ATI’s Keith Manich Discusses the Opportunity for Mechanical and Collision Shop Synergy for ADAS
By Chasidy Rae Sisk
Identifying a general increase in the use of Advanced Driver Assistance Systems (ADAS), ATI’s Keith Manich proposed that there is great opportunity for collision and mechanical repair shop synergy during Kukui’s 2020 Virtual Conference. Exploring “The Opportunity for Mechanical & Collision Shop Synergy,” Manich stated, “In the case of mechanical repairs, requirements may include calibrations because of part removal and replacement without collision damage. With collision-damaged vehicles, scanning and calibrations are needed on minor impacts as identified by the OEMs.”
“Dealership knowledge is currently limited,” Manich continued. “Insurers, the third-party payers, are reluctant to pay for scanning unless it can be proven to be ‘accident-related’ in the case of collision repairs, due to the limited dealership knowledge. There is often a need to ‘sublet’ repairs from the collision shops.”
Most modern vehicles contain some partially automated safety systems, such as lane departure warnings and adaptive cruise control, but looking beyond 2025, Manich predicted fully automated safety systems and highway autopilot. In support, he cited a March 2016 announcement from the NHTSA and IIHS regarding a commitment to make front crash prevention systems standard on nearly all models by Sept. 2022 by 20 major automakers representing 99% of all vehicles sold in the U.S. annually.
The concern Manich expressed is that, based on OEM position statements, 70% of all appraisals from 2017 should include a pre-repair and/or post-repair scan(s). This requirement is often neglected due to a lack of dealer and driver knowledge. “By 2030, almost 50% of vehicles will contain ADAS equipment,” Manich said. “Drivers are becoming more dependent on ADAS, which increases distracted driving and may result in them driving more recklessly.”
The increasing popularity of ADAS options will likely increase the need for improved system identification and repair expertise over the next few years. All of these will require calibration to ensure the systems are functioning properly. Manich also compared the two types of testing, fixed/stationary or mobile/dynamic, and he shared several OEMs’ position statements to demonstrate the importance of pre and post-repair scanning.
Asking when to scan and calibrate, Manich stated, “It isn’t the repairer and the insurer who decide this. Two entities decide when a scan is required: the vehicle and the OEM. The OEMs have very specific guidelines for scan requirements following an impact and when a part is removed.”
Regarding market potential, Manich said, “The mechanical side of the automotive repair business is beginning to see tools and equipment specifically marketed to it. Manufacturers are also identifying the need for qualified and certified technicians and facilities for providing the ADAS repairs and offering training for both mechanical and collision shops. Collision repairers typically work on three to seven-year-old vehicles, and the influx of these types of vehicles is changing their repair requirements. There’s a lot of potential if mechanical and collision shops can create synergies.”
Manich recommended that shops create new repair authorization forms, which are required for them to share owner information with the insurers. He also suggested preparing the customer to pay for OEM-required items that the insurer may challenge. “The concern focuses on need. Establishing need will be paramount, and the justification must have supporting documentation that can be used to justify the process steps. Scanning typically takes 3.5 to 6.6 hours, depending on the impact severity and the number of calibrations that must be completed.”
After providing details on the lack of OEM dealer preparation and equipment, Manich addressed collision repairers’ concerns: “Insurers are the single biggest concern to repairers because they pick and choose what they feel is worth of scanning and calibration, which is often contrary to the OEM service requirements. Repair planners see this as a constant source of friction when trying to ensure that a proper repair is identified and completed. Recognition of the cost of the repair becomes the focus point, not the need, but the cost is a biproduct of the need; the need is what’s important.”
“In many cases, the insurer will tell the repairer to ‘collect that from the insured’ without the benefit of a denial in writing. If a mechanical shop bills the insurer, the invoice is accepted without question in most cases,” Manich continued. “Insurers may feel like a health scan doesn’t need to be done, but the OEM requires it, so it is absolutely necessary. Remember – these are safety systems!”
Sharing insurers’ fears that they are being taken advantage of when a health scan is requested, Manich explained how these conflicts create additional labor for administrative work. He also explored the opportunities for mechanical repair shops, noting that “Existing collision repair shops typically have very limited space necessary to perform ADAS calibrations and store the equipment. In some markets, collision shops must sublet the work to a limited number of dealers, but this provides an opportunity for service technicians who typically work with scanning and reset processes as part of their daily job tasks.”
Manich added, ‘These necessary operations provide a new area of expertise that can be identified in marketing for the mechanical repair shop, and this could help collision repair facilities reduce repair cycle time by having a scheduled time and place to have these types of repair processes completed. Mechanical shops typically have an established area for completing suspension alignments, which can be multipurposed to create an alignment/ADAS space. By marketing the additional capabilities to collision repairers who can’t do this work in-house, technicians and store owners will have a new revenue stream.”
Further explaining on long-term synergy between the two disciplines could work, Manich shared a process by which the calibration and scan work is conducted and billed by a mechanical shop, and that sublet is added to the final repair bill so the insurer receives one combined bill from both the mechanical and collision shops.
Because of the stay-at-home orders associated with COVID-19, many people are anticipating a return to normalcy, but new car dealers have had little to no sales activity. According to Manich, “It is anticipated that there will be significant sales opportunities offered by dealers on 2020/2021 vehicles. These vehicles will be ADAS-equipped, resulting in an increased frequency of repair requirements for these systems. Dealers are focused on sales and service, not these systems.”
Once the pandemic is declared over, miles traveled will significantly increase because people are excited to escape their homes. As a result, accident frequency will increase beyond anticipated levels for the third and fourth quarters, Manich believes. “The vehicles that will be involved will be newer since owners will be taking advantage of the dealer sales opportunities, and repairers that are prepared will have opportunities and potential for additional work and revenue.”
In closing, Manich discussed the impact of mechanical and collision repair shops synergizing to ensure ADAS are properly calibrated. “The average repair order will increase by recognition of a true mechanical labor rate, and supplemental billing, which takes an average of 12 days to clear currently, will be reduced. Collision repairers will be able to align repair services with mechanical repairers, and both collision and mechanical repairers will be able to align schedules to improve throughput and customer service.”
“The expertise for the repair need will be identified by multiple repair experts,” Manich added. “Challenges by insurers for the repair needs and requirements will be validated, not only by OEM documentation but through processes from both repair disciplines. The focus on tools and equipment will be more specific by discipline, and all of this will result in reduced supplements and repair delays.”