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Oregon Shop Drops DRP Over Aluminum Repair Rates

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Oct. 23, 2013—Ron Reichen, owner of Precision Paint and Body in Beaverton, Ore., and a FenderBender editorial advisory board member, announced Tuesday that his shop will not renegotiate its Select Service contract with State Farm Insurance due to an “impasse over fair and reasonable rates and allowances for aluminum repair.”

The State Farm account, which Precision has held for 17 years, was the shop’s last remaining direct-repair program (DRP) agreement, and it accounted for more $2 million of the shop’s sales in the past year.

“It was a business decision we had been considering for some time” Reichen said. “Our terminating the Select Service agreement stems from our company being a certified Tesla repair facility and the investments in time, equipment, training, specialized equipment and facilities [that] we could not offer for the rates State Farm was willing to pay.

“This will no doubt enable our company to re-evaluate and revise our pricing on other goods and services for the other manufacturers of which we are a certified repairer for, including Porsche, Audi, Volkswagen, Nissan, Volvo, GM, Chrysler and several others.”

The issue over aluminum labor repair rates has only occurred recently, Reichen said. All insurers, including State Farm, had willingly paid Precision’s posted rates in the past, but State Farm has now elected not to do so, Reichen said.

“While insurers continue to adjust their rates based upon economic pressures, [new] vehicle technology and repair techniques, such programs as Select Service are precluded from keeping pace with their increasing costs,” he said. “We found attempting to do so, while maintaining the highest level of quality and service, to be both unreasonable and unsustainable, and, as a business decision, we elected to resign from the insurer’s program.”

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