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Repairers attack CGNU parts move

Attempts by insurance giant CGNU to cut overheads by setting up a central procurement scheme for parts supply have been lambasted as unworkable by repairers. They fear the concept may cause delays and impact on profits.

The scheme, called Unity, has so far failed to get support from vehicle manufacturers since trials with parts specialist Lex Multipart started last September. Consequently CGNU is only able to source a limited range of non-original parts.

Industry analyst Robert Hadfield believes the scheme will face resistance from smaller independent dealers who rely on parts sales to augment their core business.

“It will also end up creating a lot of admin for the bodyshop and cause delays on repair while they wait for supplies,” he adds.

“However, it needs the buy in from carmakers, but where's the benefit for them? Even if CGNU threatens to increase use of cheaper non-OE parts, particularly with the onset of Thatcham's approval programme, manufacturers like Renault and Ford have shown recently that they can still dictate the market by cutting parts prices.”

Under Unity, the estimate is submitted in the normal way to CGNU and re-routed to Multipart. Within a few minutes (although the default is within an hour), Multipart informs the insurer which parts it can fulfill. However, given the limited stock, the bodyshop often ends up with a mix of non-OE and original parts.

CGNU believes central parts procurement will lead to savings on the repair bill, which are underpinned by the expense of purchasing original parts from the carmaker.

But one repairer claims the insurer should look to cut costs in other ways. “The issue is with the carmakers' prices, but insurers could address this problem through group ratings,” he says. “If they gave cars a higher insurance rating because expensive parts increase the cost of the repair, manufacturers would be forced to reduce prices.”

CGNU wants all its approved bodyshops to sign up to a new contract this summer that will include Unity. There is talk of an increase of up to £1.50 per hour on the labour rate with the new scheme, but this has a number of conditions and is measured against average repair costs – any increases and the labour rate rise is lower or non-existent.

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