Toyota tests program to boost bump shop profit

To help dealers get more customer referrals from insurance companies, Toyota Motor Sales U.S.A. Inc. will certify dealership body shops.

Four Toyota dealerships are piloting the program, which is part of Toyota’s strategy to support dealership collision repair, said Roger Foss, Toyota’s national body shop business development and technician recruiting manager.

To become a Toyota Certified Collision Center, a body shop will undergo a two-day on-site evaluation. The shop will be measured on how well it conforms to 10 standards that range from business ethics to safety and environmental compliance. The standards incorporate performance, productivity and profitability.

Weaknesses will be pointed out during the evaluation, and suggestions will be made about how to fix the problems.

The pilot began in October; the national launch is scheduled to start in March or April. Dealer participation is voluntary, Foss said.

Currently, 465 of Toyota’s 1,200 dealerships have body shops.

The push to help body shops boost efficiency and effectiveness is designed to increase labor sales for dealers, increase parts sales for Toyota and offer another way to reinforce customer satisfaction.

NEW PROFIT CENTER

“We decided that it is an important part of our and our dealers’ future,” Foss said.

Each year, 1.5 million to 2 million Toyota vehicles are damaged, and $3.6 billion was spent last year to repair them, according to Toyota. Most of those vehicles are repaired by independent body shops, Foss said.

Most insurance companies have direct repair programs, which means they refer customers to a list of body shops. The recommended shops must meet criteria for equipment, training and pricing.

Toyota is instituting the support program to make sure its dealers’ body shops meet and exceed the insurance companies’ criteria, Foss said. It will focus on helping dealers in three primary areas:

1. Business operations – includes operating standards, consulting services, management training and marketing programs.

2. Technical support – technician training, certification and recognition; published repair standards; technical communication; facilities and equipment upgrading; and environmental compliance information.

3. Insurance industry support – encouraging insurance companies to direct customers to Toyota Certified Collision Centers; reinforce the use of genuine Toyota parts.

GOOD BUSINESS

Since insurance covers about 90 percent of all repairs, it makes sense to build a close relationship with insurers, Foss said.

Early on, company representatives began meeting with insurance companies’ policy makers to learn how Toyota could build its dealership body shops to fit the insurance companies’ needs.

“They control direct repair,” Foss said. “We will continue to market these shops based on the quality of repair and the ease by which our shops handle customers. We can offer our parts at a competitive price.”

Joe Bertolami, owner of Toyota West in Statesville, N.C., is participating in Toyota’s program. He said his shop can compete with the industry’s best, but he has found room for improvement. For instance, at Toyota’s suggestion, Bertolami instituted a pay plan to reward employees for doing a good job.

“I’m impressed with what I’ve seen. I fully intend to be certified,” said Bertolami, whose body shop sales were $2.3 million in 1996.

Fred Hass Toyota in Houston is also taking part in the program. Vic Vaughan, the general manager, said the program will give his dealership an edge over competitors.

“Certification will give us a new level of credibility and let the insurance company know what we’re doing right,” said Vaughan, whose store racked up $3.5 million in sales in 1996.

While manufacturers have typically not been involved with dealership body shops, that seems to be changing. Ford Motor Co. launched “Body Shop 2000″ in January 1993 as a consulting and management program for its dealership body shops to help the shops improve sales productivity and quality.

Later this year, Toyota plans to develop materials to encourage other Toyota dealers to look at body shops as a business opportunity.

Body shop top 10

Toyota’s Dealer Support Program for body shops has 10 types of certification standards:

1. Business ethics 2. Customer satisfaction 3. Financial performance 4. Management practices 5. Marketing strategies 6. Production processes 7. Training/certification 8. Facility 9. Tools/equipment 10. Safety/environmental compliance

Abstract

Toyota Motors Sales U.S.A. will certify dealership body shops to aid dealers in securing more customer referrals from insurance companies. Body shops will have to be subjected to a two-day on-site evaluation focusing on its conformance with 10 certification standards ranging from business ethics to safety and environmental compliance before they become Toyota Certified Collision Centers. Four Toyota dealerships will pilot the program.

Insurers fuel growth in windshield repair

Some 10 million windshields are replaced annually, a market worth about $3 billion in 1997. By contrast, the service industry repaired about 500,000 damaged windshields in 1990. By 1995, the volume had risen to 3 million.

“The insurance companies are realizing how much they can save,” says Leo Cyr, marketing director for the 500-franchise Novus Inc. chain based in Minneapolis.

Some 200 insurance companies now pay 100 percent of a windshield repair hill, waiving the deductible in an effort to sway consumers away from windshield replacements whenever possible. There are potential benefits as well as pitfalls for service shops. While the art of repairing cracks has matured in the past decade, it still does not always restore the glass to perfect condition. Some damage requires more expensive repair, and traces of the damage remain when the work is done.

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Also, a windshield is part of a vehicle’s structure and helps prevent the roof from being crushed during some accidents. In some cases, a damaged windshield must be replaced in order to maintain the auto’s structural integrity. But for most jobs, glass repair efforts can restore a windshield to like-new condition at a sizable saving to the consumer, Cyr says. That translates to customer satisfaction – in more ways than one. By repairing a vehicle’s original windshield, the shop can leave the more secure factory seal intact. Wind noise and moisture problems sometimes plague vehicle owners whose windshields have been replaced.

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On top of that, fuel injectors OR carburetors are also among the second-most parts requiring a host of maintenance, therefore, we always recommend our audiences to clean their vehicles’ fuel system & fuel injectors regularly as an effective way to prevent parts replacement – check out this website for simple solution of fuel injectors cleaning. Additionally, new vehicles are becoming more complex. The glass now is equipped with coatings, enclosed antennas, head-up displays, sensors and even rain detectors, all of which make a replacement more complicated and expensive.

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THE CURE

New developments in resins and in “curing” the resins have helped the repair trade.

To correct damage in the glass, technicians follow four steps.

  • They clean the crack in an effort to stop the damage from spreading.
  • They restore the structural integrity of the glass by applying resin to the cracks.
  • They restore clarity to the damaged area, making sure the resin is “optically matched” to the glass.
  • The glass is smoothed for cosmetic purposes and to make sure the repaired area will not interfere with the windshield wiper blades.

Traditionally, a shop’s ability to make a repair depended on where it could apply and cure the corrective resin. Cracks along the edge of the windshield were difficult because they sometimes extended under the seal. The process was limited because it relied on ultraviolet light to cure the resin. Ultraviolet light could not reach into unseen areas.

In the past two years, Novus began simultaneously using ultraviolet light and chemicals to cure the resins. The chemicals enable technicians to reach into crannies where ultraviolet light cannot go, Cyr says.

SUPPORT

There are roadblocks, Cyr admits. “We’re not accepted by the replacement industry. We’re taking business away from them. They’re in the business of making and selling new parts, not fixing old ones.”

But Cyr says a large number of Novus franchisees now do business with new- and used-vehicle dealers. This month, the chain will launch an automatic call-routing system to make its technicians easier to summon. When a call comes into the system’s 800-77NOVUS line, the system will detect the area code of the caller and rout the customer to the nearest repair technician.

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Abstract

Insurance companies have realized how much they can save from the repair instead of the replacement of car windshields and may require automobile repair shops into conducting repairs. The drive for windshield repairs are triggered by the improvement in glass-repair technology and the savings for insurance firms. Statistics show that glass repairs, which cost from $50 to $60 each, have risen dramatically to three million in 1995. Windshield replacement costs from $250 to $300 each.

Ford cuts bumper-fascia prices

Ford Motor Co. and its parts making unit, Visteon Automotive Systems, have cut the prices of replacement bumper fascias to dealer wholesalers who buy by the truckload.

The cuts average about 29 percent; they cover 41 high-volume fascias. For instance, the rear bumper fascia of a 1996-97 Ford Contour fell from $547.11 to $327.60, a reduction of 40.1 percent; the price of a front bumper fascia of a 1991-93 Mercury Tracer fell from $532.42 to $346.50, a reduction of 34.9 percent. The price cut took effect Nov. 1.

The bumper fascia is the plastic exterior component that is one element of the vehicle’s bumper system.

George Gilbert, crash parts merchandising manager at Ford Customer Service Division, said the direct-ship program to dealer wholesalers lets Ford reduce inventory and freight costs and pass those savings to dealers and their body shop-owner customers. He said Ford has about 300 to 400 dealers who are serious wholesalers.

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“The bottom line is that it makes dealers more competitive in the collision repair business,” Gilbert said. Mike Jordan, executive director of Ford Customer Service Division, said Ford’s dealers told the company it needed to do more to compete in the replacement bumper fascia business.

In early July, Ford went to work. It analyzed the market, solicited tips and ideas from dealers and set up a transportation system.

Jordan said Ford has doubled its bumper fascia sales to dealers since the program began Nov. 1.

Glen Hoffman, parts manager at Bob-Boyd Lincoln-Mercury in Columbus, Ohio, said he is excited about the program. By mid-December he had ordered and received 400 bumper fascias and was considering ordering another 96.

Until Ford’s truckload price reduction, original-equipment bumper fascias for Ford, Lincoln and Mercury vehicles cost about 25 to 30 percent more than their aftermarket counterparts, Hoffman said. The price cut, which he passes on to his customers, makes the Ford parts more competitive. He said it is too early to see a real increase in bumper fascia sales, but he believes it eventually will have a huge impact.

“I delivered 15 (bumper fascias) to another Ford dealer 50 miles away,” he said. “It has been a good program; the only problem I have is finding space to store them.”

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Craig Muhlhauser, 49, Visteon vice president of marketing, sales and service, said the bumper fascia price cut gives the newly spun-off company the chance to build confidence with Ford and the dealers.

Said Muhlhauser: “It lends credibility to the Visteon moniker; we measure our success by the success of our customers.”

Cost savings

Program specifics

* The minimum order for each part is three; the minimum truckload order is 96 parts.

* Parts will be primed, wrapped and packaged three to a box.

* Orders will be shipped within two working days and will reach the dealer within a week.

* Smaller dealers can take advantage of the reduced prices by pooling their orders with nearby dealers. Up to five dealers who are within 50 miles of each other can pool their orders to meet the minimum order requirement.

Abstract: 

Ford Motor Co and its automobile supplies unit, Visteon Automotive Systems are giving discounts to wholesale buyers of replacement bumper fascias beginning Nov 1, 1997. The discounts range from 29% for 41 high-volume fascias, 40.1% for the rear bumper fascias of the Ford Contour and 34.9% for the front bumper fascia of Mercury Tracer. The discounted pricing is due to the reduced inventory and lesser freight costs entailed when Ford ships supplies directly to dealer wholesalers.

Dura Automotive Systems goes public

S. A. “Tony” Johnson’s decision to take Dura Automotive Systems Inc. public last week was hardly a gamble.

Johnson raised $47.8 million as part of his plan to expand the company into a major supplier of automotive systems, a strategy that won him Wall Street applause for earlier ventures.

Operating through his low-key Minneapolis-based Hidden Creek Industries Inc., Johnson already has built two powerhouse suppliers, Tower Automotive Inc. of Grand Rapids and Automotive Industries Holdings Inc. AIHI was sold last year to Lear Corp. for $900 million.

Dura Automotive (Nasdaq: DRRA) is much smaller. The designer and manufacturer of parking-brake systems, cables, latches and other mechanisms posted a gross profit of $33 million or $2.03 a share on sales of $254 million last year.

But Johnson appears to be following the same strategy: Buy key automotive suppliers and use cash and leverage to build them into companies capable of building not just parts, but entire systems for integration into cars and trucks.

“We acquire companies who add technology, new customers and markets or added vehicle content we don’t currently have,” said Carl Nelson, Hidden Creek’s controller.

Said one expert, “Hidden Creek has benefited from a growing preference among the Big Three to deal with fewer but larger companies.”

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Johnson built Tower into a preeminent stamping-parts company. The company went public last year at $11.50 a share, raising $46 million. So far this year, Tower bought two stamping companies from MascoTech Inc. (NYSE: MSX). Tower’s stock closed Friday at $24.25.

Investors in Dura Automotive appear to have taken their cue from other Johnson properties. Offered at $14.50 a share Thursday, the stock closed Friday at $17.

The insiders who profited at Tower are the same ones who own Dura Automotive. They include Hidden Creek, a partnership between Johnson’s J2R Corp. of Minneapolis and the Toronto-based Onex U.S. Investments Corp., and various members of management, Nelson said.

Johnson, 56, a former chief executive of Pentair Inc., a paper, electrical-tools and sports-ammunition conglomerate in Minneapolis, could not be reached. He founded Hidden Creek in June 1989 after being let go as the No. 2 man at Pentair, according to the Star Tribune in Minneapolis.

With the help of about $900,000 in severance pay from Pentair, and corporate partner Onex, he set out to build his automotive-supplier empire.

In 1991, he bought Automotive Industries of Strausburg, Va., a private company with earnings that accelerated under the new leadership. The company has produced compound annual-revenue growth in excess of 30 percent for the past seven years, according to investment bank Seidman & Co. Inc. in New York.

Johnson built Automotive Industries into a leading supplier of interior-trim systems and under-the-hood components. He took the company public in May 1992 at $14 a share.

Lear paid $33.50 a share three years later for AIHI, Automotive Industries’ parent company. But the acquisition helped Lear move from being a seating supplier to one providing entire automotive interiors. Hidden Creek acquired the Dura Automotive Hardware and Mechanical Components division from Wickes Manufacturing Co. in November 1990. Johnson put his own management team in charge to boost quality and cut costs.

He cut inventories to $9.9 million from $21 million and renegotiated a contract with the United Auto Workers union. Johnson then installed Karl Storrie, a former group president of a number of aerospace-manufacturing companies, as president and chief executive.

Four years later, Dura Automotive acquired the parking-brake and cable business from Alkin Co. in Moberly, Mo. The move expanded Dura Automotive’s capabilities but saddled it with millions of dollars in recall and other costs from allegedly faulty-brake mechanisms Alkin built, according to the company’s S-1 registration statement.

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Ford Motor Co. was forced to recall 893,000 trucks built between 1992 and 1994, according to the registration documents filed with the U.S. Securities and Exchange Commission. Dura Automotive’s share of the recall was $6 million.

“We accepted the potential liability as part of the acquisition and negotiated with Alkin and Ford to minimize the impact to Dura,” Dura CEO Storrie said.

The Alkin business helped Dura Automotive dominate the parking-brake and cable-system business in North America. The company operates 10 plants in the United States and Mexico, with most of its sales to Ford and General Motors Corp.

Dura Automotive may be going public, but its control remains firmly in Johnson’s hands. The 3.3 million-a-share offering includes Class A common only; each is entitled to one vote. But each share of Class B common has 10 votes. That gives Johnson and other existing shareholders about 94 percent of Dura Automotive’s voting stock, according to the company S-1 statement.

The company plans to use the offering proceeds to repay a $35 million loan and $4 million in subordinated promissory notes. The notes are held by Onex, J2R and Alkin, according to the S-1.

Johnson’s plans for Dura Automotive are contained among the fine print of his stock-registration statement. The company is headed into acquisitions that will allow it to dominate other automotive fixtures, including gas-pedal assembly, which incorporates clutch, brake and accelerator pedals.

Storrie said the company is looking to Europe and other markets, with an acquisition planned within a year.

WORKING SMART IN YOUR GARAGE

A place for everything and everything in its place. WHEN YOU LOOK AROUND YOUR shop, what do you see? Is everything orderly, or is it in chaos? If your shop is like a Hollywood disaster scene, then it’s time to turn that around. Shop organization is fundamental to a great race program, and without it, you are wasting a lot of time and energy in an environment that shouts inefficiency. When you think about it, an organized shop provides an environment in which your efforts will be maximized. That’s because you won’t be wasting your time looking for things. What’s more, you will have a sense of freedom and clarity while you go about working on your car. So which kinds of car parts that we should maintain periodically in these shops? I will recommend: charging system, gauges and meters, switches, especially unclogging fuel injector or carburetors.

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It does not matter whether you have a large or small shop–keeping everything in order not only provides a great working environment, but it also says something about your dedication to your race effort. Sloppy shops tend to produce sloppy habits and sloppy results, neither of which can be a good thing for a race endeavor.

So, how do you go about getting organized? Well, there is no specific blueprint to follow for every race shop, however, there are some basics for shop organization that permeate almost any well-planned garage. Nothing about shop structure is difficult; it’s simply a matter of following the old saying, “A place for everything and everything in its place. To gather some information on organization basics, CIRCLE TRACK recently visited the professional race shop of Dave Pletcher in Pinellas Park, Florida. Pletcher’s shop covers everything from A to Z, therefore, it seemed to be a great place to assemble some shots that illustrate a systematized garage. We were not disappointed.

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Follow along as we illuminate some of the elements of a well-planned and orderly shop. A surefire way to avoid frustration is to put small parts in order, such as the ones shown here. Arranging labels to face outward will provide easy visual reference for each.

You can waste a lot of time sifting through nuts and bolts if you don’t have them categorized, as in this shot. Making bins for such small parts is a simple and inexpensive way to help keep things arranged. A toolbox is a necessity for every shop, and it’s important to keep the contents in order. This very basic step of keeping tools catorgorized is one of the most fundamental things you can do to keep things running smoothly. Keeping them in order is smart, and putting them back when you are finished will save you a lot of frustration. Hoses and extension cords left lying around, when not in use, can be a safety hazard as well as cause premature wear. Make sure they’re neat and out of the way, like the ones shown here.

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Building a rack for sheetmetal should be high on your list of organization priorities. Shelves such as these provide quick and easy access to any sheet products. A rack like this one really is the only reasonable way to store tubing. If you are adept at welding, this can be a do-it-yourself project. If you don’t do your own welding, take the time to have a local welder fashion a rack for you. There are a million things to keep in order. A shelf unit or cabinet, like the one shown here, is ideal for storing many small parts. Plastic bins are a great solution for labeling small parts. You can either buy them or simply use some discarded plastic food containers. Keeping the many parts of an engine organized is essential. Systems such as this one are an outstanding idea for staying systematic and keeping parts clean. If shelving or racks are not possible for you, a simple solution to organizing parts is to use discarded soft-drink trays (shown).

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In addition to storing parts, labeling parts is also vital and should be a part of your overall planning. In this example, a piston is being labeled with an electric etching device. The etcher is inexpensive, and its use goes a long way in remaining systematic in tracking parts and record keeping. If you can’t use an etcher to label parts, use wire-bound paper tags (shown). Again, this is an inexpensive and simple way to keep some items in order. Engine assembly can be made less frustrating when you keep all the engine parts together. A cart (shown) is an ideal method for keeping parts together and easily accessible. Use of simple equipment like this helps make your work time more efficient. Peg-Board in a garage is the most common form of organizing things. Here it’s being used to keep a variety of washers orderly. Peg-Board is easy to manage, easy to manipulate, and best of all, it’s cheap. Many small parts come from manufacturers in clamshell containers such as the ones shown here. Rather than just tossing them into a drawer, using the ever present PegBoard to keep them straight is a much better way to handle them. Even the attachments for your machines should be kept in a concise manner. This picture of cutting tools for a horizontal milling machine have been set up on a Peg-Board for easy visual reference and retrieval.