OEM Certifications on the Rise

Aug. 1, 2014
As the industry argues over insurer intrusion, more and more shops are finding OEM certifications as a DRP alternative

It’s a simple chain of events, says Oklahoma City shop owner and industry advocate Gary Wano Jr.

A new focus among automakers on MPG ratings has led to the emergence of new light-weight materials being used on vehicles; the new materials require new repair procedures and requirements; OEMs, concerned about the repairability of their vehicles (and the quality of those repairs), create programs to train, educate and certify shops to become qualified to make those repairs; and those certified shops then receive work directly from the OEM.

More OEMs providing certification programs are an inevitability as vehicle technology progresses, Wano says. As domestic automakers begin to roll out aluminum-bodied vehicles in the coming years, certifications will no longer be just a niche market for high-end shops, either.

According to a number of industry professionals, the OEM certification has the potential to become the solution to another issue dogging the average shop: perceived insurer intrusion that many feel is brought on by the restrictions of direct repair programs (DRPs).

Some have started looking at OEM certifications as the “new DRP.”

“It’s fair to call it a true alternative,” Wano says. “Our concern as an industry is to be equipped, trained and prepared to fix vehicles the correct way and restore them to pre-accident condition. Doing work for OEMs, in their programs, allows us to do that. And the referral base that those programs provide can more than make up for [referrals] provided by DRPs.”

Building a Business on Certifications

The increase in OEM certification is a viable industry trend, says Sam Whiteman, auto claims director for Allstate Insurance. But, as he sees it, insurer-repairer relationships (such as DRPs) are “ agnostic” to certification programs.

“I don’t see how they compete,” Whiteman says. “From our standpoint, we don’t require our DRP shops to be OEM [certified]. If they are, great, but the main thing we’re looking for is shops that can service our customer and put the car back to its pre-accident condition.”

A number of industry professionals who spoke to FenderBender disagree. Work referrals are the correlation, says Luis Alonso, owner of Pan Am Collision Centers, a six-shop MSO in Northern California. Obtaining an OEM certification essentially provides a shop with some level of guaranteed work, similar to a DRP.

Many shops, including Precision Body & Paint in Oregon and European Motor Car Works in California, have publicly dropped their DRP relationships in favor of OEM certifications in recent years.

OEM Parts Use Declining Automaker certification programs may be on the rise industry wide, but use of OEM parts in repairs is on a decline in recent years; meanwhile, aftermarket parts use has increased. According to Mitchell’s Industry Trends Report Q2 2014, OEM parts use (as a percentage of total dollars spent on parts) has reached a three-year low.

Wano’s shop, G.W. & Sons Auto Body, was among the first in the country to begin this trend. When the shop put on an addition in 2005 that doubled the facility’s size, Wano decided he needed a new business model that would allow him to recoup the costs of expansion more quickly.

That’s when he first joined the Mercedes-Benz certification program. He had eight DRPs at the time, and as his shop picked up more certifications—eventually joining the Jaguar, Corvette, Volvo and Tesla programs—G.W. & Sons elected to not renew any of its DRPs.

The jobs were all high ticket, and because customers are referred through their dealer or directly from the OEM, they are more educated and trusting of the needs of the vehicle. The tickets get paid out in full, Wano says.

Since 2006, the shop’s sales have grown 65 percent, while car count dropped 38 percent.

The Ford Shift

OEM certification isn’t necessarily a viable option for every shop—at least, not yet.

Both Wano and Alonso (whose business has six certifications) say the investment a shop must make can be substantial. You need to be aluminum equipped and trained, and need to have the opportunity to corner that market share of vehicles.

That’s one of the reasons that Alonso has balanced his business with a mix of DRPs and OEM certifications. Pan Am Collision is a part of 10 insurer programs. It can be difficult, though, for the average shop to have the capacity to manage both types of accounts and programs, Whiteman says, saying that very few of his Good Hands network shops also have certifications.

The 2015 Ford F-150 and its aluminum body could change all of that, though.

Ford does not have a certification program, but rather a suggested list of tools and some training courses through I-CAR. There’s also no restriction currently placed on purchasing the parts to attempt the repairs, as there is with other aluminum vehicle makers that limit sales to program members.

Many repairers are concerned that will lead to shops opting not to make the proper investments and, eventually, making improper repairs.

Wano believes that as domestic automakers progress with aluminum and other lightweight materials, they will go the route of high-end manufacturers, creating stricter certification programs. And with a new proliferation of programs, OEM certification could become a true alternative.

“It can’t be about a political agenda, though. It has to make business sense,” Wano says. “It worked for us. It’s worked for a lot of shops.” 

About the Author

Bryce Evans

Bryce Evans is the former vice president of content at 10 Missions Media, overseeing an award-winning team that produces FenderBender, Ratchet+Wrench and NOLN.

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