Friday, November 4, 2011

Why I Don’t Believe AutoMD Can Claim a 57% Variance in Auto Repairs for the Same Service - by David Carlisle

I pulled this off the internet: "New auto repair quote service, AutoMD Negotiator, reveals that Minneapolis vehicle owners can overpay $341 on average for vehicle repair. … A new, national report by AutoMD.com reveals that Minneapolis car owners are potentially overpaying by 57% on average on car repair" (http://www.wmctv.com/story/15867549/minneapolis-car-owners-experiencing-57-average-variance-on-auto-repairs-for-same-service-just-under-national-average)

Ultimately this news plug was all about US Auto Parts Network, Inc., who owns AutoMD Negotiator, selling more parts. “57%” is awfully precise. Let’s take a look to see if they are worthy of this precision. Bottom line, they are not.

We have done extensive research on emerging digital service customers (EDSCs) over the past several years. About one third of all service customers are EDSCs – service customers who use the Internet to research motor vehicle service options – and about 40% of these switch service providers based on their research. They switch, but do not emerge more satisfied.

The reason for this is due to the low quality of the information they get from the Internet. Like Auto MD Negotiator. Let me explain.

The AutoMD Negotiator claims that their service is the solution to consumers’ price shopping quandary: “We call shops and negotiate for you, so you won’t overpay for auto repair.” In a nutshell, here’s how the Negotiator works: the user enters his vehicle and repair information, receives quotes to his inbox, selects one and schedules an appointment – all without picking up the phone. One of the charts in the AutoMD propaganda piece showed price quotes for a Saab in Minnesota – Saab is nearly bankrupt and primarily a Northeast niche specialty vehicle. To find out more, we went online and used AutoMD’s Negotiator. We submitted a wheel bearing replacement for a 2000 Hyundai Sonata. In a few hours, we received three quotes for the repair in our inbox, all from independent shops or chains, ranging from $450 to $611. As you can see in the chart, none of these quotes passed the laugh test. For more data points, we entered three more repairs. After receiving more quotes back from the Negotiator, we decided to call all the shops directly for quotes to see how they would compare. Three out of the eight quotes (37.5%) we received from the Negotiator were equivalent to the quotes we received when we called the shops directly – one of these three quotes was the same, but for 2 bearings instead of one. So far in our experiment they score two out of eight – 25%.

It appears that sometimes the Negotiator actually called the service provider directly (in the case of the chain franchise), but they never revealed that they were calling on behalf of AutoMD. Other times, it seems that they didn’t call at all, because surely they would have been told, as were we, that the shop didn’t perform those types of repairs. We called up AutoMD pretending to be a shop. We asked how we could sign up to be considered for the Negotiator. As it turns out, there are no fees or surcharges for service providers that want to be listed on AutoMD. Furthermore, there are no requirements for service providers who wish to be listed. Shops are asked to provide basic information, but there is no certification process, at least according to the person we spoke with.

When using the Negotiator, there are no selection criteria besides price – and sometimes the cheapest is the cheapest for a reason. When entering a repair request, the Negotiator doesn’t allow the user to restrict his search to certified providers or specify whether he would like genuine parts. There is no option to filter for providers that offer loaner vehicles or other conveniences, which are critical for those of us who only have one vehicle or who need Wi-Fi to check email when waiting for our vehicle during a workday.


The Negotiator claims to save users time and money, but without a robust process for collecting service provider information, how can the user be assured that the service provider selected by the Negotiator is a legitimate business? Based on our phone calls, the Negotiator also missed the boat on some crucial information; imagine a customer’s frustration if he showed up to an appointment scheduled through the Negotiator, only to find that the selected service provider can’t perform the needed repair. Or, if the user’s repair was performed by someone who is unqualified and/or puts a junk part in his car. At the end of the day, finding the lowest price is not the same as finding the best value, but it seems the Negotiator is not programmed to understand this distinction.

Bottom Line: AutoMD Negotiator is fatally flawed and should die from a thousand cuts. The first “cut” is from a meat cleaver – using a call center to call up service shops for a self-diagnosed repair is just plain silly. If the intent is to help customers find the best price for the service they want, you really need to start with what they want. Do they want cheap? Do they want quality? Do they want amenities? AutoMD Negotiator is like Nextag’s pricing of squirt guns. The price range is from $10 to $2,107. The “Miller 198130 Water Cooled MIG Gun” with quick disconnect represents a price variance of around 99.5%. Or, it might be a heck of a lot better squirt gun. Or, it might be a mistake and not a squirt gun at all. If you want to compare prices for automotive service, you need to do a lot more work than AutoMD does.

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