Is There a 'Virtual Steering' Threat?

June 1, 2016
OE influence could have a major impact on where consumers take their cars

There’s been no shortage of information in the industry about telematics and OEM certifications, but a new topic that combines the two is gaining momentum and is something that shops need to be paying attention to. Some call it "virtual steering."

Virtual steering, a new way of directing consumers to shops based on OEM certifications, could have a significant impact on where consumers take their vehicles after a collision, says Ron Reichen, owner of Precision Body & Paint in Oregon.

“I believe that the old business model of the way that body shop owners manage their businesses is not sustainable,” Reichen says. “Many shops have relaxed their marketing and building their customer base and instead are relying on referrals from the insurance industry. The industry as a whole is transitioning away from the DRP model, which is 35 years old. We have to rethink how we run our shops.”

How it Works

Virtual steering will use vehicle telematics to alert the manufacturer when a vehicle has been in a collision, explains Scott Simmons, consultant at Collision Advice. After the alert, the manufacturer of the vehicle will then digitally connect with the driver to assist them with anything they might need, including an ambulance, tow truck and a list of shops that are OEM certified for that specific vehicle. As soon as the manufacturer is notified of the accident, the vehicle already communicates the damage and generates a repair order that will be ready to send to the shop that the owner selects from the list of nearby choices.

Impact on the Industry

The directing of work could cause problems and competitive issues for shops as far as maintaining quality and customer trust, according to Simmons, a speaker on the topic of virtual steering. It will also cause direct competition between insurance companies, which push their own DRPs, and the manufacturers that push OE-certified shops.

It’s not all bad, though. Reichen believes virtual steering will benefit the industry because it will push shops to get out of their comfort zone and rethink outdated ways of doing business.

“I try to be on the cutting edge,” Reichen says. “I have a passion for a lifetime of learning. We need to look at our journey in the automotive industry as a lifetime of learning. Cars are changing. The way we fixed cars five, 10 years ago won’t work anymore.”

The OEM Certification Choice

Reichen’s shop, Precision Body & Paint, has 24 OEM certifications. It was a major investment, he explains, but it has paid off because of how much more work he is able to do. He doesn’t have to refer many cars to dealerships or other shops because he has the tools and information to correctly repair the majority of vehicles that come into his shop.

“Independent facilities need to be reaching out to get OEM certifications because those are the only shops that are going to show up for customers. It’s no longer going to be the insurance companies that are directing, it will be the manufacturers,” Simmons says.

Survival of the Indy Shop

Will virtual steering be the end of mom and pop shops? Paired with the increase of advanced materials and new technology used in cars to comply with the CAFE standards, it could cut down on the need for that kind of shop, Reichen says. However, the ones that are able to differentiate themselves will be able to survive.

“Develop things that make you unique,” he says. “Shop owners have to understand that they need to own their customers and find what works for them.”

That being said, shops that are not OE certified will have to adapt and find ways to stay competitive when automakers are referring their customers to OE-certified shops, Reichen says.

Winning Customers Over

Simmons points out that selecting a shop from the list does not mean you have to get it repaired there. A customer has not made an agreement until the repair order has been signed. This gives consumers time to research other shops before making the final decision, which can work in the favor of shops that don’t show up on an OE’s list of certified shops.

Besides certifications, other factors that keep shops competitive in the market are a strong media presence and continued contact with customers and networking, Simmons adds. All of these factor into the vehicle owner’s decision, Simmons says, and a long list of positive reviews could cancel out a long list of OEM certifications, depending on the situation.

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