Original article posted by BodyShopBusiness, see original link here.

OE Certification: The New Mainstream

There are few people in the collision industry today who would deny the impact of OEM certification over the past five years. Remember, it was only in 2011 when we as an industry officially proclaimed that OEM repair procedures were the standard to be followed by those pursuing a safe and proper repair. OEM certification, if talked about at all, was used to refer to the specialized repair of high-end luxury vehicle makes. It implied the use of exotic repair techniques, working with high-tech materials, and required significant tool and training investments by a select few repairers.

The New Mainstream

Today, OEM certification has definitely gone mainstream. In fact, in many ways, it actually is the new mainstream. With multiple vehicle manufacturers active in the market with programs to identify, certify and support qualified repairers, the progressive shops are typically now looking for ways to harness their OEM credentials and leverage their unique qualifications locally. They’re also looking for ways to get the most return on their OEM certification investment dollar, an exercise that must consider the types of vehicles they’re most likely to see in their shops, the actual cost of certification by each manufacturer, the investment in tools and training, and any other incremental performance criteria that the shop must meet. Dealer body shops, independent repairers, and regional and national MSOs all appear committed to achieving OEM certification credentials at an astounding rate.

But it’s not just the shops that have recognized and embraced OEM certification. The information providers (CCC, Mitchell and Audatex) are racing to tie OEM repair requirements to onboard vehicle diagnostic data and translate that into usable inputs for repairers’ estimates and repair plans.

OEMs that had previously rejected the OEM shop certification concept now find themselves playing catch-up with the market and repositioning themselves to keep pace with their faster-moving competitors.

Insurers are also jumping on the bandwagon, as they have come to realize that their DRP model is now nearly 40 years old and today’s vehicle technology demands that repairs are performed according to precise specifications. Insurers are mining their data warehouses with the goal of improving their predictive capabilities for repair costs and processes, based on OEM technical requirements and historical repair experience.

The Numbers

To really appreciate the speed and scope of the spread of OEM certification across the repairer community, it helps to do a check of the latest “numbers.”

OEM certification now boasts North American market figures that represent well over 84 percent of all vehicle brands on the roadways. Now, more than 3,500 shops are enrolled in at least one OEM certification program. More than 2,800 are enrolled in just one joint-effort program through Assured Performance. That number is projected to reach approximately 3,600 shops by year-end 2018. At an average annual gross sales of more than $4.5 million, these collective repair providers are now responsible for over $16 billion of repairs, nearly half of all repair work performed in North American.

In a repairer market that consists of 30,000-plus shops, one may overlook the impressive achievement being made here. Consider that many insurer and fleet DRP networks have 1,000 to 2,500 shops (and most are eager to reduce this number to streamline administration and management). Current reports indicate that around 15 percent of all shops own a spot welder – a basic tool required for almost all types of certification. I-CAR reports that less than 20 percent of all shops are pursuing regular technician training.

When you put this in context, it seems that literally any shop that has the ability to achieve OEM certification criteria is actively embracing and pursuing it as a way to distance themselves further from their competitors and position them for future success. This is demonstrated by the 85-percent plus retention rate for Assured Performance’s certified network shops that must undergo an annual reassessment and approval process.

Beyond Core Certification Requirements

The dial has recently been turned up on OEM certification, and we’re talking about much more than just “adding teeth” with restrictions or mandates. The collective vision is to help drive shops to improved quality as well as greater business performance and production capabilities by offering incentives, business development support and critical business technology tools.

A major game changer and enabler is the development and recent release of several business software tools focused on enabling the repairers to become process-driven and more turnkey. These tools address critical business development needs that are not addressed nor are part of traditional “management systems” offered in the industry. These business development packages have been designed to help a shop maximize their overall business performance, manage quality and offer far higher levels of customer service. Ultimately, the goal is to help the certified shop achieve “5-star” status that ensures best-in-class service to their community.

The new certification programs also empower the shop with self-managed data analysis and the ability to track performance and target areas of opportunity for either enhanced profits or
improved efficiencies.

One such example is ShopOps, a system developed and provided by Assured Performance that includes a document warehouse, customer relationship management (CRM), automated mass marketing tools, documentation system, and a quality control and documentation program that includes smart apps for technicians. ShopOps is provided to all Certified Repair Providers at no charge through Assured Performance for all of the 2,800 to 3,600 shops in their joint-effort network.

More Than Just a Trend

Clearly, OEM certification has struck a chord, and thought leaders from all industry segments are adjusting their strategies to align better with its success. Industry consultants are now filling their coaching, on-site consultation, training and 20-group programs with the critical content needed for compliance and participation in the OEM certification programs. These programs are even becoming
generically referred to as certified repair programs, or CRPs, as they’re now dominating the marketplace.

CRPs are gaining a foothold in the market and are well beyond a trend. Now, leading insurers are embracing OEM certification credentials and exploring how they can enhance their existing DRPs. Several insurers expressed concerns about OE certification programs in the early years, believing that CRPs would create conflicting criteria to their longstanding DRP rules and processes. As the process has evolved and matured, however, this anxiety has been found to be misplaced.

Insurers have a vested interest in seeing that their policyholders’ vehicles are repaired properly and now, with the advanced-technology vehicles filling the roadways, see this as critical. The John Eagle legal award settlement is just the latest example of why this is so critical with today’s complex vehicles. It has increasingly become clear that there should only be one way to properly repair today’s vehicles. Doing anything less creates a potential liability chain that no shop or insurer wants to find themselves at odds with.

The proof is in the numbers. It does not cost more to repair a vehicle right by the right repairer. Insurers are master data analyzers, and the simple repair cost math as it relates to repairs done following OEM certified procedures has shown them (to their surprise) that such repairs are actually turning out to be less costly and carry a far higher CSI than repairs completed following outdated, non-approved methodologies by less well-equipped shops without documented technician training. It makes sense that doing the repair once, to
approved standards by trained personnel, will ultimately lower the average repair costs (and improve cycle times and their related spin-off cost drivers).

Summary

There seems little doubt that the OEM certification model will see only continued evolution and refinement in the coming years. With all the qualifying shops, some are suggesting that the next logical step will be the certification of the repair itself to OEM standards. The shop would continue to bear the responsibility for properly completing the repairs as it does today. But by following, documenting and attaching the related OEM-certified repair details to the vehicle’s history, they can deliver a “certified” repair, done by a “certified” facility and “certified” and trained personnel. This would be a game changer in the sense that repair quality would now be differentiated. And the implications are far reaching: consider the difference in diminished value that would exist between a vehicle that had an OEM certified collision repair versus one that was repaired using undetermined, undocumented processes.

Such a concept is not difficult to foresee, and the enabling repair documentation software (at no incremental cost) has already been built and made available to OEM-certified network shops. These sorts of records can be stored in the shop’s Amazon cloud account.

Progressive shops can see the opportunity to effectively protect themselves and ensure the highest proper repair quality – documented and accessible at any future date, should the need arise. It is truly a benefit in and of itself that could make the OEM certification process the right choice for any shop that today lacks such verifiable repair liability mitigation processes.