Increasing Recycled Auto Part Sales

Plymouth, MN - The ADP Hollander Client Advisory Council recently addressed increasing recycled part sales for collision repair. Fueled by the desire of insurance companies to reduce their overall repair costs, recycled parts are now the focus of renewed attention that can help increase sales for individual recyclers, and market penetration for recycled parts as a whole.

The Client Advisory Council is a group of 24 leading ADP Hollander clients formed to provide ADP Hollander with input on industry needs, products and requirements. These industry representatives, along with key members from ADP Hollander, have attended forums, discussion sessions and joint meetings with insurance collision repair representative for several months. The group has concluded that it's necessary to resolve a few issues to achieve a high rate of recycled parts sales growth. Two of the most important issues are repair cycle time and use of standard terminology.

Repair Cycle Time

Insurance companies and collision repair facilities monitor the total time it takes to repair a vehicle, from the time it arrives for repair to the time it is returned to the customer. This span, referred to as a repair cycle time, is critical to insurance companies because the longer it takes to repair the vehicle and return it to the owner, the higher the out-of-pocket costs. It also affects collision repair facilities because they need to maximize the number of vehicles they can repair, reduce the overhead per vehicle and thereby increase their profits.

Collision repair facilities plan all aspects of a repair to minimize cycle time. They try to manage when the bad parts will be removed (possibly immobilizing the vehicle), when to use the bays to repair and install replacement parts, and so on. A delay in the delivery of replacement parts (new or used) can throw the entire schedule out of synch, impacts the repair of other vehicles as well. It has been estimated that if the repair cycle time for all vehicle repairs could be reduced by just one day, the combined impact to the insurance and collision repair industries would be a savings of about $1.5 billion per year. Some of the ways to help collision repair facilities reduce cycle time are:

• Give accurate delivery estimates: While an optimistic estimate may help the recycler get an order, a late delivery affects the repairer's ability to deliver the vehicle on time and may deter them from future business with the vendor.

• Specify the source of your parts: If you must order a part from another recycler, inform your collision repair customer so they can estimate the risk to cycle time.

• Provide updates proactively. Don't wait for the repairer to call when parts are not delivered on time. Instead, give them an update in advance so they can make changes to their plans before the repair goes on the critical list.

• Be honest about the condition of the parts: Built into their time estimates is the time to repair and prep your parts. If parts are not described accurately and need more work than planned, it will delay the job.

Use of Standard Terminology

Repairers and recyclers may have different perceptions of definitions. For example, a recycler who indicates that a part has "two hours of cleanup" typically includes the estimated preparation and repair time to make the part suitable for use. However, to a repairer, cleanup usually means only degreasing and washing the part to make it ready for painting, not repairing. It is likely that if additional time is needed to repair the part, the repairer will call the recycler for an allowance for that time. This can create considerable friction since the recycler may perceive he has already included the repair time within the "cleanup."

The Client Advisory Council is addressing the issue of standard terminology in a committee that includes several repairers and at least one insurance representative. Once the terms have been defined, they will be submitted to the Automotive Recycling Association (ARA) and collision repair organizations for broader input, and then released to all as a firm step toward improving communication between buyers and sellers. A similar joint effort is underway as a part of the Automotive Services Association (ASA) initiative with the ARA and ADP Hollander. Until these initiatives are finalized, you can increase your sales to repair shops, gain customers loyalty and reduce your returns by following these suggestions:

• Describe your parts objectively. Instead of using "sales" terms (clean, really nice, needs work), use objective terms such as "four-inch scratch, paint only." If the Conditions and Options field in your inventory systems does not provide enough room for an objective description, use the Inventory Notes or Users Notes as well.

• Be accurate in your descriptions. Buyers don't want surprises and would rather know the accurate condition of a part up front than argue for a price reduction later. Negotiations take time and they extend repair cycle time.

• Use care when giving damage estimates in hours. Unless you are an expert appraiser, chances are your estimated time won't agree with the buyer's. Rather than estimating time only, also describe the extent of damage in terms of measurements, preferably in inches. In addition, ask one of your repair customers if your inventory staff could spend some time at their facility for valuable cross training.

• Use the ARA Damage Codes. The ARA has distributed the damage code graphics to repairers, and ADP Hollander has provided space in the inventory record to insert Primary and Secondary damage using the ARA's three-digit code. You will find a copy of the standards in the documentation for Hollander Yard Management System release 97.2 and they are also built into AccuPart and the newly redesigned Powerlink. You also can contact the ARA for a copy of the damage standards or download them from their web site.