The Present and Future of Carbon Fiber Parts

ALSO IN THIS ISSUE> Trends Data: First Quarter Motorcycle Sales Drop More than 20 Percent

> Shop View: See How One Shop Answers the Call: Lean Six Sigma Case Study> Audatex News and Events: Audatex Strategic Advisory Council Meets in New Orleans

> Much More

AudatexDirectionsNews from Audatex North America, Inc. Vol 08

The Present and Futureof Carbon Fiber PartsSNEAK PREVIEW: TechFocus™

Driving Accuracy and Reducing Cycle Times:Audatex is Changing the Industry with TechFocus—the only integratedand estimate-specific solution for accessing repair and replace procedures.(See page 14 for more details)

Audatex Directions is a newsletter thatprovides in-depth trends and industryanalysis on the auto physical damagemarket. It is published by Audatex NorthAmerica, Inc., a Solera Company.

Contributing WritersJohn Smith Jr.Product Manager, Audatex

Michael T. AndersonSr. Director of Data Analytics, Audatex

Rick TuuriVP Industry Relations, Audatex

DesignJoe SullivanGraphic Designer, Audatex

Request CopiesTo request a printed copy of this publication,please email: [email protected] download the pdf, please visit ourWeb site: http://audatex.us/thinktank.aspx

Local focus. Global knowledge.

Audatex is the leading global claimssolutions provider. As part of the Soleragroup of companies, we draw on our broadglobal claims market experience to identifyand implement the best-practice processesthat drive continuous improvement for ourlocal customers and their trading partners.Solera companies serve the automotiveindustry in more than 50 countries acrosssix continents.

15030 Avenue of Science, Suite 100, San Diego, CA 92128Tel: (800) 237-4968 Fax: (858) 946-1073 www.audatex.us www.solerainc.com

© 2010 Audatex North America, Inc. All rights reserved.Audatex, AudaInsight, Autosource, Audatex Estimating,Audatex Win-EMR, PenPro and Shoplink are trademarks orregistered trademarks of Audatex. All other companyand/or product names may be trademarks or registeredtrademarks of their respective owners in the United Statesand other countries.

ContentsManaging Director’s Message

Feature Article–The Present and Future of

Carbon Fiber Parts

Trends Data–Putting the Industry in Perspective with

U.S. Collision Repair Data–First Quarter Motorcycle Sales Drop

More than 20 Percent

Shop View–See How One Shop Answers the Call:

Audatex North America, Inc. Lean SixSigma Case Study

Industry Leadership–Audatex Recognized by ICBC

Insurance–Audatex TechFocus™: Repair and

Replace Procedures at Your Fingertips

Regulatory Update–Regulatory Compliance

and...Facebook?

Audatex News and Events–Audatex Holds Strategic Advisory

Council in New Orleans–Audatex Technical Advisory Council

Focuses on Database ReferenceManual in Atlanta

–How the Hollander Strategic AdvisoryCouncil Helps Clients See Things FromThe Other Side

–Upcoming Events

34

11

13

16

Audatex Directions

6

18

Synergy

It’s no secret: Parts are pivotal in the collision repair business today. The supply and demandof parts—plus easy access to them—can be as important as having the skilled craftsmen andpainters to deliver vehicles to like-new condition and delight customers. Industry statisticsshow that approximately 40 percent of the costs of a collision repair job are directly tied to thecosts of parts. As parts go, so often goes the success of the entire automotive claims valuechain, from the initial notice of loss and assignment, to the estimate, to the repair—andultimately to the hand-off of keys to the owner. What happens throughout the processdetermines the job’s efficiency and accuracy, both of which drive customer satisfactionscores.

At Audatex North America, Inc., we’re uniquely positioned to unite value chain partners unlikeany other solution provider. From our sister company, Hollander North America, Inc., Audatexcustomers can choose from an inventory of literally millions of recycled parts with a few clicks.Because Hollander, founded in 1934, is considered the industry standard for recycled partsinformation, you can be sure you’re accessing the latest inventories of OEM recycled stock.This Audatex-Hollander synergy delivers a recycled parts solution that is helping change howcollision repair shops, insurers and automotive recycling yards run their businesses. Thebottom line is simple: Each of the three segments can benefit while also increasing CSI.That’s a win-win-win-win, when you count the vehicle owner.

As you look at your business and your parts strategy, I hope you’ll be as excited as I amabout how Audatex, together with Hollander, provides great opportunities to increase cycletimes and reduce waste from your processes. Perhaps the most important aspect ofmanaging an efficient and cost-effective collision repair shop is access to an ample supply ofrecycled parts. Hollander’s network of recycling yards has the largest number of parts readyfor use for collision repair. Hollander makes this information available through its EDENlocating solution exclusively in the Audatex Estimating™ solution. Through an intelligent user-interface, estimators, technicians and shop office staff can easily access the Hollanderrecycled parts inventories, place orders and keep things moving smoothly.

The Audatex-Hollander synergy enables Audatex customers to make more informed repairdecisions and gain greater control of their business operations and ability to serve customers.As with our breakthrough 3D Intelligent Graphics, no one else in North America can offer thisinnovative type of solution.

This synergy between Audatex and Hollander has only just begun. Inside this edition ofAudatex Directions, we share news resulting from the Hollander Strategic Advisory Council.This special advisory panel includes industry leaders from the automotive recycling, insuranceand collision repair industries. At the recent IT show, the Council established initial prioritiesthat aim to continuously improve Hollander offerings and the customer experience. Whetheryou’re a collision repairer, insurer or recycler, I invite you to read the article on page 22.

Also in this edition, we share trends on U.S. collision repair through data from AudatexInsight™, our data analytics solution. Knowledge is power. Don’t forget to check out our coverstory on how carbon fiber parts may impact future loss costs, as well as the articles on trendsin motorcycle sales and how a collision repair chain is using Lean in its 28 stores with helpfrom an innovative virtual program from Audatex. We are always striving to bring you relevantinformation, analysis and solutions. Thank you for your business.

Sincerely,

Mike SalfityManaging DirectorAudatex North America, Inc.

3www.audatex.us

‘‘’’

Managing Director’s Message

At Audatex North

America, Inc.,

we’re uniquely

positioned to

unite value chain

partners unlike

any other solution

provider.

4 Audatex Directions Vol 8

fiber in a high-production environment.Partnering with Europe’s SLG Group, BMW AG plans to build a $100 million carbon fibermanufacturing plant in the state of Washington.Daimler AG also recently announced they arepartnering with the world’s largest carbon fibermanufacturer, Toray Industries of Japan, tojointly develop carbon fiber reinforced plasticbody parts for vehicle production in 2012,beginning with the Mercedes SL-Class. Otherautomakers have previously announced thatthey, too, plan to work with carbon fibermanufacturers.

Through the American Recovery andReinvestment Act, the Department of Energy(DOE) has allocated $34.7 million to establish aCarbon Fiber Technology Center at the OakridgeNational Laboratory with the goal of advancingthe production of lighter weight vehicles throughcarbon fiber. This comes as part of a $104million funding for research and testing facilitiesat seven DOE laboratories.

To date, the greatest challenges in the use ofcarbon fiber have been the high productioncosts as the result of limited manufacturingtechnologies. A key strategy for each productionfacility will be improving the affordability ofcarbon fiber in high-volume applications. Whilewidespread use may still be a few years away, ithas the potential to have profound implicationsto all involved in collision repair as well as autoinsurers.

The use of carbon fiber is no longer limited to exotic cars or interior trim. Severalmanufacturers utilize carbon fiber in vehicles on the roads today; namely BMW, Mercedes,Porsche, Mini Cooper, Audi and Chevrolet.

Feature Article

Continued next page

This past April, the U.S. Department ofTransportation (DOT) and the U.S. EnvironmentalProtection Agency (EPA) jointly establishedhistoric new federal guidelines governing fueleconomy and greenhouse gas emissions. Thesenew rules establish increasing fuel economystandards for 2012 through 2016 model years,which will result in fuel economy standardsreaching an estimated 35.5 miles per gallon(MPG) for the fleet by 2016, representing a 30percent increase. Similarly, Canada alsoannounced light duty vehicle GHG-Emissionregulations, as these standards are part of aNorth American strategy.

Under the Corporate Average Fuel Economy(CAFE) program, each vehicle size or “vehiclefootprint” will have its own MPG target ratherthan an overall fleet standard. This change willforce automakers to design specific technologiesfor each of their vehicle segments toaccommodate the new rules. While many arelooking towards advancements to conventionalpowertrains, which may provide 15 to 20 percentimprovement, weight reduction will continue toremain the primary fuel economy strategy. Steelis strong, but it’s also heavy. According to someestimates, replacing steel body and chassiscomponents with lightweight carbon fiber canreduce vehicle weight by as much as 60 percent,which in turn, leads to increased fuel economy.

While discussed for years, it is only until recentlythat manufacturers announced investments touse carbon fiber in high-scale vehicleproduction. In May, BMW AG announced it plansto make extensive use of carbon fiber in the2013 BMW Megacity electric vehicle andbecome the first manufacturer to institute carbon

The Present andFuture of CarbonFiber PartsBy Michael T. Anderson

Below are just some examples of carbon fiber parts available in vehicles today and the associated part cost comparison (when available).

When compared to traditional materials for automaking, why is carbon fiber so expensive? Acarbon fiber part can cost more than five timesthe amount to manufacture than aluminum dueto the cost of the carbon fibers and the resinmatrix. Since inception of the first carbon fiberparts dating back to 2003, raw material priceshave come down as demand has increased,while manufacturing processes have improvedbut remain a significant challenge. Oncemanufacturers overcome the remaining cost andproduction cycle time challenges, it leaves thequestions of how many and what parts on avehicle will be constructed of carbon fiber andhow to repair these parts.

The former question remains uncertain as manyof the manufacturers are in their design phases,and thus, the specific application of thematerials is confidential. Regarding repairingcarbon fiber parts, Jason Bartanen of I-CAR’sTech Centre told Audatex that “for many of thevehicles using exposed weave carbon fiber, theonly repair option is part replacement unlessdealing with small scratches, which can besanded and buffed.” Bartanen went on to say,“If the carbon fiber is damaged, or a scratchextends through the clear coating, the partgenerally cannot be repaired. For painted carbonfiber parts, GM does allow for repair using SMC

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Feature ArticleCont inued f rom prev ious page

Vehicle Part

Hood $5,897 $1,023

$1,786 $612

$740 $128

$3,620 $238

$1,290 N/A

$542 N/A

$229 w/Aero pkg

$86 w/o Aero pkg

$279 $41

$2,588 N/A

Fender

Deck LidMolding

Outer MirrorHousing Cover

Outer MirrorHousing Cover

Front BumperCover Molding

Lower FrontSpoiler

Lower FrontSpoiler

Roof

2010 ChevroletCorvette ZR012010 ChevroletCorvette Z06

2010 Audi A6

2009 MercedesBenz CL550

2009 MercedesBenz CL63AMG

2009 Audi TT

2009 MiniCooper S

2009 MiniCooper S2010 BMW6 Series

CarbonFiber $

StandardSheet Metal $

techniques for cracks and holes; provided theyare not on the edge of the panel. The number offenders that will qualify for this repair will likelybe limited.”

Carbon fiber structural parts are generallyreplaced to ensure the same strength ismaintained. In addition, adhesives will likely beused to join different carbon fiber components,which, once bonded, are not easilydisassembled for repair without cutting orcausing damage. The use of suitable adhesives,which allow for disassembly, will be significant to the repair process.

Lightweight Materials and theFuture of Vehicle DesignDemand for increased fuel efficiency andreduction of greenhouse gasses under the CAFE program will require advances in the use of lightweight materials in vehicle design.Carbon fiber offers tremendous advantages: Itis five times stronger than steel and twice asstiff, yet lighter than aluminum. While the timingof widespread use in vehicle constructionremains uncertain, what is certain is thattremendous investments are being made bymanufacturers to leverage its lightweightdurable qualities.

What is also certain is that the use of weavedcarbon fiber—painted or otherwise—will presentrepair challenges to those in the collision repairbusiness, due to its inherent qualities. Exposedweaved carbon yields very limited repairqualities, while painted carbon fiber parts allowfor only slightly more repair opportunities.

For insurers, replacing these parts will impactclaim costs. While they still represent a verysmall percentage of replaced parts, the numberwill only increase in coming years. It willtherefore become increasingly important toensure appraisers and repairers have the properestimating tools to identify vehicles wherecarbon fiber parts are standard equipment and where they may (or may not) represent anoption. Not ensuring that the proper part (carbonfiber versus traditional materials) is placed on theestimate can become a costly mistake.

Manufacturers

have recently

announced that

their designs will

rely heavily on the

use of carbon

fiber, which is five

times stronger

than steel and

twice as stiff, yet

lighter than

aluminum.

Average Gross Appraisal Values While the industry has not seen a shift in theoverall distribution of estimates by coveragetype, the impact of the aging fleet, the increaseduse of alternative parts, minimal claims inflationand a marked increase in repairs are keepingrepairable appraisal values in check. Firstquarter 2010 average gross appraisal values(GAVs), reported prior to deductibles, were down

slightly on a year-over-year basis ($2,321 versus$2,340), representing a $19 or -.8% variance.Although we cycled through a complete calendaryear, average vehicle age only increased by .4model years, with collision losses only increasingby .2 model years.

The average number of miles on repairablevehicles increased by +6.5% on a quarter-over-


Trends Data

Putting the Industry in Perspective withAudatex U.S. Collision Repair DataBy Michael T. Anderson

Continued next page

Figure 1: U.S.Quarterly GAVs (Source: Audatex Insight™)

quarter basis, reaching a 24-month high of85,478. Mileage on vehicles involved in propertydamage (PD) liability losses led the change(+7.6%), while first party losses increased by+5.5% and +6.8% for collision andcomprehensive, respectively.

Parts AnalysisSegmenting vehicles by age group, Audatexindustry data reflects 5.4% more lossesinvolving vehicles in excess of three modelyears. As this percentage increases, so does the likelihood of the use of alternative parts.Indeed, in the past 24 months, the industry has experienced a material shift towards theincreased use of alternative parts, as seen inFigure 3 on the next page.

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2,350

2,400

2,450

2,3002,2502,2002,150

U.S. Gross Appraisal Values(GAVs)

Q1 - 2009 Distribution

COLLISIONCOMPREHENSIVELIABILITY

54.1%

14.2%

31.7%

Q1 - 2010 Distribution

COLLISIONCOMPREHENSIVELIABILITY

54.7%

13.6%

31.7%

Figure 2: Quarter-Over-Quarter Comparison of Loss Type (Source: Audatex Insight)

Both aftermarket (13.3%) andrecycled (15.4%) parts useincreased by 1.1 percentage points compared to Q1-08, while

remanufactured/reconditioned (6.6%) and OEsurplus (0.5%) increased by .5% and .1%,respectively.

As seen below in Figure 5, overall replaced partcounts have decreased slightly compared to Q1-09 and Q1-08. However, OEM part counts have fallen from 5.3 in Q1-08 to 4.4 in Q1-10,representing nearly one replaced OEM part perrepairable estimate. This may be attributable byincreased cash outs, a trend some insurers havereported.

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Continued next page

The use of OEM parts (as percentage of partdollars) in the first quarter of 2010 was down -2.9 percentage points from the same period lastyear, and -5.2 percentage points (or a -7.5% ofchange) from Q1-08, as seen in Figure 4. WithOEM parts reaching only 64.2% of total partsdollars, this figure represents the lowestpercentage within the two-year reporting period.

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

4.05.06.07.08.0

3.02.01.00.0

U.S. Replaced Part Count

OEM Part Count Alternative Part Count

Figure 5: OEM andAlternative Part CountDistribution (Source: Audatex Insight)

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

80%90%

100%

70%60%50%40%

U.S. Part Dollar Distribution

OE Salvage Remanufactured & Reconditioned

Recycled Aftermarket OEM

Figure 3: Part Distribution by Part Dollars(Source: Audatex Insight)

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

65%66%67%68%69%70%

64%63%62%61%

U.S. OEM as % of Total Part $’s

Figure 4: OEM Parts Stated asa Percentage of Part Dollars(Source: Audatex Insight)

Trends DataCont inued f rom prev ious page

Audatex Directions Vol 88


Continued next page

Figure 7: Labor Hour Distribution Trend(Source: Audatex Insight)

Figure 8: Average Labor Dollars Per Estimateby Type (Source: Audatex Insight)

Labor AnalysisAverage U.S. labor rates during the first quarterof 2010 reflect minimal increases whencompared to Q1-09 (Figure 6). Steady labor

2008 Q1

2008 Q2

2008 Q3

2008 Q4

U.S. Labor Hour Distribution

Mech / Elec Labor Hrs

Frame Labor Hours

Refinish Labor Hours

Sheet Metal Labor Hours

2009 Q1

2009 Q2

2009 Q3

2009 Q4

68

101214161820222426

0.9

0.5

7.9

12.6

0.7

0.4

7.5

12.4

0.8

0.4

7.6

12.2

0.9

0.5

8

12.6

0.8

0.4

7.7

12.2

0.7

0.4

7.4

11.9

0.7

0.9

7.4

12

0.8

0.4

7.8

12.2

0.8

0.4

7.6

12

2010 Q1

rates, in conjunction with .3 fewer hours (Figure 7), helped contribute towards loweroverall net labor dollars of $5 per estimate,compared to Q1-09.

When comparing Q1-10 labor hours perrepairable estimate to Q1-08, the Audatex datasuggest an overall reduction of 1.1 labor hoursand .3 hours compared to Q1-09, drivenprimarily by sheet metal and refinish, whichrepresent .9 of the 1.1 hours.

The combined impact of fewer labor hours andmodest increases in labor rates results in lowerlabor dollars per repairable estimate (Figure 8).Q1-10 data suggest a slight decrease of $5compared to Q1-09. However, when comparedto Q1-08, the data reflect a decrease of $17 perestimate.

Of the $17 variance to Q1-08, nearly half ($9)can be attributable to lower sheet metal laborcosts, with Q1-10 being $6 lower per estimatethan Q1-09, keeping slight shifts in repair versusreplace labor dollars in mind.

Inflation ForecastThe annual U.S. inflation rate for the 12-monthperiod ending March 2010 was 2.31%. That’s2.70% higher than the 12 months ended March2009, which reflected -.38%. U.S. inflation ratesare forecasted to be 1.58% over the next year.

Total LossNew vehicles sold at a seasonally adjusted rateof 11.2 million units in April 2010. While new carsales reflect a modest improvement, largelydriven by significant dealer incentives, dealershipused car sales improved by 8% in the firstquarter of 2010, according to ManheimConsulting data. Even though significantincreases were seen in used vehicle sales,dealers also experienced a decline in grossmargins of one percentage point.

The wholesale market continues to reflect astrong rebound, largely due to lack of supply ofused vehicles coming off trade or lease, withthose vehicles remaining on the road continuingto show their age. According to a recent reportby R.L. Polk, for the 15-month period betweenJuly 1, 2008 and September 20, 2009, more than

2008 Q1

2008 Q2

2008 Q3

2008 Q4

U.S. Labor Dollar Distribution

Mech / Elec Labor $

Frame Labor $

Refinish Labor $

Sheet Metal Labor $

2009 Q1

2009 Q2

2009 Q3

2009 Q4

40%

50%60%70%80%90%

100%

$57

$26

$343

$548

$48

$21

$327

$546

$54

$22

$334

$542

$58

$24

$355

$562

$53

$22

$343

$544

$51

$19

$324

$530

$49

$19

$327

$540

$56

$22

$348

$549

$55

$21

$342

$539

2010 Q1

2010 Q1 2009 Q1 $ Change % of Change

Average U.S. Labor RateQ1 -2009 vs. Q1 - 2010

Sheet MetalRefinishMech / ElecFrame

$45.00$44.80$68.30$50.80

$44.60$44.30$66.40$50.20

$0.40$0.50$1.90$0.60

0.9%1.1%2.9%1.2%

Figure 6: AverageLabor Rate by Type(Source: AudatexInsight)

14.8 million vehicles were scrapped, comparedto 13.6 million new vehicle registrations. Whilesome of this is related to the CARS program,vehicles in the U.S. on average were 10.2 yearsold during this period, representing a .2 increasefrom just a year ago. Compared to 1995 data,this represents a 21% increase.

Despite a slight uptick in unemployment (9.9%),consumer confidence increased in May 2010 forthe third consecutive month. While still weakcompared to historical levels (63.3), consumeroptimism about the short-term future (measuredby the Present Situation Index and ExpectationsIndex) showed improvement as well. As moreindicators continue to point towards positiveeconomic recovery, new car sales with enticingincentives may erode the used car market in theshort term.

Despite optimism around 2010 and 2011 newvehicle sales, the impact of tight consumerspending during 2008 and 2009 will last for

9www.audatex.us

Figure 11: Percent ofEstimates as PotentialTotal Losses (Source: Audatex Insight)

some time. Until then, the industry will likelysee only modest improvement in vehicleactual cash value (ACV), as shown inFigure 10.

The overall mix of total loss valuationsremained fairly constant over the past year,with “cars” representing between 62 and63% of all vehicle valuations. With fuel pricesat reasonable levels, increases in ACVs werelargely driven by increased values in pick-uptrucks and sport utility vehicles, whichincreased 9.2 and 5.7%, respectively,compared to Q1-09. Cars increased onlyslightly—by 1%. Vans increased by 4.7%,while specialty vehicles declined by -9.7%.

Over the past 24 months, the lower ACVshave continued to result in increasedestimates being identified as a potential totalloss. These percentages vary by state and byclient, dependent on the defined total loss

thresholds. As Figure 11depicts, 2010 is trendingslightly higher than the firstquarter of 2009, indicating thatthe modest increase in ACVsseen in Q1-10, compared toQ1-09, is not enough to impactthe percent of estimatesidentified as possible totallosses.

Percent of Estimates as PotentialTotal Loss

14%

15%

16%

17%

18%

19%

20%

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

2008 2009 2010

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

$600$500$400$300$200

SM Replace Dollars SM Repair Dollars

U.S. Sheet Metal Labor DollarDistribution

Figure 9: Average Sheet Metal Labor DollarDistribution (Source: Audatex Insight)

Actual Cash Value Trend

$6,400$6,600$6,800$7,000$7,200$7,400$7,600$7,800

May June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Rolling 12 MO - April 09 to 10Rolling 12 MO - April 08 to 09 Figure 10: ACV Trend (Source: Audatex Insight)


As we enter the peak sales season formotorcycles, Harley Davidson announced itexpects to ship 10 percent fewer units toworldwide dealerships in 2010 compared to2009. Until consumers begin buying atdealerships that can carry inventory, the overalldemand—and thus the value of motorcycles—will likely continue to remain suppressed in 2010.With 41.9 percent of motorcycle estimateswritten in 2009 identified as a potential total loss,and repairable gross appraisal values (GAVs)nearing 50 percent of the average value, thedifference between the two is narrowing andmay lead to further increases in total lossvolume.

10

Figure 1: Motorcycle Actual Cash ValueTrends 12 Months Ended April 2010(Source: Audatex Insight)


New motorcycle sales saw a20.9 percent drop in the firstquarter of 2010 over thesame period last year in theU.S. While significant, thisreflected a slower rate ofdecline than Q1-2009’s 37 percent drop. Street bikesand scooter sales, whichcombined, represent 74percent of the market, led thedecline. The two categoriesdropped by 21.6 percent and21.5 percent, respectively.

After two years of slumping sales and dismalearnings, Harley Davidson saw its first quarternet earnings shrink from $117.3M to $33.3M.Net revenues declined from $1.28B to $1.04Bas Harley Davidson acknowledged that 2010will remain a difficult year until improvementsare seen in both unemployment and consumerconfidence.

As overall demand for motorcycles decreases,so too have their actual cash values (ACVs).April year-over-year ACV data reflects an overall7.9 percent decline in value. Enduro classmotorcycles and scooters declined 10.8 percent,sport and street cruisers declined 12.1 percent,while touring models increased slightly by 2.4percent. The touring category reflects newermodel years with fewer miles than those seen inearly 2009. Harley Davidson models as a brandfell by 6.0 percent.

6,000

6,200

6,400

6,600

6,800

7,000

2009

/Apr

2009

/May

2009

/Jun

2009

/Jul

2009

/Aug

2009

/Sep

2009

/Oct

2009

/Nov

2009

/Dec

2010

/Jan

2010

/Feb

2010

/Mar

2010

/Apr

Motorcycle Actual Cash Values


First Quarter Motorcycle SalesDrop More than 20 PercentBy Michael T. Anderson

References:

The New York Times, April 21, 2010, “A Bit of Good News For Harley Davidson” by Jerry Garrett.http://wheels.blogs.nytimes/2010/04/21finally-good-news-from-harley-davidson/

www.about.com, April 22, 2010, “First Quarter Motorcycle Sales Down 21 Percent, Harley Davidson Posts ProfitDespite Earnings Drop” by Bassen Wasef. http://motorcycles.about.com

11www.audatex.us

Shop View

and to better understand what drivesprofitability. He also looked to Lean to gain thetype of “X factor” advantage that wins lifelongcustomers, providing an almost indefinable edgeover the competition.

“Simply put, we want to provide world-classcustomer service and we want to do it as fast aswe can, meaning we want vehicles back out onthe road for our customers as quickly aspossible,” Mikrut says.

Realizing that the day-to-day demands of hismanagers’ careers made off-site instruction anundesirable option, he sought out a Web-basedLean Six certification program that would beavailable to them from the convenience of theirown computers. To optimize participation, healso wanted to select a program that wouldgrant them the flexibility to train when theirschedules allowed.

Mikrut didn’t have to look far to identify a reliablesource for the training. He learned that Audatex,whose industry-leading estimatics system isdeployed in all 28 Cars Collision locations, alsooffers an online Lean Six training program that isthe only one of its kind specifically designed forthe auto body repair industry. Built from theground up by experts known as black belts inthe Lean Six community, the Audatex trainingcan be taken at a participant’s own pace,without the need for costly travel to a physicalclassroom location. Using dynamic streamingvideo and audio, the online content is availablein 10 modules that provide clear, easy-to-followsteps for achieving marked improvements in

For Don Mikrut, CEO of the highly successfulCars Collision Group, one answer lies inembracing the principles of Lean Six Sigma, abusiness management methodology that guidesmany of the world’s best-run organizations. Lean Six Sigma focuses on improving value,decreasing waste and increasing speed. Itreflects a company’s commitment to itscustomers, and to making quality a top priority.

With 28 service centers in three U.S. states andrevenue approaching $75 million, Cars CollisionGroup hardly seems lacking in all these areas.Yet at the core of the Lean philosophy is thinkingfor the long-term, and Mikrut understands thatplanning ahead will not only allow him toposition his company for further success, but toalso cultivate the leadership required to guidethat success into the future.

“As a multi-shop operator (MSO) that repairsroughly 44,000 vehicles per year, we are held tohigher standards by insurance companies andcustomers alike, and we are fully committed toupholding those standards,” Mikrut says. “But incompeting with independent shops whoseowners have a vested interest in profits, I alsoknow that instilling that same sense of (personal)motivation in my managers–making them thinkahead like owners do—is very important.”

Although Cars Collision already practices LeanSix tenets, Mikrut decided in early 2009 to puthis senior-level shop managers through third-party training. His goals: to help them dig deepinto the organization’s processes andprocedures to shave time off of repair jobs,

Continued next page

See How One Shop Answers the CallAudatex North America, Inc. Lean Six Sigma Case Study

Warranty ratios. Defect rates. Customer service indices (CSI).They all measure quality and performance in the collision repairbusiness. But after reviewing the numbers, how do shopmanagers go about making improvements?

operations and customersatisfaction.

Choosing the Web-basedtraining from Audatex,which applies Leanprinciples within its ownorganization, seemed likethe perfect fit for CarsCollision on many levels.Just to be sure, Mikrut,who has completed formalclassroom training in LeanSix Sigma himself, took atrial run of the courseworkbefore making a decision.He was immediatelyimpressed.

“Audatex has condenseda tremendous amount oflearning into a 4-1/2 to 5-1/2-hour Web-basedproduct,” says Mikrut.“Even better, they’veapplied this learningexclusively to collisionrepair, using our industry’sown terminology. It lends

great value the way it has been put together.”

Lean Six Sigma becomes even more effectivewhen all entities in a company’s ecosystem—employees, suppliers, partners and evencustomers—adopt Lean methodologies. Havingan existing Lean information and softwareprovider such as Audatex provide thecoursework sealed the deal for Mikrut.

To get started with Audatex Lean Six Sigma forCollision Repair, all that is required is a computerwith an Internet connection. Participants simplypoint and click on the designated Audatex Webaddress, and enter a log-in name and password.Mikrut’s strategy for Cars Collision was to giveeach manager a timeline for completion of thecourse. They had the freedom to view thematerial on the Web at lunch, during breaks, inthe evening or whenever time allowed. Thisflexible approach to training worked flawlessly,with the entire team finishing on schedule.

Next, they held discussion groups to addressthe best ways to apply the Lean principles withintheir own shops. Mikrut believes the training hadan immediate impact on the way managers runthe business, prompting process adjustmentsthat resulted in greater efficiency and moreproductive operations for Cars Collision. Morethan anything, the Lean Six program has servedas a way to reinforce practices already in place.

“Having a credible third party engage ourmanagers in the benefits of Lean Six provedinvaluable,” he says. “The Audatex trainingfueled new levels of understanding about therules we’ve established at Cars Collision, andthe reasons for those rules. It’s given them anew perspective on profit and loss, as well asrenewed commitment to the ideals that we’vebeen pushing all along, such as keeping theshops clean and organized.”

The bottom line for businesses such as CarsCollision is simple: its technicians cannot affordto fail. Yet technicians’ work requires achallenging combination of precision and artistry,as well as speed. “They take cars apart and thenput them back together again, with everythingfitting together perfectly. We deal with millions ofparts, which means there is an equal number ofopportunities for defects,” notes Mikrut.

To minimize defects and maximize speed ofrepair, Cars Collision continues to investigateways to improve its service centers. It hasperformed Lean Six Sigma-level analyses of itsoperations nationwide, looking specifically at theadvances made by each shop and each statemonth to month and year to year. What it allcomes down to, he says, is the commitment ofyour people, and he looks at the recent Lean Sixtraining as only a starting point.

“As Audatex explains, Lean Six training is ajourney, not a one-shot deal,” says Mikrut. “Webelieve in investing in our employees, becausethe best way to standardize operations is togroom from within—to take your existing teamand help them grow and understand the corevalues of pride and commitment. Programssuch as Lean are critical to our ability to do just that.”


“Audatex has condensed a

tremendous amount of

learning into a 4-1/2 to 5-1/2-

hour Web-based product,”

says Mikrut. “Even better,

they’ve applied this learning

exclusively to collision repair,

using our industry’s own

terminology. It lends great

value the way it has been put

together.”

Shop ViewCont inued f rom prev ious page

— Don Mikrut, CEO,

Cars Collision Group

“”

www.audatex.us 13

Beth McAteer,Product Manager ofAudatex’s newestWeb-based reportingplatform, AudatexInsight™, wasrecently recognizedby The InsuranceCorporation of BritishColumbia (ICBC) forher leadership role in

moving ICBC to a successful implementation inJanuary of this year.

“Our initiative to implement Audatex Insight wascritical to meeting our Collision Repair IndustryAgreement commitment in evaluating repairfacility performance against several keyperformance indicators in 2009. Beth was

Audatex Recognized by ICBC Insurance

very attentive to our needs, and we wereimpressed with the entire Audatex team and thespeed with which our joint teams were able toaccomplish this important ICBCimplementation,” said Darcy Gorchynski,Director, Material Damage Services at ICBC.

“I was honored to receive such recognition fromICBC on behalf of our team,” said McAteer ofAudatex. “The ICBC implementation of AudatexInsight was a dedicated effort to meet thebusiness challenges of our client. Businessintelligence and analytics are core competenciesat Audatex, and we remain focused on deliveringinformation that provides immediate andmeasurable value to our customers. We lookforward to future implementations with the ICBCteam on additional Audatex Insight analyticalmodules,” McAteer added.

For more information on Audatex Insight, please visithttp://www.audatex.us/insurance_solutions/reporting_solutions.aspx

Industry Leadership

Audatex Insight is the automobile claims processing Web-based

business intelligence platform. This robust analytical tool

empowers claim and underwriting executives to effectively

monitor, measure and manage their claim performance and loss

experience. It provides them the right information at the right

time so they can make informed business decisions. With

Audatex Insight, decision makers spend less time manipulating

data into a usable form and more time interpreting results to

drive strategic business actions.

Audatex Insight: Visualize Intelligence


Having access to accurate and timelyinformation has always been a key to success—regardless of the objective. Imagine GeneralEisenhower using old data to plan the D-Dayinvasion of Europe. How successful would hehave been without access to the latestinformation?

For repairers, easy access to real-timeinformation is no different. Leveragingmanufacturer-specific vehicle procedureinformation can make the difference between aprofitable job or one consuming time and moneyfrom your technicians and production managers.Having immediate access to the data you needfor a repair provides your team with the toolsand techniques to complete the job correctly thefirst time.

As Rick Tuuri, former chairman of the I-CARInternational Board of Directors and VicePresident of Industry Relations for Audatexnotes: “Repair procedures have always beenimportant, but especially considering the rapid-

paced evolution of automotive design and repairtechnology, ‘just in time’ access to them iscritical. It’s no longer enough to be able tosimply access the data. Today’s collisionprofessional needs immediate access, at theirfingertips.”

Traditionally, collision repairers have accessedrepair and replace procedure information in threeways. The three each have their pros and cons:

1. Access to the OEs directlyWeb sites, manuals, 800-numbers: A price isassociated with each in the form of time andmoney. You get the information you need, buthow long does it take to get it?

2. Information providerOne source for information, but you still mustlogin, input the vehicle, search for the sectionand find the procedure. Surfing the Web insteadof repairing cars costs you time as well asmonthly subscription costs.

Continued next page

Industry LeadershipCont inued f rom prev ious page

Audatex TechFocus™: Repair and Replace Procedures at Your FingertipsBy John Smith Jr.

3. Parts suppliersYou buy the parts from this source—why not getthe procedures, too? At first glance, they appearto be a great source, but what happens if youbuy parts down the street? How reliable is yoursource?

Audatex is changing theindustry with TechFocus—theonly integrated and estimate-specific solution for accessingrepair and replace procedures:

One-Click Easy AccessTechFocus provides OE-referenced procedureinformation within Audatex Estimating™ specificto the estimate you’re writing. If we have theprocedure for a quarter panel on the vehicleyou’re estimating, one click from your mousegives you access to that procedure. No Websites, no logins, no searching.

Estimate and Vehicle-Specific ViewsIf you want to access a procedure for a partnot listed on your estimate, that’s OK, too.One click within TechFocus toggles between the procedures needed for your estimate andall procedures available for that vehicle. It’syour choice.

Printing Procedures for Techniciansand Repair Order FilingSharing procedures with your technicians is easywith the ability to print for reference on the flooror filing with the job. As with the viewing ofprocedures, one click allows you to print forsharing with the team.

Installation and Updates If you have the latest version of AudatexEstimating installed and an Internet connection,you’re ready to start using TechFocus. There’snothing additional to install or update. Weupdate the procedures on our end, so whenupdates are made to a vehicle procedure, youcan be confident that you’re getting the latestversion available to you.

15www.audatex.us

Vehicle CoverageA procedure solution is only as good as thevehicles included. Out of the gate, TechFocuswill have procedure information from Acura,Buick, Cadillac, Chevrolet, Chrysler, Dodge,Ford, GMC, Honda, Jaguar, Jeep, Lexus,Oldsmobile, Pontiac, Saturn, Scion, Toyota,and Volvo. And we’re adding more every day.

Industry LeadershipCont inued f rom prev ious page

Are you ready to leverage the powerof TechFocus in your repair facility?Audatex is piloting with select shopsahead of our release in the nearfuture. To be selected for earlyaccess, please contact your localAudatex account professional or callus at 800-237-4968.


Many of us are hardly strangers tothe personal use of social mediaamong children, teens, and eventhe fastest growing demographic

of Facebook users, women between the agesof 55-65. While baby boomers grew up withtelevision (which took 13 years to reach 50million users), and Generation X ushered in theInternet, (which took only 4 years to reach 50million users), we now have Web 2.0. Theexplosive revolution of this medium isexemplified by the growth of Facebook, whichhas added 200 million users in less than a year,according to Socialnomics.net, a social mediablog. In fact, many of today’s college studentsnow consider email passé.

This rapid growth and adoption of interactive webcommunities is not limited to the popular socialnetworking sites, but also includes numerousdigital content publishing sites like Twitter andYouTube, and sharing sites such as Newsvineand Digg. The term Web 2.0 was coined toreflect, not a new software update, but rather achange in the way we use the World Wide Web.Think Wikipedia versus Encyclopedia Britannica.

The impact of social media on business,especially the regulated world of insurance,became apparent at the IRES Foundation’sNational School on Market Regulation. At thisconference, held in Chicago this past April, apanel of experts addressed issues ranging fromthe value of social media in marketing, to thehazards of ignoring its use, to regulatory issuessurrounding the use of this media by insurers.

The general consensus among the panelists wasthat insurance companies cannot afford to ignorethe value of this medium to reach the market.And just as important, insurers need to be incontrol of their brand. As Karen Yotis, CommunityManager at LexisNexis Corporation presented ina YouTube video, 25 percent of searches for theworld’s 20 largest brands are links to user-generated content.

Don Walters, Senior Vice President, GeneralCounsel and Secretary of the InsuranceMarketplace Standards Association (IMSA),

Regulatory Update

What the concept of Web 2.0 really boilsdown to is the utilization of the WorldWide Web as a genuine platform whereusers and visitors can control their owndata, enrich their experiences andcustomize their online lives. Web 2.0 isdependent upon ‘the Community’.

—Jon Gorman, editor-in-chief, NAMIConline weekly newsletter

Regulatory Complianceand…Facebook?The Risk of IgnoringSocial Media

Continued next page

the subject of misrepresentation and recordretention in advertising and marketing. Moststate insurance departments have regulationsgoverning these practices, and Ms. Narcinistated that regulators can monitor insurer use ofsocial media. While insurance companies areaccustomed to legal oversight of their corporateadvertising messages in traditional advertising,does your company know how your producersare using social media to advertise your brand?The Model Unfair Trade Practices Actaddresses both record retention issues, andmisrepresentation and false advertising. Themodel act describes false advertising as:

“Making, publishing, disseminating, circulating,or placing before the public, or causing, directly or indirectly, to be made, published,disseminated, circulated, or placed before thepublic, in a newspaper, magazine or otherpublication, or in the form of a notice, circular,pamphlet, letter or poster, or over any radiostation, or in any other way, an advertisement,announcement or statement containing anyassertion, representation or statement withrespect to the business of insurance or withrespect to any person in the conduct of hisinsurance business, which is untrue, deceptive or misleading.”

How are these types of outreachto potential customers retainedfor examination? Most statesrequire insurers to maintainrecords of marketing materials

for several years. According to Ms. Narcini, acottage industry is springing up to assistcompanies with this type of record retention.

For now, there may be more questions thananswers, but the upside is that social media is avaluable tool for insurers and other businessesto get their message out, and more importantly,get immediate public response from user-generated content. As Thomas H. Wetzel ofThomas H. Wetzel & Associates, said“Policyholders are worth talking to…and willinfluence each other about your brand.”

17www.audatex.us

presented information from IMSA’s Social MediaWorkgroup. The IMSA workgroup mission is “tosupport a social media strategy that growsbusiness by keeping pace with real timebusiness opportunities while adhering toapplicable regulations and company policies.”Mr. Walters highlighted the advantages of usingsocial media for everything from marketing to

employment recruiting. In fact, 80 percent ofcompanies use LinkedIn as their primaryrecruiting tool, according to Socialnomics.net.

From a compliance standpoint,the use of social media doeshave regulatory implications. Aswith any communications tool,insurers should have defined

policies and procedures relating to the use ofsocial media. For example, how does yourcompany respond to third party posts thatthreaten your brand reputation? How are yourproducers’ use of this media monitored?

Regulatory issues include many areas such asrecord retention, false claims, improper “rebates”(giving away concert tickets, for example),required disclosures, and more. The use ofsocial media in our industry is so new that itremains to be seen how regulators will view andmonitor these activities.

Several panelists, including Anne Marie Narcini,Chief of Market Regulation with the New JerseyDepartment of Banking and Insurance, broached

‘‘Regulatory UpdateCont inued f rom prev ious page

’’—Chris Anderson, Wired Magazine

If insurance companies do not useFacebook and Twitter carefully, theymay find themselves not only inviolation of insurance laws, but alsowith an increased risk of errors andomissions claims.

—Susan Stead, Partner,Neilson Levine de Luca and Horst

Your brand

isn’t what

YOU say it is,

it’s what

GOOGLE

says it is . . .

18

Audatex News and Events

“Strategy” was the key theme at theAudatex Inter-Industry Strategic AdvisoryCouncil Meeting held in New Orleans earlier thisyear. Mike Salfity, North American ManagingDirector, kicked off the session of industryleaders from the insurance and repaircommunities by sharing his views on the future of Audatex in the U.S. and Canada.

“Our mission is to deliver business solutionsto your business problems, by enabling youto reduce cycle times, win repair work,improve retention, grow your customer baseand deliver higher CSIs,” said Salfity. “Withour analytics capabilities, you’ll understandyour own business better.”

He also addressed the evolution of technologythat is helping insurers and collision repairers bemore successful. “3D Intelligent Graphics is akey differentiator for Audatex, as the exclusiveprovider of this important new interfacetechnology,” said Salfity. “If you think about it,the graphics display is the real window to theestimating system. The more detail you see onthe screen, the more accurate the estimate willbe. This should improve the quality of the initialestimate and decrease the number ofsupplements.”

Currently, Audatex’s 3D Intelligent Graphicsprovides unlimited “zoom,” discrete partisolation capability and 360-degree rotation.Next-generation 3D Intelligent Graphics willinclude color-coded substrate capability.

“Voice of the Customer”“This meeting is really an important way for us tohear the voice of our customer,” said Salfity.“Every time we show 3D graphics to our clients,they see another application for the future. Thesky is really the limit.”

In addition, Salfity focused on using Audatextechnology to its fullest to enable otherapplications for potential use by Audatexcustomers and clients. “Smartphoneapplications are in our future, as they are beingworked on right now to deliver up-to-date, easy-to-access information to all Audatexsubscribers,” he said.

Additionally, Audatex is focused on Insight, itsanalytics product and the most robust solutionAudatex North America has ever developed.“Data analytics is a key to success for Audatexand our clients,” Salfity said. “Audatex Insightcan provide information you need, from national,to local, to granular detail at any level, and thenconvert that data to knowledge, so that you can

Audatex Holds Strategic Advisory Council in New Orleans


Continued next page

19www.audatex.us

Audatex News and EventsCont inued f rom prev ious page

better understand your customers and your ownbusiness needs.”

Industry trends, reviewed by Michael Anderson,Audatex’s Senior Director of Analytics, revealthat total losses year-over-year experienced aminor increase, while the average cost of arepair dropped slightly. “Aftermarket prices rosea few percentage points, likely due to the rise inmaterials costs, while the OEMs have beenaggressively lowering prices on crash parts tocompete,” Anderson said.

“Considering these trends, along with a laser-focus by some insurance carriers on partsanalytics, and a rise in the repair of parts versusreplacement, Audatex can develop a vision ofthe future,” said Rick Tuuri, VP IndustryRelations for Audatex, and the group’s facilitator.“Because these trends will likely continue for atleast the next 12 to 18 months, repairers willneed to understand that they may be looking ata slight drop in the number of repair jobsavailable due to total losses, and an increasedfocus on saving as many parts as possible. Thiswill help to create a higher number of profitablerepair jobs.”

Getting “Lean” and Going “Green” “Lean” was also a focus at the session, asWarren Farrar from State Farm Insurance led thediscussion, as seen from the perspective of amajor insurer. “With all of the talk, action andmedia about Lean, it is still in its infancy in theindustry,” said Farrar. “While some shops havehad obvious success with Lean, as of yet it isstill statistically insignificant in the big picture.”

Farrar addressed the International Bodyshopand Industry Symposium (IBIS) on this sametopic two years ago. “Insurers can act ascatalysts for Lean in today’s environment, and(they) are doing just that,” Farrar said. “We wantto help as we can as we definitely see thepotential benefit to the entire industry.”

Going “green” was the theme of a presentationby Derek Naidoo from Auto Body Speed Shop(ABSS), which has a U.S. presence in Floridaand several shops in South Africa. Naidooprovided an overview of his enterprise—a lean,green franchise that specializes in non-structural

repairs and green power. (Please see AudatexDirections, Spring 2010 for more information onABSS.)

“This council meets twice per year and is criticalto the Audatex strategy, vision and mission,”said Tuuri. “Having open dialogue with insuranceand repair leaders is imperative to Audatex, aswe serve both segments. There is no better wayto hear the voice of our customers than to meetwith them regularly and take time to listen towhat they say.”

“Acting on their counsel is equally important,”said Salfity. “After our last meeting, the councilprovided Audatex with their combined priorityrank for five key initiatives. Their number-onepriority was to provide repair and replacementprocedures in Audatex Estimating™. Thisinitiative is already underway and will beintroduced by end of 2010.”

The Strategic Advisory Council has made clearthe group’s importance to Audatex, as well asthe value of meeting regularly. The council meetstwice per year, with the next scheduledgathering in late August.

“There is no better way

to hear the voice of our

customers than to meet

with them regularly and

take time to listen to

what they say.”

—Rick Tuuri,VP Industry Relations,

Audatex

“”

20


The Audatex Database and the DatabaseReference Manual took center stage at the mostrecent meeting of the Audatex Inter-IndustryTechnical Advisory Council. The council includesboth insurers and repairers, and engages indetailed discussion with Audatex about thedatabase, product offerings and communicationtools such as the Database Reference Manual.

“It is difficult to overstate the importance of theDatabase Reference Manual,” explains RickTuuri, VP of Industry Relations for Audatex, andthe meeting’s facilitator. “While Audatex is themost automated estimating platform on themarket, you still need to understand what goesinto the database and what comes out on theestimate. The Audatex Database ReferenceManual provides an invaluable tool thataccomplishes just that.”

At the meeting, Council members reviewedproposed changes and clarifications to theReference Manual to ensure that it is clear,accurate and works for insurers and repairersalike. Council members also provided Audatexwith recommended priorities for changes in thesystem. This work, while sometimes tedious andtime-consuming, provides value to both Audatexclients and non-clients.

“Whether you’re an Audatex client or not, youwill probably deal with an Audatex estimate,possibly every day,” says Tuuri. “So the workthis group does regarding the system, thedatabase and the Reference Manual is importantto everyone in the industry.”

Highlights of the discussion included the needfor replacement procedures in the database,clarification on raw, unprimed bumper coversin the Audatex system, and implementation ofalternate, industry-accepted labor proceduresfor parts replacement.

Audatex asked the council members to helpprioritize projects and council suggestions toaddress in the database. Audatex then takesthis “Voice of the Customer” for considerationas an important part of the product roadmapand product development process.

According to the council, the number-onepriority is access to repair and replaceprocedures within the estimating application.This mirrored the input from the Audatex Inter-Industry Strategic Advisory Council as well. As aresult, Audatex is committed to introducingthese procedures this calendar year (see p.14).

“The focus will be on the 80/20,” says Pat Rice,VP of Database Development in North America.“We will put our efforts into the 20 percent thatdrives 80 percent of results for our customers.We won’t include all repair procedures, but wewill include those that are most commonlyneeded. They will be integrated within theapplication so they will be easy to find and use.”

Audatex is also addressing raw, unprimedbumper covers. “The aftermarket really startedthe trend of supplying bumper covers raw andunprimed. This approach has found its way intothe OEM marketplace,” explains Tuuri. “MostToyota and Lexus bumper covers now come rawand unprimed, so Audatex users need to knowwhat is and is not included in our refinish labortimes.”

Another enhancement relates to Honda Air BagImpact Kits. Honda offers parts kits that containcomponents related to airbag deployment. Whilethis is an extremely proactive step by Honda tocontain costs, there are cases where not all ofthe parts are replaced.

Audatex Estimating™ will allow selection of theImpact Kit, along with the option to replace allcomponents or select those that will be replacedwhile still taking advantage of the Kit price. “Thisenhancement is a direct result of client input andis one more way that we respond to the voice ofour customer,” says Bob Sandkaut, DatabaseManager. “Through our Request for Reviewfunction, we hear directly from our customersand the industry about their needs, and takeaction to incorporate their feedback into ourdatabase.”

Audatex TechnicalAdvisory CouncilFocuses on DatabaseReference Manual inAtlanta


Continued next page

www.audatex.us

Audatex will also provide the capability to allowthe use of alternate replacement procedures,while still incorporating OEM procedures. Oneexample is replacement of the lower control armfor late-model Toyota Camrys.

Audatex labor times are currently based on allthe operations outlined by the OEM to replacevehicle components. While the Toyotaprocedures include complete R&I of the engineand transaxle, many repairers have found thatsimply raising the assembly can accomplish theoperation. Therefore, Audatex will begin toprovide the ability to perform this operationeither way, at the discretion of the user.

“This kind of flexibility in the system is extremelyimportant to our users and the industry. While

OEM procedures provide the basis forlabor procedures within the system,

automotive repair technology continues toevolve at a rapid rate,” explains Tuuri. “In thisway, Audatex can reflect the evolution of repairpractices employed by the industry.”

In another move, Audatex is adding moreoperations to recycled replacement times,improving the industry’s most comprehensivelist of “Remove, Remove and Replace (Install)”operations for recycled panels. For example,when replacing a recycled door assembly,Audatex has always included this “R, R, & R”time for lock cylinders and trim panels. This isbecause the repairer will have to remove the lockcylinder and trim panel from both the recycleddoor assembly and the existing door, and installthe components from the existing door on therecycled replacement assembly.

Audatex plans to include the “Remove, Removeand Replace” time for additional operations thatneed to be performed, such as recycled outerquarter panel replacement (skin only). This wouldinclude the time to remove the existing skin, andreplace it with the recycled component alongwith the time required to remove the quarterpanel skin from the recycled assembly.

“Audatex is committed to automation ofincluded operations, whenever required, toensure estimate accuracy and completeness thefirst time,” says Tuuri. “This enhancement willimprove ease of use and accuracy for recycledquarter panel skins.”

Several other changes to the upcoming revisionof the Audatex Database Reference Manual were

reviewed and discussed in detail. All revisionswill print in bold type and be highlighted in anoverview of the changes when the new Manualis released later this year.

Council members include insurers and repairersfrom both the U.S. and Canada. In addition, theCollision Industry Conference (CIC) DatabaseCommittee is also represented, bringing inputfrom CIC, AASP, ASA and SCRS. The Councilmeets twice per year.

“Meetings like this are extremely beneficial andimportant to Audatex clients and the industry,”says Carroll Proctor, A.C. Proctor’s Paint andBody Shop in Augusta, Georgia. “As a memberof the Council, the ASA and the CIC DatabaseCommittee, it’s important that our voice isheard.”


Rick Tuuri explains, “While Audatex is the most automatedestimating platform on the market, you still need to understandwhat goes into the database and what comes out on the estimate.The Audatex Database Reference Manual provides an invaluabletool that accomplishes just that.”

21

22

With increased attention placed on the use of alternative partsin the repair process and the implementation of Lean claimsmanagement processes, Hollander, a Solera Company, haslaunched a Strategic Advisory Council to provide collaborationamong leading recyclers, insurers and collision repairers.Hollander is a sister company to Audatex North America, Inc.During the most recent Hollander Strategic Advisory Councilin May, these key topics topped the agenda:

• Improve the selection and use of recycled parts bydeveloping strategies to bridge the cataloguing methods usedby the estimating applications and applications used by therecyclers.

• Add flexibility to the recycled parts search process tofacilitate searches by part quality and vendor qualifications,and to enable searches outside of the current geographic andyear/model constraints.

• Improve data analytics for recyclers by including datacollected from the estimating process to provide betterintelligence to aid in vehicle purchase and profitabilitydecisions, leading to improved recovery.

• Explore innovative mechanisms for salvage disposition toimprove recycled part availability and quality, shortendisposition cycle time and reduce overall process costs.

“We view the relationship between insurers, collision repairersand recyclers holistically and with a potential to generatesynergies,” says Rich Lauria, General Manager for Hollander.“For example, through collaboration emanating from theStrategic Advisory Council we identified potential ways toincrease the revenue for recyclers from both a vehiclepurchase and sales perspective, as well as increase salvagerecoveries by insurers. Keeping the vehicles within the U.S.recycled part supply chain increases the supply of parts,offering body shops better selection and quality, while at thesame time helping insurers better manage their loss costs.”

From a recycler’s perspective, “Bringing insurers and bodyshops into the council represents a game changer,” says JimWatson of ABC Auto Parts in Blue Island, Illinois. “Having adiverse group providing various perspectives to industryissues provides more clarity and ability to arrive at solutions

that benefit all the parties. For example, there areissues relating to the search and sale of recycledparts that impact recyclers caused by constraints inthe process that may not add value and could beremoved. Likewise, some elements in the salvagedisposition process that may not seem significantto insurers could play a big role in reducing risk forrecyclers, thus allowing for potentially higherrecoveries.”

Tim Adelmann, Executive Vice President for ABRAAuto Body and Glass, with over 100 repair facilities,states: “As a collision repairer, it is our obligation towork with our insurance partners to take advantageof the use of recycled OEM parts. In doing so, wesometimes face challenges relating to availability,part quality and time to delivery. When we wereapproached by Audatex with the idea of helpingresolve some of these issues through direct dialogwith recyclers, we were very intrigued. The resultsso far have exceeded our expectations. The factthat all members of the group are working togethercollaboratively to give Audatex and Hollanderdirection and validating opportunities, I think, willlead to great things and benefit us all.”

Adelmann’s comments were echoed by ChadCounselman of Counselman Automotive Recyclingin Mobile, Alabama. Says Counselman, “WithHollander coordinating this group, I foresee a unityin the future between Audatex customers andHollander customers. This will allow each of theindustries to communicate in the same language,which will result in quicker delivery of the correctpart every time. We see Audatex and Hollander asthe key to this link because they have the potentialto open doors we never knew were even possible.At our business, we rely heavily on data to help usmake purchasing and operational decisions. Justbeing able to see and have access to data fromestimates written in our area can providetremendous value when combined with data fromour own systems.”

As Hollander’s Lauria views it, “We look at partsthroughout the entire process, from identificationthrough locating, ordering, logistics and ultimately,data analytics. To have a significant impact inbenefitting all parties, any solution must includeaspects of every step, and we feel that Audatexand Hollander are perfectly positioned to changehow the industry manages recycled OEM parts.”

How the Hollander Strategic Advisory CouncilHelps Clients See Things From The Other Side



— Continued from below

Audatex Online TrainingCenter: Ongoing LiveCourses

Audatex continues to offer award-winningaccredited online training classes for free. Live,virtual classes make it easier than ever to putAudatex Solutions to work for you.

For the latest Audatex training informationand to see what classes are coming up, visitwww.training.audatex.us.

www.audatex.us 23

The Automotive Recyclers Association’s 67th AnnualConvention & ExpositionAustin, Texas

Oct 11-12Oct 28-31

Nov 2-5

Catch Audatex at the next industry event or trade show.

NACE (National Auto Body Congress Exposition)Las Vegas, Nevada

SEMA Show Las Vegas, Nevada


From unbelievable 3D artistry in the movie, Avatar, to amazing new capabilities

now available in Audatex Estimating, the 3D movement has arrived. Audatex

3D Intelligent Graphics is powered by the industry’s only smart database with

Intelligence Built In.

Audatex 3D Intelligent Graphics give you the ability to view and move parts

and complex assemblies as if you were holding them in your own hands.

Experience Unlimited Zoom, Color Coded Parts, 360-Degree Rotation and

Parts in Perspective.

800.237.4968 | www.audatex.us

The future is here.

Intelligence. Built In.© 2010 Audatex North America, Inc. All Rights Reserved.

The Present and Future of Carbon Fiber Parts

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