The contract kicks in from June 1, 2005, and is likely to mean a doubling of repair volumes directed by NUI to Ford’s 160-strong national dealer bodyshop network.
The importance of NUI’s commitment to the manufacturer – the insurer underwrites the Ford Insure programme – has not been lost on John Cooper, director of Ford Customer Service Division, who said at the conclusion of the agreement: “We are delighted to see Norwich Union embrace the twin concepts of using genuine parts for all Ford repairs and refer more Ford owners to our network.
“This partnership will enable us to achieve higher levels of satisfaction for our mutual customers.”
A marriage made in heaven?
Simon Machell, NUI customer service director and now executive director of newly acquired RAC, was equally supportive. But is this marriage between two giant but contrasting motoring forces – one interested in retaining profit, the other in containing costs – really a match made in heaven?
Many Ford and other VM dealers have developed a cynical commitment to body repair over the years after suffering at the hands of motor insurer price suppression. Increasing numbers have turned their backs on accident repair and are instead choosing to work more closely with approved independent bodyshops (see panel). Among the first independents to be given the prestigious ‘blue oval’ badge is Warwick-based Impact Repair Centres.
The attrition rate among dealers exiting the body repair industry in the past five years has been almost double that in the independent sector with many turning over valuable workshop space to sales and service or even looking at commercial redevelopment. It could take more than NUI’s promise of doubling work volumes and commitment to OE parts to cause a reversal in this process.
Failure of Project Unity
Dealers may also be sceptical about the NUI parts relationship with Ford. After all, it’s only a year since NUI entered into the ill-fated Project Unity with Lex Logistics which was meant to revolutionise parts supply to NUI approved repairers. If Unity had been successful, it could have significantly damaged dealers’ parts revenues.
Unity was conceived to source OEM parts as a means of the insurer leveraging parts prices. When the project collapsed earlier this year after the concept failed to win the backing of VM’s, Unity was supplying mainly non-OE parts.
Repairers complained about poor fit, delivery problems and a mountain of packaging that was costly to dispose of. Soon after, NUI replaced Lex Logisitcs with Unipart’s SSVG but this relationship will now undoubtedly be weakened following NUI’s commitment to Ford and BMW.
Industry pundits believe that NUI’s intention in developing Unity was to give the VMs a bloody nose and force them to the table to hook into a central supply and rebate deal. “Insurers use non-original parts to create price pressure on VM supplied parts,” says body repair industry analyst Robert Hadfield of Auto Body Projects.
“Ideally, insurers would like to see repairers use VM parts at non-OEM prices to protect themselves from liability and diminished value issues, although the work carried out by Thatcham on improving the image of non-OEM parts in recent times has created a new quality dynamic in the parts sector.”
Hadfield believes the cat and mouse relationship between insurers and manufacturers will continue and predicts that while the cost of some fast moving accident repair parts will reduce, prices of other high-tech parts that can’t be readily copied will remain high.
Ford drops RAC in favour of AA
“Pedestrian safety compliance has led to some bonnets and bumpers having subtle changes to plastic and foam components involving complex redesign. What used to be a relatively straightforward part now requires performance criteria that might be difficult for non-OEM suppliers to copy,” Hadfield says.
“There is no end in sight to increases in average repair costs.”
Meanwhile, a side issue is set to potentially sour the new NUI-Ford relationship. Ford is about to switch from the insurer’s new business acquisition RAC to the AA for the provision of roadside assistance.
AA roadside assistance, which now comes as standard with every new Ford, is being extended to include mainland European cover. Part of the AA’s plan is to develop a team of technicians dedicated to responding to calls from Ford owners.
The insurer continues to rattle cages in the body repair sector after technically approving the PPG and Nexa paint refinish. Approved bodyshops will be incentivised to switch brands via a performance reward programme which may conflict with manufacturers’ and dealers’ own preferred suppliers.
And what happens if the cost of repairing Ford vehicles becomes greater inside the Ford repair network than in NUI’s own approved repairer network?
“Either the cost of insuring Ford vehicles will have to go up, or the insurer will look to find cheaper alternatives for repairs,” says Hadfield.
History suggests it’s likely to be the latter.