Tuesday, 30 April 2002 17:00

Recycled parts issues take center stage at CIC meeting

Used or "recyclable" parts were the focus of discussion during a number of other presentations at the Collision Industry Conference (CIC) held in mid-March in Nashville, Tennessee. 

Chris Dameron, director of the Automotive Service Association (ASA) Collision Division, reminded CIC participants that ASA has developed a reference chart for estimators of "non-included operations when installing a recycled part." He said that while this is a useful tool, ASA would like to see a longer-term solution included in the electronic estimating systems. The association has submitted a request to the primary estimating system providers asking them "to make this non-included information more easily accessible."

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CIC participants in Nashville had an opportunity to compare three used doors ordered by a local shop to see if they were as described by the auto recyclers from which they were ordered.
"What we're suggesting is that a 'drop-down box' appear [on the computer screen] whenever a recyclable part is selected," Dameron said. "It will serve to remind the user of some of the more commonly missed procedures. Six of the major insurers have given us their written support to encourage the information providers to enhance their products with these drop-down boxes. We'd also like to see these enhancements used in the new part replacement guides as well. We'd like to ask everyone in the industry to support us by encouraging the information providers to make this a priority on their schedule."

Nearly two hours of the CIC meeting in Nashville were devoted to a panel discussion of the "recycled parts supply chain." Among some of the key points raised:

- The Automotive Recyclers Association estimates that only about 30 percent of total loss vehicles are purchased for recycling; the majority are purchased for rebuilding or shipment out of the country. This drives up the return insurers receive for salvage, but also reduces the amount and quantity of quality used parts available on the market, which in turn drives up used parts prices, parts theft, and the number of vehicles being totaled.
 
- The inconsistency of titling laws from state to state makes it relatively easy to "wash" a title for a vehicle branded as a total. Florida, for example, is one of the few states that declares some total loss vehicles as non-repairable, issuing a "certificate of destruction" for such vehicles; but a state of Kentucky memo to its vehicle titling employees states that a "Florida certificate of destruction can be upgraded to a Kentucky salvage title."

- Some solutions proposed by the panel, which included representatives of insurers, auto recyclers and repair shops, included more use of "non-traditional" recyclable parts (such as door and back glass); more care by insurers about insuring previously totaled vehicles; creation of a business model that demonstrates to insurers why changes that may result in lower prices paid for salvage could be beneficial to them overall; an industry-accepted definition of a non-repairable vehicle; and national titling legislation that supports that definition.

The CIC committee that over the past three years has organized comparisons of OEM and non-OEM parts at CIC has turned its attention to the third parts option: used or "recyclable" parts. Participants at CIC in Nashville hovered around three Ford Taurus left front door assemblies, ordered and brought to the meeting by a Nashville shop. Jeanne Silver, co-chair of the CIC Parts and Airbags Committee, said the shop was asked to order the door from three used parts suppliers that the shop regularly does business with, without revealing the parts were part of a CIC project.

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 Enlow

"I specified that he use three reputable parts suppliers, not someone he wouldn't use everyday and trust to provide quality parts," Silver said. In this, the first of what the committee hopes will be a regular demonstration at CIC meetings, the names of the companies providing the parts were not revealed. Committee co-chairman Rod Enlow did say two of the companies were "single-location" auto recyclers, while one was a multi-location national salvage parts supplier.

"The issue was just to look at recycled parts as received," Enlow said. "We tried as much as possible to make this 'just another day in the life of a repair facility.'"
 
The results? All three parts were the correct year, make and model, and had all of the trim, glass and options specified when ordered. (Hinges were not specified when ordered; two of the doors came with hinges, but one did not.) Two of the doors arrived a day after they were ordered; the third came a day later.
 
To avoid anti-trust issues, the committee did not reveal repair times the parts suppliers used to describe the condition of the part, but said only that Door A was described as having "light damage," Door B was described as having "slight dings," and that Door C "shows no damage." How well the parts lived up to those descriptions was left to CIC participants to decide.

"Clearly anyone who looked at Door C [and saw no damage] either needs to get their eyes checked or they got the wrong door," Massachusetts shop owner Chuck Sulkala said.

"Both the repairer who ordered the parts and I felt they were in different condition than as described," Silver agreed. "If you look at Door C, I would venture to say that any repairer would return that door. Yet 'shows no damage' is the exact description [the seller provided]."

The committee also checked to see if any of the doors had been refinished. Two of the doors had consistent paint mil thickness of 3.0; Door C, however, had mil thickness that varied from 4.5 to 5, leading the committee to suspect the door was a blended panel in a previous repair.

Inaccurate descriptions a big problem
 
CIC participant Herb Lieberman of Lakenor LKQ Auto Salvage in Santa Fe Springs, Calif., said inaccurate descriptions of parts condition is all too common a problem in his industry. "The fact is, on Door C, the majority of the industry would quote that door to an insurance estimator as being a clean door, with the full knowledge in their mind that when they deliver that door to the repairer, they'll have to negotiate the repairs on it," Lieberman said. "They know very well that if they tell the insurance estimator or body shop estimator that they have a door that [needs] three hours worth of repair and may have been a repaint, that estimator is going to hang up the phone and call another recycler. The next recycler may not be as honorable, and he's going to say, 'Yes I have a perfect door.' Then when the repairer orders the door, and when it arrives, the repairer has a surprise. That's what happens in the real world."
 
Enlow said his committee is working on one possible solution for the problem: service level agreements in which there are cash payments or other repercussions if the parts supplier doesn't provide the service level agreed to.
 
"If the part is not usable, there needs to be a consequence paid by the person who sent me that part," said Keith Manich, a CIC Parts and Airbags Committee member working on the service level agreement issue. "In the future, you're going to find a lot of people who don't want to continue to pay that monetary amount, so the descriptions will get better." Manich said the committee hopes to present a draft of the service level agreement proposal when CIC meets in Salt Lake City, Utah, in July.
 

John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.

 

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