Dealing ADAS Calibrations: What Option Is Best?

Published in Texas Automotive – Thomas Greco Publishing

ADAS features have become pretty standard on most vehicles; in fact, around 95 percent of light duty vehicles manufactured in 2023 came equipped with automatic emergency braking, according to CCC Intelligent Solutions’ 2024 Q1 Crash Course Report (bit.ly/CCC-CC2024q1).

These days, around 70 percent of vehicles being brought to a body shop require at least one calibration, but there’s a lot of debate about whether it makes more sense to sublet this task or to bring calibrations in-house. Simple answer: there isn’t one! It all depends on your business model and what makes sense for each shop. 

“Calibrations are an absolutely integral part of the repair process on most vehicles, but when it comes to how those calibrations get performed, shops need to consider whether it’s more logical to sublet them or bring them in-house,” according to Tommy Ames (1Source ADAS/Automotive Electronic Solutions). “Correctly performing calibrations requires tons of training, certain equipment, a lot of space and a specific environment, so it may not be worth the investment if the shop doesn’t have a high enough volume.”

ABAT President Burl Richards began performing calibrations in the shops he previously owned because “it made sense to be able to service all three shops in-house. We wanted to make sure we were doing things right, so we updated the facility, invested in the training and equipment and turned one of our buildings into a calibration center.” The high volume between his shops justified the investment, and the ability to manage that aspect of the repair allowed for increased efficiency since he no longer had to schedule appointments with a sublet company. 

With multiple dealerships under his umbrella, it also made sense for Eric McKenzie (Park Place Dealerships; Dallas/Fort Worth) to bring calibrations in-house. “We are the certified collision center for all the brands our dealerships sell, so we see the importance of keeping as much of the repairs in-house as possible. We started doing our own calibrations as soon as there was training and procedures to show us how to do them.”

Greg Luther (Helfman Collision; Houston) also opted to follow this path because “we felt operations were missing through our third-party vendors, and we wanted more accuracy and control over the process. We started with research, visiting other shops performing in-house calibrations about their process and seeing their chosen systems in action. A friend of mine developed a system he calls VSSTA for in-house scans and calibration with remote assistance and OEM scan capability. VSSTA also communicated directly with our shop management system, ROME, so it has turned out to be a great fit for our shop.”

Beyond the tools, equipment and facility updates required, training is a key aspect of successfully performing ADAS calibrations, and for many shops, it makes sense to assign this task to a specialized diagnostician. In fact, Ames believes having a designated calibration expert is “one of the most important aspects of successful calibrations. In the ADAS world, knowledge is power. That knowledge can only come from training and experience. These are SAFETY features. Would you put your family in a car that was just calibrated by someone who doesn’t know what they are doing?”

Richards agrees. “Calibrating a vehicle isn’t as simple as setting up some targets and using a computer; you need an experienced professional who knows how to diagnose their findings and can help the body tech understand what steps need to be taken next.”

McKenzie’s “dedicated mechanics use only OE scan tools and OE approved/compatible calibration equipment, plus they attend any available OE training.” Likewise, Helfman Collision employs “a dedicated technician who is trained and supported through VSSTA, with our manufacturer training as a dealership, and he has completed I-CAR training relative to his role,” Luther reports.

Following OEM procedures is absolutely imperative when performing this difficult task. “OEM repair procedures are absolutely critical in performing a proper ADAS calibration. Advanced Driver Assistance Systems rely on precise sensor alignment, which must be restored to factory specifications after repairs,” Luther states. “Following OEM repair procedures is not just best practice – it is necessary to ensure vehicle safety, consumer safety and the safety of everyone on the road around a repaired vehicle…and to protect the repair facility from liability issues. An improperly repaired vehicle could lead to injury or death, and no one wants to have to live with that responsibility to save a few bucks.”

“We base our whole repair plan and methodology on OEM procedures,” Richards concurs. “Everything starts there because our goal is to repair the vehicle to its original, pre-accident condition.”

“Following OE procedures is an absolute must because failing to do so could cause ADAS features to either not work at all or not as designed by the manufacturer either of which could end in catastrophic results,” McKenzie adds.

Because “procedures and requirements change daily in the ADAS space, following OEM procedures is paramount,” Ames stresses, taking it a step further: “If you’re not going to invest the time and money into OE repair procedures, don’t even bother doing the work! You’re not just risking liability; you’re risking a life – someone’s child, parent, grandparent or other loved one.”

There’s certainly a cost associated with bringing calibrations in-house, but shops that have made the investment often see a significant ROI. “Other than initial equipment purchases, costs are minimal,” McKenzie shares. “This is typically the most profitable area of our business. Some of the equipment does require larger spaces than repair stalls, so the drive aisles work for that.”

“The equipment cost is substantial, but it’s worth every penny,” Luther indicates. “Space is a concern because some vehicles require very large, dedicated areas for their specific calibration. It requires a large, level surface, free of obstructions. We were able to accommodate such a need, but many shops cannot. In-house calibrations have been a profitable venture for our shop. Although expensive and time-consuming to get started, I wish we had done it sooner.”

Although Ames recognizes that “performing calibrations in-house can enhance profitability by reducing cycle times and keeping all proceeds in-house if the business is structured correctly,” he warns those considering it that “there’s more to it than [just starting it up and collecting more money]. First, you need to have the volume to justify it. Calibration equipment is expensive. Subscriptions are just as expensive if you want 100 percent coverage. Then there are space requirements. If you have it, great. If not, then add that to the startup costs.”

To see a profit on this work, shops must first convince insurance companies to pay for calibrations, but shops doing this have come up with some tips. 

“Some insurers want to compare your in-house bills to a third-party invoice, so it’s important to be very specific in your documentation and make sure you’re in a reasonable price range,” Richards suggests. “Then again, some appraisers objected to paying a markup on sublet invoices, despite the fact that the calibration company was using my stall and electricity, so of course, we’re going to mark it up because we’re a for-profit business. A lot of insurers want to argue about any required procedures, so there’s going to be some pushback no matter how you do it.”

Ames recommends that establishing a separate business makes it a little easier for shops to collect compensation from insurers but can also come with additional challenges. 

Luther believes the key is in documentation. “Most insurance carriers agree to cover our repair costs without issue, as we maintain a fair and reasonable pricing structure, backed by thorough documentation to justify our charges; however, some carriers only cover a portion of our calibration costs, citing disagreements with OEM requirements or our pricing structure. Unfortunately, due to a lack of regulation, the State of Texas has allowed insurance companies to manipulate auto insurance policies in a way that enables them to determine repair coverage without adhering to OEM guidelines. This has negatively impacted Texas consumers. Since the Texas Department of Insurance has permitted these changes, many major insurance companies have taken advantage of the situation, knowing that most consumers lack the time and financial resources to challenge their decisions and demand proper payment.”

McKenzie finds, “Most of the insurers understand and pay for reasonable calibration charges, though it can be a moving target.”

Even shops that have a dedicated diagnostic technician recognize that they cannot perform every calibration in-house, though, since it’s impossible for most facilities to acquire everything they need for all makes and models. McKenzie’s team sublets vehicles that they don’t have the proper equipment to calibrate, sending them to the dealer. 

“There’s a lot of training to keep up with, and if you don’t have the volume to make the investment, there are definitely benefits to subletting calibrations,” Richards acknowledges, adding that some sublet companies do a wonderful job of keeping up with the technology and doing things the right way. And that’s not necessarily every sublet company. 

“It is the wild west with ADAS calibrations right now,” Ames says. “Everyone and their grandmother is out for a money grab. Finding a good reputable sublet company can be difficult in some markets, and scheduling a sublet calibration can also be a challenge.”

So, how do you know whether your shop should bring calibrations in-house?

Ames recommends starting by identifying your shop’s volume and demand: Are ADAS-equipped vehicles a significant portion of your workflow? Does outsourcing calibrations lead to delays or inefficiencies? Then, determine if you have the space for static calibrations and open roads for dynamic calibrations, if you can justify the cost of tools and equipment and if you’re willing to invest in training for your team (or if you’re able to hire a diagnostic technician with the right experience). Consider facility requirements, and research your ability to comply with industry standards as well as how bringing calibrations in-house may impact liability for your shop. 

Ames also recommends looking at existing costs and profits for outsourcing, the expense required to bring calibrations in-house and how long it would take to break even on your investment. Additional considerations include the possibility of starting a separate business to collect proper compensation from insurers if you suspect they may not recognize and reimburse your in-house calibrations. 

In short, Ames offers this advice: “If ADAS calibrations are frequent, and outsourcing delays are hurting efficiency, bringing them in-house can be a smart move if your environment allows; however, if the volume is low or space is limited, outsourcing may still be the better choice.”