Friday, September 10, 2010

What About Collision?

I hosted a Webinar for VW’s wholesaling dealers last month and talked about where the market is heading. VW is very creative with their leveraging of NASPC resources. Basically, TJ Dolliver and his folks said they’d help my brother find a convertible Bug if I did this for free. Outfoxed again – me, that is. After the Webinar, I told TJ I’d do the next one free of barter restrictions – maybe a t-shirt. The real creative bent on this Webinar wasn’t so much the negotiation, it was the application. We collect all this data for the industry. We feed it to you in April. We see that things are getting better. We know the root causes of what went wrong and the drivers of recovery. We understand what’s going on in the retail environment via tens of thousands of surveys each year. Yet, our retailers are still suffering from a recession hangover and are reticent to buy more inventory and hire more staff. These are the two big show-stoppers we all talked about in April.

Overall, it looks pretty good out there based on recent Market Watch results. The only fly in the ointment has been collision. LKQ/Keystone, the junk car-parts company, has been going gang-busters this year vs. last year. What’s going on? VW’s wholesaling retailers filled in some of the blanks for me. Retailer GMs are still shivering from last year’s melt-down and are being very conservative. They don’t see what we see, or they don’t really believe what the factory guys tell them. So, they have clamped down on investment in both inventory and staff. And, in the process, they are missing the market. The clips are from this week’s Detroit News. Last year, miles traveled stalled and accidents were way down – from fewer miles, lower speeds (to get higher recessionary mpg), jet-stream weather impacts (drier winter in the NE), and better vehicle safety features. Furthermore, last year folks pocketed their insurance claim checks as part of their cash conservation plans (there must have been dancing in the streets at some insurance companies due to low-ball estimation procedures). All this led to a real contraction in the collision market during 2009. 2010 is not 2009. Things have changed, and the market is coming back – recent government data shows we are out of the nose-dive in miles driven, there’s more pent-up celebrations, less cash conservation, more aging ugly dents that still need to be fixed … hence, more collision parts demand. Similar logic applies to all wholesale demand. And, while our retailer GMs maintain their grim recessionary reticence with cash and cadres of staff, junk car-parts companies like LKQ, and the independents, are having a ball.

Bottom Line: VW’s a pretty smart company. We need to use every tool possible to communicate and educate our retailers.

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