The term Tsunami is a phrase often used in the U.S. collision repair industry today by I-CAR and others. I first heard the expression during a presentation by Jeff Peevy in late 2009. He was referring to the projected impact and challenges repairers would face in the future as a result of a combination of stricter federal regulations involving fuel economy and vehicle emissions.
An early warning sign for the impending tsunami in auto repair affected mechanical and maintenance technicians in the mid-1990s, when the US Environmental protection Agency (EPA), in an effort to strengthen control of harmful auto emissions, mandated the second version of On Board Diagnosis (OBD-II) equipment. OBD-II is more effective and complex than the first version of OBD introduced in the 1970s, monitoring parts of the chassis, body and accessory devices. It includes electronic engine and emission control systems and catalytic converter sensors to insure they are working as designed while the vehicle is in motion. Maintaining, repairing and monitoring OBD-II systems required significant retraining for mechanical and maintenance auto repair technicians, but did not have a huge effect on collision repairers, yet.
More fuel efficient and cleaner emission vehicles meant making cars out of lighter-weight materials. Lighter engines, chassis and other parts of the vehicle were designed with materials other than conventional cold roll steel. These new, varied materials often required different repair procedures, environments, equipment and tools. It was difficult, if not impossible, for a collision repairer to identify the materials used on the vehicle they were repairing at that moment. Collision repair shops had to increase technician training, buy new equipment and pay closer attention to OEM repair procedures, which were usually difficult to find.
Some collision repairers sold or closed their shops, knowing that they couldn’t afford to keep up with the necessary changes. Many others jumped onto the OEM Collision Repair Shop Certification bandwagon or sold to an MSO (Multi-Shop Operator).
The arrival of the Technology Tsunami in the collision repair industry was delayed a few years as a result of low new car sales during the Great Recession (2007-2009). However, sales picked up significantly in 2012. The repair frequency of vehicles produced between 2007 and 2011 has increased as did the amount and complexity of technology built into late model vehicles, in particular the steadily growing adoption of innumerable Advanced Driver Assistance Systems (ADAS).
Another significant technological jolt to the auto repair industry around this time was the increasing popularity of wireless technology, and the rapid expansion of what has become known as the Internet of Things (IoT). It didn’t take long for improvements and adaptability of wireless technology to transfer the concept of the “connected car” from a crazy futuristic dream to a reality within grasp. So who and how would all of this technology be fixed and when necessary?
“Repairability” has been a buzzword and concern in the US collision repair industry for decades. Even before the turn of the 21st century, some insurance companies worked with vehicle manufacturers in an effort to address repairability issues during the new model design phase and to avoid expensive repair costs once the vehicle was sold, on the road and subsequently crashed. It seems as if this collaboration has come to an end, at least to some degree.
Luxury brand OEM certification can cost as much as US$100 000 and economy brand certification US$50 000. These are just the setup costs to upgrade training, equipment, tools and processes to meet OEM collision repair shop specifications. Some independent collision repair shops get certified in a given year. Even if multiple vehicles do come, it takes years to recoup the investment for shop certification.
However, the new debate involved whether or not pre-and/or post-scanning is a) necessary as part of the collision repair process and, if so, b) the age of vehicles needing a scan and c) who will pay for the necessary scans. This has become a battle that goes beyond repairers and insurers. Vehicle manufacturers have jumped into the debate with both feet. Over the past year Audi, FCA, GM, Honda, Nissan and Toyota have posted position statements regarding scanning for diagnostic trouble codes during the collision repair process. Mechanical repair shops have been scanning for decades. Ironically, in the past when diagnostic trouble scanning was necessary and sublet out, insurers generally reimbursed for it. To be sure, in the past, there were fewer systems which needed to be checked and recalibrated.
However, vehicle technology has become very complex. It is virtually impossible to repair a late model crashed vehicle without scanning to insure that all the driver assist systems have been recalibrated. The argument is that traditional collision repair methods and procedures are no longer enough to repair 21st century vehicles in a manner which safely protects the vehicle owner. Repairers say that the extent of Advanced Diagnostic Assist Systems (ADAS) makes sub-letting impractical.
Repair cycle time is tremendously affected when an in-process vehicle has to travel to a dealer, wait for the sub-let provider to schedule it in and then travel back to the repair shop. Additionally, dealers charge higher rates for scanning than independent collision repairers would and a pre-repair scan can often prevent later supplements. Collision repairers argue that the sub-let process is inefficient and time consuming. They believe that in-house scanning will save time and, ultimately, money. At this point, however, US insurance carriers are hesitant to accept that argument and pay for it.
Some insurers say they will consider reimbursement in cases when a scan indicates that further repair is necessary. Proponents in favour of in-house pre-and post-scanning present the following scenario: A child climbing a tree falls out and hurts her arm. The parent takes the child to the doctor to get an x-ray. The doctor and x-ray technician get paid by the health insurance company even if the child’s arm isn’t broken. This scenario makes the above-mentioned insurance policy look like a very weak response to the issue.
The manufacturers will not change their position on diagnostic scanning. A shop has the responsibility to repair the car properly. If the diagnostic scanning involves sub-letting the job, both the insurer and the repairer lose control over the delivery time, and the scanning itself is more expensive, but the insurer will likely pay. On the other hand, if the shop does the scanning in-house who will pay – the insurer, the collision repair shop or the consumer?
In general, insurers are hesitant to automatically accept across-the-board in-house scanning. They first want to understand at what age a vehicle should be scanned, whether every vehicle needs both a pre-and post scan, and how long it takes to scan a vehicle. Until they have answers to this information they cannot calculate an average cost.
Everyone agrees that the goal should be customer safety and satisfaction and, ideally, severity control. Supporters of in-house scanning say that the best way to achieve these goals is to keep the car in production, do necessary corrective action in the shop, and avoid the risk of missing a delivery date and losing control of customer satisfaction.
The debate goes on. To date this controversy has not taken into account the critical questions and consequences of data ownership, manufacturers intention of steering business to their dealers and away from independents, the long-range effects of rapidly evolving technology severity, totals and technician training. According to Sean Carey, president and CEO of SCG Management Consulting LLC, opportunity for genuine consumer focused collaboration between all constituents exists. Carey fears that the industry will walk past it.