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National Survey Shows Replacement Car Practices Changing

BODY SHOPS: STILL UNCLEAR ON COST OF MAINTAINING COURTESY CARS

by: Karen White and Barry Francis

TORONTO, November 14 2000— A national survey shows continued confusion on the part of Canadian auto body shop operators on the cost of maintaining company-owned courtesy cars. The study also revealed changes in replacement car practices with almost twice as many operators shifting to rental cars than to company-owned courtesy cars over the last 18 months.

The survey on replacement car practices, carried out by Gallup Canada, involved telephone interviews with a random sampling of 60 body shops operators across the country, representing a national cross-section of the industry. Conducted in September 2000, the survey follows up on a similar study conducted in March 1999.

While more than two-thirds of survey respondents indicated that quality replacement cars(rental or curtesy) are "very" or "quite" important to their businesses, they were unable to agree on their cost or best method of providing those cars.

ESTIMATES ON COURTESEY CAR COST VARY WIDELY.

Cost estimates for maintaining courtesy cars varied widely—ranging from $1,200 to $6,000 annualy— and, in many cases, did not include the cost of maintenance, fuel, insurance and repairs.

Surprisingly, close to 20 percent of those providing company-owned courtesy cars said they did not know the cost of maintaining their fleets. This percentage was down from 30 percent in the previus survey, indicating that body shop operators are starting to pay more attention to courtesey car costs.

Fully one-third of respondents conceded their cost estimates did not include maintenance, insurance and administrative cost such as service repairs - even though such costs are inherent in managing a courtesey car fleet. The differing cost estimates may reflect the wide variance in types and ages of cars included in body shop fleetsd as well as the lack of an industry standard for cost measurement.

REPLACEMENT CAR PRACTICES CHANGING

Nearly 60 percent of those surveyed said that between 50 and 100 percent of their customers require replacement cars, the same percentage as in the previous survey.

The survey revealed that respondants currently rely almost equally on rental car companies and company- owned courtesy cars to supply replacement cars to their customers.

More than 53 percent of survey respondants reported a change in their replacement car practices over the past five years, as compared to 16 percent in last year's survey — indicating a significant change in industry replacement car practices over the past 18 months. The survey showed a trend toward the use of rental cars with just under two-thirds of those specifying a chance in policy indicating that they had shifted to rental cars, the highest rate of change came in Atlantic Canada and Quebec.

Of those who switched to rental cars, the most common reasons cited for switching were reduced costs (36percent), reduced hassles and paperwork (13percent) and insurance considerations (13percent). Other frequently cited advantages included having newer, cleaner cars available for customers.

As to whether they'd ever switch back to courtesy cars, 70 percent of those who have changed to rental cars said they would not consider returning to courtesy vehicles, the same percentage as in last year's survey.

The most common reasons cited by respondants for maintaining courtesy cars included:

• Cost of rental cars not covered under insurance (19 percent)
• More cost efficient (19 percent)
• More convenient to the customer (14.3 percent)
• Needed as incentive for customers (12.5 percent)

COURTESY CARS FLEETS AGING

The survey also revealed that the vast majority of shop-owned cars - approximately 70 percent - are from four to six years old, while about one-quarter are 1-3 years old and 10 percent are 10 or more years old. The type of cars in these fleets varied by region across Canada with Ontario shops strongly favouring mid-size vehicles and two-thirds of respondents elsewhere in Canada favoring compact or econemy models.

The survey also revealed a significant decline over the past year in the use of full-sized courtesy cars from last year's survey with just 19 percent of respondents offering full-sized cars (vs.37.5 percent in the 1999 survey). Only 5 percent of respondents sid they provide vans as courtesy cars.

Fully 95 percent of respondents who maintain courtesy cars reported that they had small fleets of 1-10 cars, up from 83 percent in last year's survey. An additional 5 percent reported that they maintained fleets of 16-20 or more cars. The largest fleet sizes were reported in Western Canada.

The Gallup survey was commissioned by Enterprise Rent-A-Car, a leader in the Canadian replacement car market.

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THE POPULARITY OF AUTOBODY SHOP BANNERS — TODAY'S REALITY.

by: Jean-Yves(John) Racette

You go to the drugstore to buy your pills, you're at a banner; you go to the corner store…you're at a banner; you want to eat a hamburger, you've got the choice of which restaurant to go to, but these are all banners. But whether you buy glasses, shoes, stay at a hotel or view a movie at home or in a movie theatre you have dealt with a banner. They are all banners - business repairing; brakes transmissions, mufflers, windshields, tires, general mechanics, etc.

They are hundreds of thousands / tens of millions in Canada, in North America, troughtout the planet joining themselves to a banner. They have understood that in business strenght is acheived throught unity, they know that the consumer likes to find himself where he feels secure and knows in advance what kind of product and service he will find.

The arrival of banners in body shops was late compared to other types of banners wich have been presented to us in the last 20, 40, 50 years, but for their sake the consumers are used ti this phenomena and they are quite satisfied with it.

To give you a better expertise in the matter THE COMMUNICATOR met with an expert. Mr Pierre Bourbonnais who has been a bodyshop operator for 24 years, has accepted to give us his opinions. He has also worked as an estimator in an important automobile insurance firm and today we find him as Reginal Coordinator for an important large-scale national bodyshop banner.

A DIFFERENT SITUATION

Today's situation is different according to Mr. Bourbonnais, we are heading towards a world of banners in order to better our chances of succeeding in business, by grouping together we are stronger. Traditionally, the bodyshop operator did his own thing in his own town, working in a more craftsmen like fashion, spending more time restoring body parts, which evidently gave us more revenues in hours worked. Nowadays, we are perceived differently, we are considered to be more like technicians and considering the evolution of the automobile, the work is different. For example, often it cost more to fix a body part than to replace it. The consumer has become extremely demanding, you always have to have the latest in technologiy and work with equipment that is much more sophisticated.

A CONSTANT AND RAPID EVOLUTION

Banners can hire experts fulltime, although a bodyshop operator who works alone unfortunately doesn't have the same means. So the banner constantly proceeds with marketing anlysis, wich leads to continual progress for the bodyshop operator keeping them at the finest point in current events The management team of the banners are constantly looking for ways to satisfy the bodyshops, helping them better perform; products, management, training, new technologies. We are heading to more and more sophisticated automobiles, says Mr. Bourbonnais, we're achieving excellence in unprecedented technology levels, the banner is capable of conceiving and propose consequent training programs that will permit technicians to constantly keep themselves up to date.

There are so many sollicitations and proposed programs in training courses that it becomes very difficult for some bodyshops to make a choice. It's unfortunate that certain bodyshops businesses in the future will have to refer to subcontractors to do the job, because they could not organise training courses in time.

We know, consumers look for security, the banner system allows an enterprise to be easily recognized by the consumer, it is identified to something the consumer has already registered in his memory, in addition, generally the consumer knows what he will find when he arrives at a shop identified by a banner, he feels more reassured on the qualifications of the technician and what kind of service he will receive. Finally the cost of promoting the bodyshop image are divided between all the members, therefore less cos a bigger coverage than if it was paid by one individual alone.

We have to consider that members of a banner have a very active social life in their industry. They are more often surrounded by people that have about the same ideas and exchange the same objectives as to the successful outcome. In short, the bodyshop operator can easily consult every field by inquiring services from his banner. Volume discounts, group insurance programs, are other consideration factors.

In subject of collision repair, the majority of banners have excellent guarantees on repairs effectuated, enormously influencing consumers. Wheter a technician takes his retirement, withdraws from his enterprise for health reasons or because he decides to sell, the guarantee will still be applied, because the banner will have the repair made at another one of his members and this for the consumer, is very reassuring…and very securing. Certain banners dispose of financial methods available for the consumer even leading to a credit card. The bodyshop can recommend to the consumer to finance his deductible by the credit system offered by the banner, or, to finance his additional little repairs which are not covered by the insurance.

In our days, we must take into consideration that the bodyshop operator have to associate with many players at the same time, the insurers as well as the consumers want to work with who know their product with perfection, a banner is very appealing to them because it covers a vast territory in which their clients are part of. Instead of working in a case by case system, the banner offers them uniformity, one program only and only one mediator in which they find quality in a product research and market analysis, where his interest is in the banners.,

CONSIDERATIONS

We believe at THE COMMUNICATOR that their exist a world of difference between a banner and a professional association, for example, whether a bodyshop operator is a member of a banner or not, this has nothing to do with his participation in a professional association of is choice. It is the business of each bodyshop operator to take concern in the advancement of his profession. We don't see why both would be incompatible, just look at the enterprises evolve in general to see that instead they both go together for well-informed business men.

It is the professional association's business to work for its members, provided that the members in question are in the profession the so called association represents, as to the choices members make to find out which system they wish to use to operate their business. Also, what we recommend here to the bodyshop operators is to take care in evaluating their choices and not to decide on emotional eruptions, get out of paradigms as would say someone I know well…Shop around and evaluate what could bring you to become a member of a banner. Take appropriate decisions to the environment we live in today. Only you can take that decision because you're the one that will have to live with it.