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Thursday, 19 December 2013 00:20

Alabama Shops Speak Out on Life After Select Service

Back in May 2012, 18 shops in the Birmingham, AL, area stunned the collision repair industry by voluntarily terminating their Select Service agreements with State Farm after the insurer required the PartsTrader electronic parts procurement program in their market. Now, more than a year later, some of the shops indicates that most are faring better than other collision repairers may have thought.

Steve Plier, founder of the Alabama Automotive Repair Industry Society of Excellence (ALARISE), told a media source that overall, those shops have reported lower volumes of State Farm work but higher profit margins. “I do believe a couple of the smaller two-man shops that removed themselves from the program have most likely struggled more than the $1 million and up per year repairers, but I believe that has more to do with total volume being down versus simply the State Farm/PartsTrader issue,” says Plier. “Business in the metro Birmingham area since early 2012 (before PartsTrader rolled out) has been what I would consider to be slow across all insurance company lines. In the spring of 2011, central Alabama was hit hard by strong storms, so the volume since late 2011 has not been what I would consider brisk.”
Also quoted was Lloyd Bush, owner of Bush Auto Collision Repair in Gardendale, AL, who said it was a “gut-wrenching decision” to drop Select Service since State Farm accounted for 44 percent of his work, but overall he has come out okay.

“We’ve lost 5 percent of our gross sales, but our net profit has gone up,” said Bush. “We’re able to charge storage, our teardowns aren’t scrutinized and our local State Farm agents are still sending us business. I spoke to them before coming off the program to tell them what was going on, and they agreed with me and said, ‘We don’t send people to you because you’re on the program; we send them to you because we know you’ll fix the car correctly and we won’t have any problems.’”

Bush attributes the 5-percent loss to steering, mainly customers who have never been to his shop before and make a claim via the call center instead of their agent.

Bush says if faced with the same decision today, he would make the same choice, primarily because of the storage he has been able to charge due to no longer having a contract with State Farm. He also charges for lift time. “The lift wasn’t free, plus one of my men has to do it,” said Bush.

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