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Wednesday, 03 September 2014 22:11

Southern California Shop is Happily DRP-Free

Direct Repair Programs (DRPs) have become the main source of revenue for body shops nationwide, and that doesn't appear to be changing any time soon. While many collision repairers look at DRPs fondly, others do not. One body shop owner in southern California said enough to DRPs, and even though his numbers have dipped slightly since then, he’s sleeping better at night knowing his profits per car are continuing to climb.

Owner Hiten Adhvaryu, 36, purchased Quality Assured Collision Center in Long Beach, CA in 2007. In 2008, the shop had its worst year as the economy imploded, but by the middle of 2009, the business was almost back to normal. Since then, the shop has improved its revenues every year.

Adhvaryu’s theory for success is simple--concentrate on the work and everything else will fall into place.

“The work comes first and that’s our approach,” he said. “There are things that will happen in any business that you can’t control, but you can control the quality. Once we get a customer in here, we go out of our way to exceed their expectations. Getting customers isn’t easy and we work hard to acquire them, so once they’ve agreed to bring their car here, we want to perform at a high level. Repeat customers and referrals are the backbone of any business and collision is a great example of that.”

Quality Assured operates out of a 63,000-square-foot facility that was built in the 1940s, but Adhvaryu is proud of the fact that his approach to fixing cars is cutting-edge, not old school. If there is a new form of technology available to him, Adhvaryu will adopt it without hesitation, he said, as long as it helps his business in a tangible way.

“I always want to be on the cutting-edge of every aspect of the new technology in this industry,” Adhvaryu said. “We were one of the first shops in the area to spray waterborne and a first adapter with our management systems. We’re ramping up to work on the newer aluminum cars and our people are certified to work on the new Ford F150s. If we can use something to do a better job, we will pursue it, but only if it makes sense for us.”

During the summer of 2010, Adhvaryu received a phone call from Allstate offering to set his shop up on a DRP, he said. “They said we’ve been watching you and we’re seeing some good things, so we’d like to set you up on the program. I was so excited and I called my brother to share the news. Business was good and we had just experienced our best year ever. When Allstate explained the DRP, we thought, this is too good to be true. Well, unfortunately—it was.”

After signing on the dotted line with Allstate, reality started to seep in and the relationship quickly soured.

“It became evident that I had to do all the work up front and invest all the money in parts upfront,” Adhvaryu said. “When we started the DRP we had to put up nearly $50,000 for parts and labor because they were bringing us a lot of cars. That’s the way DRPs work and that was irritating, but not a real deal breaker at that point. But, when Allstate started making more demands, I realized this isn’t a true partnership. I began to feel like an employee instead of a partner.”

Adhvaryu had to change his business model to adhere to the DRP.

“We were able to survive the financial impact, but it was starting to put a strain on the business. After that initial deluge, Allstate wasn’t sending us enough cars to justify the investment and then they kept re-inspecting our estimates and wrestling with us on every one. My policy has always been to avoid debt at any cost, but this DRP had me in the hole almost right from the beginning. After a while, we started asking ourselves, is this really a good deal for us?”

Quality Assured’s lone DRP completely fell apart when Allstate asked Adhvaryu to compromise the quality of one particular repair.

“The final straw was when they wanted us to fix a car that I didn’t feel was safe. It’s one thing to save money, but it’s another thing to make an unsafe repair in order to save a few bucks. I value my customers more than any amount of money in the world and I want to be able to sleep at night”

Finally, Adhvaryu convinced the insurance adjustor to come out and look at the car. It was determined that it shouldn’t be repaired, and therefore was totaled. The price was too high and the risks too numerous, so Adhvaryu pulled the cord on the DRP.

“I told Allstate that I don’t want to fix a car and provide a lifetime warranty on the work if the repair is not up to our standards. What happens if the customer complains for whatever reason? What can I tell them? So, I told Allstate thank you for the opportunity but take me off the program right now.”

Amazingly, the world did not stop when he quit his DRP, Adhvaryu said.

“We’re actually healthier now than before, because we’re not fixing as many cars but we’re making more per vehicle for the ones that we’re getting, without any DRPs. Our net is more and we can say that we’re not sacrificing the quality of either the repairs or the parts.

“DRP's are a one-sided partnership between an insurance carrier and the shop, and it is definitely not a win-win situation for both sides,” Adhvaryu said.  “In reality the only true partner in our industry is the relationship between the shop and its customers and it’s the only true partnership we care about. Around here DRP stands for Decreased Repair Profits.

“My point is that the insurance companies should do what they know best which is to insure people and let the shops decide what's best when it comes to repairing cars,” he said. “In many industries in this country, we let the consumer decide where they can take their business. There is a lot of information out there for consumers to do research and find really good shops that will work for them and not the insurance company. If you balance the positives and negatives in a DRP environment, only the insurance company gains while the shops and the customers lose.”  

Adhvaryu said that while his DRP with Allstate didn’t work out, he would be open to considering DRPs again in the future.

“We work with all insurance companies and I’d be open to listening to their programs – if they make sense for my business. If they will allow me to do it our way without going into debt and cutting corners on repairs, I have no problem working with them in a DRP.”

In the interim, Adhvaryu likes to call his shop “an independent that is independent from the insurance companies.”

“We’re trying to get cars in here, of course, because if we’re not growing we’re dying, but we want to do it the right way. I know that the quickest way to get business is to hook up with some insurance companies, but we don’t need them.  We’re DRP-free and happy about it, because at the end of the day we have complete control of every repair, including the types of parts we want to use and the way we want to fix them.”


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