion. The only way to deal with them when they attempt to get out of paying for repairing a vehicle back to pre-loss condition is to knock them right into the ropes and be willing to keep swinging until they comply.

    The insurance companies are not the problem. It’s the shop owners that are stupid enough to believe that being nice and going along with insurers demands will somehow get them more business. I’ve got to say that the collision repair owners for the most part are a disgusting accumlination of gutless wonders with jelly for spines.

    My stand and my companies stand when it comes to insurance companies if very simple: Don’t try and cheat my customer (the vehicle owner for those that may be confused about this) out of what they have coming and don’t tell us how to repair the car, we’re the experts when it comes to this. At my company insurance companies get to do just one thing….pay to restore my customers vehicle back to pre-loss condition. As long as an insurance company doesn’t cross the line of anything less we’ll get along just fine. If they don’t then they get to deal with the ruthless rules of reality.

    Wake up fellow shop owners. The vehicle owner is your friend not the insurance company! If you toughen up your bottom line will fatten up and you gain nothing but respect and admiration from your customers.

    We live in a free enterprise system and if you consistantly produce a great product,great service and stand up for the vehicle owner your company will naturaly grow. That’s just the way it is.

  27. Tom Price on Thu, 26th Apr 2007 9:40 am
  28. Business is so good for CarStar that they sold all but one corporate body shop to private owners here in KC. Hmmmmm????

    […] member. Looking deeper into her background you find she was in charge of marketing for the “Responsible Push back” gang at Carstar. She is also involved, or has been in past, with CIC, the “Collision Insurance […]

  29. The Man on Thu, 6th May 2010 10:17 am
  30. Dear CCBEnterprises – please explain why Carstar (CEO Daddy, Son co-owner and jerkoff partner) decided to keep everyone’s 401K contributions, matches and interest earnings from their associates for all of 2009 and 2010. Then come out and admit it and explain it was to keep everyone employed. I smell FRAUD!! You boys are in big big trouble at this point. I see a nice fitted orange jumpsuit in your future my friend. And you KNOW EXACTLY what I am talking about. Word is on the street my friend. You can run now but you can’t hide. All we can hope for now is the inocent employees get to keep their jobs, keep the shop open and find better more honest owners to step in.

  31. diane pearce on Thu, 20th Mar 2014 10:05 am
  32. If CARSTAR approaches your shop into becoming a part of their Franchise,DON”T !They do noting but take your money,plain and simple.

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