Canada’s Environment Is Not Like The United States
Certainly one of the most contentious topics that has ever arisen in the collision repair industry are insurer-driven parts procurement programs. Like collision repairers, we in the auto recycling industry have been consumed with conference calls and training sessions on how to use these systems to streamline sales to our customers in the auto repair industry. In the past few months numerous people have asked me what I think about all of these programs and members of our auto recycling community have even sought help from industry experts to gain some guidance on what our position on these programs should be going forward.
With many collision repairers felling a “loss of control” and having what seems to be a universal dissatisfaction with parts procurement programs, auto recyclers find themselves confused about whether they should participate or not in these programs. Naturally no auto recycler would ever want to deprive a collision repairer of the profits they need to earn on their parts purchases and any “bidding war” that could embrace the lowest priced part over a more appropriately priced quality part is a slippery slope for us as well.
Auto recyclers in Canada, by and large, have taken the position that while we are not really sure what this means to our business we are willing to partake in these programs and check things out for ourselves in these early stages. There is no question that auto recyclers have mixed views about this topic as we do have compassion for their extreme scrutiny that our collision repair customers are under and we are not looking to add more unnecessary paperwork to our customer’s plate.
At the onset, I can tell you that while some auto recyclers are selling parts daily on these programs, the majority of the auto recyclers are not. While the significant roll-out continues in an effort to see increased participation there are a few hurdles that auto recyclers must overcome to fully embrace this new way of doing business. For starters the data integrity and the extraction of the parts inventory from the auto recycler’s computer inventory management systems is something that is very valuable and we need to make sure that this is done safely and securely. In addition to this, auto recyclers don’t want to mess around with time consuming and cumbersome part quoting platforms on both the sale and returns side of the parts process.
My position is that parts procurement programs are like a tool that can help our existing customers and potential new customers find our inventory for possible inclusion in the repair process. I personally have observed new collision repairers in my area purchasing recycled parts who would have not otherwise bought them.
These programs affect anyone who sells parts and it does impact our relationships with our collision repair shops whether we are a part of these programs or not. Increasingly, we are told that if we are not signed up on these programs we will be losing out as shops won’t be able to purchase our parts when they are working on a specific insurance company’s repair. Also, we have to deal with the notion that if we are not a part of these programs our competition will participate in them and thereby get the sales that we pass on. In the collision repair industry, will the MSOs actually turn down programs like this for the long-term when their business model depends so heavily on putting volume through their shops? And what about the consolidators in the auto recycling industry? Surely they will partake in any programs with insurance companies.
Since parts procurement programs are here to say in one form or another it is incumbent upon every business person to make sure that they make decisions on a daily basis that are profitable.
Auto recyclers will sell parts when it is profitable to do so and when it isn’t profitable we have to pass on the sale. Knowing when to hold’em and when to fold’em is crucial and this is more important than any notion that recyclers must stand in solidarity on whether or not to embrace these types of programs. As in life, sometimes things go too far and they don’t make sense from a business perspective and when that happens it’s time to move on. Is this one of those times? Perhaps not yet, but we will certainly be watching this closely to make sure that we do what is best for our businesses.
David Gold is the co-owner of Standard Auto Wreckers, an auto recycling facility with locations in Toronto, Ottawa, Ontario and Niagara Falls, N.Y. He is the founding member of a Charity Car Program that covers North America (www.CharityCar.us and www.CharityCar.ca) and the leader of North America’s largest harmonized end-of-life vehicle solutions company, www.GreenVehicleDisposal.com. He can be reached at email@example.com or visit www.standardautowreckers.com.