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Thursday, 22 March 2012 16:31

CAA Glendale/Foothill Chapter Holds Meeting About Industry Total Losses at LKQ, Santa Fe Springs

Although she was home ill, Linda Holcomb, Glendale/Foothill Chapter President, gave a report on the CAA’s first Quarter Board Meeting held in Sacramento. It was read by chapter board member, Mark D’Angelo, who conducted the evening meeting.  Linda said, “I have to tell you I am very excited about our new President, Dave Picton. He delivered one of the best president’s speeches I’ve heard in a long time. Dave would like to hear from any of our members about their ideas and directions of our Industry and the CAA. His phone number is (916) 731-8203. Please feel free to call him.”

D’Angelo said, “The focus of this meeting is a very important issue in our industry, total losses. They are affecting our body shops every day and taking away repairs from us. Not to mention that most of the customers really don’t want their cars totaled. The purpose of this meeting is to take a look inside the world of total losses and find out why they are happening, and where they are going.”

The principal speaker at the meeting was Herb Lieberman, who serves on LKQ’s Operating Committee, work with LKQ’s Govt Affairs Dept and represents LKQ Corp to many inter- and intra-industry national associations by speaking on “The Total Loss Dilemma.” With more than 430 facilities in five countries, LKQ provides its customers with the industry’s largest selection of replacement parts and services. LKQ specializes in recycled OE auto and truck parts, new aftermarket replacement parts, reconditioned OE replacement parts, remanufactured engines and transmissions, rebuilt OE replacement parts, heavy truck and equipment parts, paint and body shop supplies and equipment, and salvage vehicle disposal, with national part purchase programs and insurer services. The meeting included a tour of the LKQ facility to get a one-on-one look at their business behind the scenes.

Herb said, “This is a multiple Industry Concern—not just the concern of LKQ Corporation. In fact it is so important that SCADA has made the topic of salvage determination, purchase, sale and processing its number one issue of concern for 2012. This is a topic that I believe has great impact on the collision repair industry, all suppliers to the collision repair industry and—truly most important of all—a direct impact on the consumer who we are all in business to serve. “

He started out by noting that LKQ handles between 10,000 and 12,000 salvage vehicles a week. They obtain most of these vehicles through competitive bidding. While this may seem like a lot, he began showing how many vehicles could have been available, not only for salvage bidding, but to shops to be repaired. Out of 65,000 a week, 19,500 (30%) are exported out of the U.S. Out of the 24,500 taken by professional dismantlers, many parts are also shipped out of the country, largely to Russia and Nigeria at this time. This should be of great concern to collision shop owners because those 10,500 (25%) vehicles could have stayed in the U.S. and been repaired by our body shops. To make this worse, Insurance Auto Auctions recently signed an exclusive agreement to provide China with their vehicles.

One aspect of the problem he emphasized, is the absence of a uniform standard for what constitutes a total loss, what percentage of a vehicle is repairable and how the title is branded. Every state makes its own laws. Often an insurance company makes the decision, taking away repairs from the collision industry and also overruling customers who really don’t want their cars totaled. Herb noted that in New South Wales, Australia, a law was passed that required any vehicle that was declared a total loss by a professional estimator,  to only be sold for end-of-life processing. The result was significantly more vehicles being repaired by the industry.

Herb stressed that this problem can only be solved in the U.S. by shop owners coming together with other concerned players like auto dismantlers to press for laws declaring something like a 50% consumer right to repair. The potential control for such a right is already in place. In California, used car dealers are required to report the VIN of a vehicle to the NMVITS, National Motor Vehicle Title System, or pay a $1000 fine per vehicle. In this difficult economy more people are choosing to repair and keep their existing car rather than buying new. Lobbyists for organizations like the CAA need to educate legislators about this issue and stress the importance of protecting consumer rights as well providing business and jobs for a vital industry like ours in our state and in the nation.

Herb Lieberman can be contacted at HMLieberman@LKQCORP.com. More information on this topic can also be obtained by contacting Patrick Matthews, district manager for the west region, at 562-587-9014, or prmatthews@lkqcorp.com.

Percentages mentioned in this article are used as approximate numbers based on actual LKQ Purchases and percentages given by major salvage auctions.

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