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Regulation and the Collision Repair Industry

In November I posted a discussion about the money in the collision repair industry; just as in every other industry money is what makes it all go around. There is certainly nothing wrong with this, it is a very big part of what our society is based on. But as we all know, if there are no checks on the behavior motivated by money the system gets very out of balance. This is where government regulation steps in to control behavior.

Very Little Regulation to Date

The collision repair industry has to date largely avoided attracting the attention of regulators. The main reason why this lack of regulation exists is the public has not needed the protection. On the cost side, a very fragmented industry meant that competition kept the prices down and on the safety side cars evolved in a manageable way for 50 years. This manageable evolution meant that learned skills and work habits could be used for many years with minor tweaks and updated versions of familiar equipment.  Every now and then something quite new came along, but it was all manageable without a need for a real change in operating methods. Problems were created, but as I have mentioned before (Nov 23, 2016 Standards and Regulation for Vehicle Repair) these were more anecdotal than systemic.

Why We May Not Have Needed Regulation in the Past

Poor repairs did compromise the car, but two significant factors kept these compromised cars from being very real problems. Considering post repair safety, or Next Accident Readiness, a car made primarily from mild steel did not change too much in strength and safety after that metal was repaired with heat or pulling. Looked at more darkly, that car wasn’t very safe as designed so the bar was not high.

On the causing accidents side; the control system of the car was 98% the driver and the driver was not affected by the repair.

Why We May Need It Soon

Today’s cars are much safer but their sophisticated design and structural materials demand very specific and accurate repair or replacement methods, otherwise their strength and safety are very much affected.

We are well on our way to the control system being 100% built into the car with the ‘driver’ just along for the ride. Repairs with these cars will have a direct effect on the control system and have to be absolutely accurate, every time. Remember that we will not get from 2% to 100% on a specific date in the future, we will get there on a curve and we are further along this curve now than the industry recognizes.

The changes of the last 5 years and those coming at us rapidly are significant more for their wide application than for their technology. Many of the features which are seen as ‘new’ were being used by manufacturers such as Mercedes Benz in the mid to late 2000s. But with only a few manufacturers using this advanced technology on a very small percentage of the overall vehicle fleet, it was possible for these manufacturers to control the repair process and ensure that the technicians working on the cars were properly trained.

The people who bought these cars were higher income more often than not and had an expectation that if they had purchased an expensive asset that they would get top level service in the repair and maintenance of that asset. If the MB sanctioned repair facility told them that these parts and these procedures were needed then that was what they wanted and they let the insurance companies know that. The insurance companies knew that they could not easily fight a determined owner armed with the logic of a proper repair (and also a lawyer) and with so few of these cars on the road the additional costs of these repairs could be made to fit into their business model.

We are now in 2017 and we have a problem. Every manufacturer is using very sophisticated technology and materials in even their least expensive cars and with so many of these cars on the road they are not yet able to control the repair process in the same way that MB could. They are working hard to find a way, but with the very large number of vehicles involved the problems are far more complex than they were for MB 10 or 15 years ago.

MB had to train maybe several hundred or at most a few thousand technicians and facility managers to work in their rigorous system. The industry was large enough that this relatively small number of motivated people could be found despite the stubborn industry culture of resistance to learning and training. Without doing any background research, it is easy to imagine that if only Honda, Toyota, Ford and GM wanted to get to this level (and they do along with all of the other manufacturers) they would have a very difficult (impossible) task to find and train the people needed. The current insurance company model is also not designed for MB level repairs on every car on the road.

or Why We May Not

The repair side industry could reorganize itself to be able to properly repair the cars of today, with truly qualified technicians working with appropriate equipment and to standards that are accepted and expected across the industry. The insurance side of the industry could also restructure to accept and expect only correct repairs. It is possible that the manufacturers will have enough control over the repair of their vehicles that they will be strong influencers of these needed changes. If these things can be seen to be starting to happen then only a very light regulatory framework may be needed.

If the coming year or two do not show signs of real change then regulators may need to be much more involved in the needed transition.

My guess is that the current regulation in the aircraft industry will become the model for the advanced collision repair industry of the near future.

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