REPAIRERS NEED A BETTER SUPPLY CHAIN!

Last month I wrote a piece outlining how it makes sense for insurers in the UK to incentivise collision repairers to use more Reclaimed Original Parts (ROParts) in the repair process.

Since then I have had a number of emails from repairers, insurers and auto recyclers asking for more information.  It certainly stirred some interest in the model I have developed over a number of years and the subsequent calls and discussions I’ve had with insurers and repairers have led me to expanding on a previous article I wrote a couple of years ago. 

Why should repairers buy more ROParts when auto recyclers, generally speaking, supply and deliver a product and service that is often below standard, even if insurers incentivised their use appropriately?

Now, I know that auto recyclers globally will be reading in shock horror.  What is Chris doing?  Why is he saying this?  We need to be telling insurers and repairers, or anyone in fact that wants to listen, that our industry is great and provides product that is second to none…. Do not fret, I will make the case in a moment as to why the automotive recycling industry is such an important part of the supply chain, today more than every!

In 2008, I attended an automotive recycler conference in the USA. Up on stage giving the keynote were two insurance representatives from State Farm and All State. Their message was simple;

‘As insurers, we would love to use more of your parts, they are genuine, they are more cost effective and can be used to have the vehicle returned to our policyholder in its pre-accident condition.’ There are several reasons why this is not as simple as it may seem on the surface.

At this conference 11 years ago, some of the attendees came up to me in the break saying that repairers just don’t want to use ROParts, that it is all the fault of insurers and that repairers are just too fussy. Honestly, this is approach just not good enough! 

In 2019, some 11 years later, I chaired the Vehicle Recyclers Association Annual Conference in the UK and again the same message, this time from an Aviva Insurance representative.  The message went along the lines of ‘…of course we want to use more ROParts, they make sense from a sustainability perspective, commercially and they will help us repair more vehicles, so excellent for the collision repairer.  Not to mention the benefits to the policyholder.’

THE PROBLEM

I have visited hundreds of auto recycling facilities around the world.  I remember one visit to a facility selling a lot of parts to the collision repair industry. From some distance, I saw a bonnet that was being prepared to be shipped to a collision repairer. Its condition was terrible – filler in multiple areas, paint blistering in one spot, shrink marks on the underside and even some crow’s feet starting to come through.

I asked, “what are you doing with that bonnet”, hoping to be told that it was going in the bin. “That’s part of an order that we are shipping to a collision repairer with a heap of other parts” was the response.

I couldn’t resist. “Do you realise that this part has been poorly repaired before and will be unusable” as I proceeded to explain all the faults?  Again, the response was less than acceptable, “well, what do they want, it’s second hand. We don’t sell new parts; they need to expect it will not be perfect.”

Now don’t get me wrong, there are some great suppliers out there that would never supply such a part and I am a strong advocate of quality ROParts. What the industry MUST come to grips with though is that it is very difficult for repairers and insurers to know who the best of the best is. It’s that bad apple syndrome – one bad apple in the basket makes all the others bad, slowly but surely.

The auto recycling industry has a huge opportunity for growth. Usage levels of ROParts in the UK to collision repairers are WELL below other countries. Most insurers will tell you that usage is hovers between 0-2% of the total parts dollars spent. In the USA usage hovers closer to 12%, although we are seeing signs of usage waning there as well, as the certified aftermarket part is taking significant market share, while in New Zealand it is not unusual to hear of 30-40% usage levels.

In real terms auto recyclers make up a fraction of the repair and the only way is up, but it will require commitment, change, training and investment. Failure to do so will lead to further decline as the likes of the certified aftermarket and OE parallel parts grow their share of the total available market.

“How can the automotive recycling industry, change its perception?  How can repairers trust that the auto recycler will send them high quality parts? How can the industry win the trust of insurers to promote the use of ROParts?”

THE ANSWER

For 20 months now, along with the Vehicle Recyclers Association (VRA) in the UK, some insurers, eBay UK, environmental consultants and I have been working tirelessly to build a robust, independent certification program.

The VRA Certification program is the result of this hard work by all stakeholders and finally, we have an independently audited set of criteria that auto recycler needs to meet in order to be certified.

This is a WORLD FIRST!  Of course, there are other programs that are great and serve a very important purpose as a steppingstone towards such a certification program, such as the ARA Gold Seal and CAR programs in the USA.  But it is the level of independence and the robustness of this model that makes all the difference.  Insurers can now rest assured that there is the appropriate level of independent scrutiny, applied to the certified recycler that will give them the comfort they need to know they are, at arm’s length, enabling the use of quality, safe, recall checked, legally acquired ROParts from facilities that meet all environmental and occupational health and safety standards – guaranteed!

There are some great facilities out there that simply go unrecognized. They have worked hard at it, invested heavily and will change the way their auto recycling business is viewed.

The VRA Certification program is progressing well and by the time this article is published, there will be over 10 recyclers that will be certified.  In total the VRA has received in excess of 160 applications, which the certification bodies, RMI and Interface, are working diligently to audit.

All well and good, but what can we do to streamline the parts acquisition process and make parts a symptom of writing an estimate; easy, accurate, frictionless?  I’ll discuss this in my next article and the role eBay UK is playing in making this a reality.

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