What follows is a letter I received from a well-known member of Canada’s collision sector about new cash-on-demand requirements for obtaining parts from repair facilities.
As the publisher of Collision Repair, I frequently receive letters containing views that might harm the writer’s reputation to be attached to.
This magazine is proud to be a platform for unpopular and controversial opinions. I take great pride in protecting our sources. If you wish to send in your own anonymous submission, we are eager to consider it.
I can be reached at publisher@collisionrepairmag.
—Darryl Simmons, publisher, Media Matters Inc.
Come together, right now (over COD)
Canadians are a unique breed. Around the world, we are known for our nauseating politeness, and our generally culturally sensitive traveling habits—we are often recognized with or without the standard-issue maple leaf backpack decals. We’re also nice. And generous to a fault.
Where we really come into our own is during disasters.
We show up with sleeves rolled-up and shovels in hand—or rubber boots in foot, if the task requires it. When the chips are down, we open our communities, our homes and our hearts. Whether personally, or through our businesses, we donate money, we make food and we donate clothes and supplies. Then we donate some more money. Regardless of our own personal hardships, we do whatever we can to help each other—no questions asked.
Maybe it’s because we live in a country that has its share of regular disasters. Whether it’s a snow-storm burying the Maritimes, ice storms ravaging Ontario or Quebec, spring floods sweeping-over Manitoba or Alberta or forest fires in B.C.
Perhaps the ‘why’ is irrelevant. It’s what we do, it’s the Canadian way.
It’s easy for me to describe and write about my fellow Canadians because I’ve seen it many, many times over the years, and, I’m proud to say I exhibit these noble traits so often shown by my fellow countrymen and women whenever I can.
Why the patriotic ramble? I’m making a point to express my frustration.
At a time when the country should be coming together, the automotive sector has a handful of characters making moves to pull us apart. At a time when we should be focusing on finding ways to keep the country together, there is a select few focusing exclusively on themselves.
The stories are popping up across the country of OEM dealers that have decided, pretty much overnight and without notice, to move their wholesale parts business to cash-on-demand.
At this most opportune time to demonstrate Canadian leadership and business ethics, these dealers have decided that the right move is to leave many other businesses and vehicle-owners to figure out their own problems.
This is not just an issue exclusive to collision repairers, every local mechanic eventually needs to source parts from the dealers. The automotive aftermarket in Canada is largely populated with very smart small business people.
We get it! Every shop owner in Canada is going to have to make some tough decisions in the days and weeks to come. But I guarantee you not a single one has told an insurance company that they have to pay for repairs in advance. Nor has any mechanic told his fleet accounts they are now COD if they want to keep their service vehicles on the road.
We get it, many dealers have likely been stung once-or-twice, and also likely have a couple accounts that represent a lot of risk right now. It makes sense to put those accounts on COD until they catch up, or decrease their credit amount to a level you’re comfortable with, but to wake up one morning and put every account you have on COD is bull****.
Collision industry stats show that pretty much 80 percent of the auto claims in Canada are repaired by about 20 percent of the shops. The likelihood that that 20 percent would leave you hanging is incredibly small. That 20 percent is comprised of most of the best operators in the country—made up of MSOs, network shops or very strong independent owners.
When this is over, that same 20 percent will still be around fixing vehicles. And many will be working to replace you as their parts provider as quickly as they can. We’ll remember that your first move was to think only of your own well-being, leaving not just shops, but many Canadians in a difficult spot when you were most needed.
That 20 percent of shops work on a system that sees us paid approximately every 30 days, quite often longer with bigger jobs.
With our margins eroding (even before Covid19) none of us has the financial ability to operate on COD with about 40-to-50 percent of every claim being parts and/or sublet.
While they sit back and smile their best Scroogian smile, applauding their own savvy business decision, I hope they think about all the people hand-cuffed by their self-serving move.
I hope they remember the first-responders forced to take public transportation to work because they couldn’t get their car out of the shop. I hope they see the faces of the volunteers forced to back-out their food delivery commitments and those of the people who will go hungry as a result. I hope they consider the single parents forced to skip much-needed shifts because they can’t get to and from work without vehicles.
As B.C. Premier John Hogan said in a recent broadcast, “This is a time of unprecedented cooperation… and it is only the beginning.”
Dealers should be cooperating too—cooperating in order to keep Canada moving as much as possible.
