Volume 34, Number 2, February 1999

 

USGAuto News

Auto Glass Industry Feels the Effects of NAGS® Revaluation

To glass shop owners around the country, the new year brought something more than a full slate of college football games and a list of resolutions. January 1, 1999, brought National Auto Glass Specifications (NAGS) Benchmark Prices™ to the glass industry, and many shop owners say the effects of new pricing will be felt long into the year.

Most glass shop owners have accepted and even welcomed the new pricing. However, some complain of the inconsistent manner in which many insurance companies, such as State Farm (see January 1998, USGlass, page 52), are applying the prices, and decisions by some of their colleagues to ignore the pricing when giving discounts.

However, the revaluation has brought some good news to glass shops. For the first time, some insurance companies are paying NAGS benchmark prices plus a percentage in certain markets. "I know there are cases where certain insurance companies program are offering a list plus situation," said Catherine Howard of NAGS.

Benchmark Pricing is a value-neutral system designed by NAGS to accurately reflect the cost of aftermarket glass, with little or no discounts "off" the new prices. In addition, the new prices do not include other items that were formerly "built-in," such as labor, moulding and hardware.

Originally, NAGS said the lower price of glass would be counteracted by an increase in labor rates. However, according to Cindy Sawyers of Auto Glass Systems in Elyria, OH, in some areas that has not happened. "Our main problem is that many insurance companies have not figured the new pricing into their discounts," she said. "We were told by NAGS that the difference in pricing would be made up for higher labor rates, but that has not happened."

This practice is not universal, however, according to Robin Voet of C and R Auto Glass Bolivar, MO. "They have adjusted the cost of labor to meet the pricing," she said. "We used to charge $15 per hour and now we get $40 per hour."

Jerry Johner of Neste Auto Glass of Steamboat Springs, CO, has had problems with insurance companies who are not willing to adjust their discounts to recognize Benchmark Pricing. "One company called and wanted 55 percent off NAGS prices," he said. "I told them that we cannot even buy glass for that."

According to State Farm, most of the glass shops it deals with have accepted its adjusted pricing. "We have had more shops join our program," said Eric Thomas, national glass manager. "There were only a handful of them that could not live with the changes."

The company adjusted its rates based on the prices of the top 50 pieces of glass it replaced last fall. "We took a look at where our pricing was in the fall and made some changes to labor and kit prices," he said. "We felt like there was a need for the increase in labor and kit prices, but we kept the bottom line about the same. Since the change was not proportional for each piece of glass, shops could conceivably make more or less on replacements. Overall, our change should not have had any affect on the bottom line, if it was one of the top 50 windshields."

The company has received some criticism for using a flat labor rate, but Thomas defended the decision as necessary under the circumstances. "We are doing a flat $40 labor rate," he said. "It would be impossible for us to take all of the different labor rates into account throughout the country. For our purposes, it is easier for us to administer a flat rate."

Though conventional wisdom says glass companies will not be able to make a profit selling glass at Benchmark Prices with large discounts, it has not stopped some from trying, according to Jim Testa of Blue Ridge Auto Glass in Winchester, VA. "When some shops are still giving 60 percent off, it does not do much good," he said. "It is just back to the same vicious cycle."

Joyce Campbell of Al’s Auto Glass in Elyria, OH, notices the same trend. "It is killing us," she said. "People are still underbidding each other with ridiculous discounts."

In spite of these complaints, there are some glass installers who have benefitted from the price change. NAGS’s original intention of accurately gauging the aftermarket price of glass was achieved, according to Dana Partney of County Auto Glass in Park Hills, MO. "It has been an easy transition," she said. "The customers are not asking as many questions about the price of glass and the huge discounts," as they did before the change.

Even those critical of the way the insurance industry and other glass shops have handled the change, admit that it was necessary. "Restructuring did bring list prices back in line," Sawyers said. "The customer does not go into sticker shock and it is easier to determine if we are making a profit."

 

Auto Glass Safety Under Question

A lawsuit, generally believed to be the first ever filed in this country contending inadequate cure time for a windshield has been filed.

Maya Donnett, of Bethesda, MD, has sued General Motors Corporation, National Car Rental and Windshield Kaui, of Kaui, HI, alleging that her injuries in a car accident were the result of an improperly installed windshield that was not given enough time to cure before it was driven. She was left a quadriplegic as the result of this accident.

Donnett had been driving a 1997 Chevy Cavalier that had its windshield replaced just hours before she rented it from National Car Rental. The lawsuit alleges that the windshield was not given enough time to cure properly.

Attorneys for the defendants are expected to cite the fact that Donnett had been drinking (her blood-alcohol content exceeded Hawaii’s 0.08 limit), not the windshield installation, as the major cause of the accident.

An article in The Detroit News of November 29, 1998, states that ". . . but most adhesives require time - at least a day, frequently more - at the right temperature and humidity to seal correctly. Replacement shops, however, can’t afford to let a vehicle just sit in a bay and eat up space that could be devoted to another paying customer." Donnett believes that this was the case with National Car Rental and Windshield Kaui. An investigator for the plaintiff, Richard Hille, said "There was virtually no adherence between the bonding material and the glass itself . . . it’s the worst windshield installation I’ve ever seen . . ." The case will go to trial sometime this year.

 

Glass Technology Resin Prices Reduced 33 Percent

The prices of Glass Technology’s Diamond Clear resin products have been reduced 33 percent, according to the company. Phil Lemler, executive vice president, said, "Due to the tremendous success of our Diamond Clear product line, we have been able to recapture the majority of our development costs much sooner than anticipated. We have elected to pass this savings on to our customers."

 

ABRA Acquires Three Stores

ABRA Auto Body & Glass, LLC., has announced the acquisition of three ABRA franchises in the Minneapolis-St. Paul area. The stores are located in Eagan, West St. Paul and Stillwater. The stores’ former owner Mark Wahlin has been retained in a managerial position with the company.


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