July 26, 2012—Charles Bryant, executive director of the Alliance of Automotive Service Providers of New Jersey (AASP/NJ), distributed an open letter accusing State Farm Insurance’s parts procurement program through PartsTrader of being rolled out for the pursuit of higher profits rather than greater repair efficiency.
The online parts bidding program was launched earlier this year as a pilot in four regions. State Farm has said the program is meant to provide a better experience for customers and boost quality, part availability, and efficiency, among other improvements. In his letter, Bryant argued that it seems as though State Farm wants to decrease its average severity and reduce payouts for claims. He said the program seemed to be aimed at boosting profit margins for State Farm.
“All that’s left to determine is whose pocket that additional profit will come from. State Farm’s additional profit will either come from the parts vendors or the repairers, or both,” Bryant added. “If you carefully read all the statements that have been issued by PartsTrader and State Farm, nowhere will you hear from either party that this program is guaranteed to not negatively impact profitability on the repairer."
Bryant said the collision repair industry contains several intelligent professionals who have built and operate successful businesses. He said the PartsTrader program insults their intelligence.
