It is amazing during times of lower authorised repair volumes how the influence and strategy change is implemented through Insurers on procurement terms and conditions of trade.
We are all aware of the outcomes of the COVID pandemic and the effect this had on disposable and profit earning processes across the economy. Our focus for obvious reason is on the operational ability of the Motor Body Repair (MBR) sector and the continued submission we are forced into through oppressive intervention on a daily basis.
Clearly it is not understood what it takes to achieve a minimum of break-even trade result and measurement of the performance indicators in the running of a panel beating business in this era. We continue to be subject to top-down dictatorship and seem to be invisible in the integral part that we play in the repair process and the market as a whole.
Systems applied by Insurers and based on software promotion of direction of spend are flawed and when challenged, there is never a clear or transparent answer or better outcome for all. In reality this invariably appears to be selected by favouritism or agreement and flies in the face of customer satisfaction and preference.
There is daily evidence showing over capacity and direction to selected service providers where other repairers in the same area have no work at all. It can be argued that the industry is over traded in terms of number of MBRs all competing for a slice of the cake and dependent on insured claim work, however factors such as cash in lieu and write-offs at ever reducing values contribute significantly to the volume of directed authorised repair.
MBRs are paid at almost negative inflation for their repairs undertaken and all this alongside accredited repair methods that are reduced to a bare minimum or against normal industry required methods. Logic should surely prevail as the procedure of charitable labour or cutting of corners gives rise to repair without standards or road worthiness, and cannot in most cases restore the vehicle to as close to as possible condition before it was involved in an accident.
The industry is however over whelmed by getting work on the shop floor but against the principle of financial observation of survival once the overheads have to be paid. Adding to this, we are cautioned against treading on Competition law by not being allowed to negotiate on behalf of members, the application of labour rates and other commercial terms. However, insurers disrespect the scope by enforcing parts procurement from a single supplier who is able to apply extra ordinary discounts on the price.
This leaves the MBR further out of pocket. This enforcement is viewed as collusion with the intent of price fixing and is unlawful. We question whether source of supply can in fact be transparently confirmed as required by the guidelines published via the Competition Commissioner.
No regard is provided for sustainability of the greater dealer market. We have created great working relationships to the benefit of supplier and MBR and to try and preserve economic empowerment for employees and consider long term job security. In a recent radio interview with the CEO of Shoprite Checkers, Pieter Engelbrecht, said that this corporate entity is showing full regard to buy local and stimulate the economy. He claimed that more than half of their suppliers are provided procurement opportunity for income under a million Rand per annum but is honest in sharing equitably to a valued supply chain.
This premise is not rocket science. Can the conscience of our billion Rand profit Insurers not be similar in support of the value chain and offer to extend SMME opportunity and the backbone of the economy in supporting job opportunity? We agree the base is different but a large proportion of MBRs remain compliant, accredited and qualified beyond extreme, but are ignored on the premise of forcing volume deals in the hope of a lower cost per claim. This is a greedy and unsustainable outlook and karma is already playing a role with ridiculously high rework rates being seen. A higher cost has to apply in settlement of the claim and at the end of the day the paying customer is forgotten and without their vehicle for even longer.
In summary, if we cannot achieve support for unity and stand together to take back control of our industry, we will remain on the path to self-destruction and business closure should things not change for the better in the foreseeable future.
by Steve Kessel, CRA operations director