Frame Job: How Frame Damage Can Quickly Sink Remarketing Goals
Why is it that the most important tasks that need to be performed are often the hardest to do?
That may be the case for car remarketers in identifying frame damage. Those remarketers who fail to first identify frame damage and then disclose that information to potential buyers at an auction could face costly consequences—both in terms of real dollars and damage to their reputation.
But while identifying frame is usually difficult to the untrained eye, there are materials and training programs available that can help remarketers improve their skills with regard to identifying cars that are likely to have sustained frame damage from an accident.
The number of cars with such damage may not be large. “Of the 10 million used vehicles Manheim handles annually, the overall percentage is relatively small,” says Matt Arias, senior instructor at the Manheim Technical Center, run by Atlanta-based Manheim.
But the cost of each unit may be significant. “Frame damage is pretty serious stuff. Most remarketers need to be better at identifying frame damage. A false positive can hurt the value of the cars while a false negative can also be costly and hurt your reputation,” says Dave Sutton, general manager of sales and operations for VW Credit.
Sutton estimates that about 5% of the cars returned through the lease programs at VW Credit have some form of frame damage and he adds the percentage increases the longer the cars have been on the road. He explains there was an uptick in the number of cars with frame damage about five years ago when manufacturers began designing cars with frames that could withstand most of the damage in order to better protect occupants. But that amount appears to have stabilized over the past five years, he says.
But the cost may be rising. The current cost to a remarketer for failing to identify, and subsequently disclose, frame damage, can be as high as $2,500 per vehicle and a time loss of up to three months to sell the auto, Sutton says.
“The National Auto Auction Association standards state that a buyer who finds undisclosed frame damage to an auto can take the deal to arbitration. Arbitration can be expensive for sellers. The arbitration costs alone could be more than $1,000 and then it might take you up to three months to settle and you have a depreciating asset during that time,” Sutton says.
By identifying signs of potential frame damage, further investigating suspected cars and then disclosing upfront which cars have frame damage, remarketers can save themselves a lot of time, money and good will. Although some cars with damage can be repaired, in many cases it is more of a matter of disclosing the extent of the damage at the time of auction. Then, the buyer can make an informed decision on the purchase and the seller does not face subsequent actions, Sutton says.
But the hard part can be identifying those autos with damage. At a recent conference, Sutton and Arias explained signs that remarketers should look for in determining if there is frame damage and participants were given a test. In the test, they were shown pictures and told to determine which cars likely sustained frame damage. Most participants failed, Sutton says.
But there is information available to help remarketers make better assessments. Aria recommends remarketers look at the NAAA structural damage policy at the Web site naaa.com. Also, Manheim offers a course entitled “Automotive Structural Dynamics” at the Manheim Technical Center.
In general, signs that remarkets should look for include:
* Bolts that have been removed, loosened or replaced.
* Irregular gaps in panels indicating vertical or lateral deflection that may have been caused by collision forces.
* Body repair and refinishing defects (e.g. paint runs, excessive orange peel, contaminants and sand scratches).
Such signs are often indications that an automobile has been in an accident that may be involved frame damage and require further investigation, Arias says.
“Products like Insight ECR (electronic condition reports) and pre-sale inspections and post-sale inspections can help detect problems, reduce costs and improve customer service,” Arias adds.
This article originally appeared in GreenLight Remarketing, a quarterly journal published by Santander Consumer USA Inc. and located online at www.greenlighttodrive.com.
That may be the case for car remarketers in identifying frame damage. Those remarketers who fail to first identify frame damage and then disclose that information to potential buyers at an auction could face costly consequences—both in terms of real dollars and damage to their reputation.
But while identifying frame is usually difficult to the untrained eye, there are materials and training programs available that can help remarketers improve their skills with regard to identifying cars that are likely to have sustained frame damage from an accident.
The number of cars with such damage may not be large. “Of the 10 million used vehicles Manheim handles annually, the overall percentage is relatively small,” says Matt Arias, senior instructor at the Manheim Technical Center, run by Atlanta-based Manheim.
But the cost of each unit may be significant. “Frame damage is pretty serious stuff. Most remarketers need to be better at identifying frame damage. A false positive can hurt the value of the cars while a false negative can also be costly and hurt your reputation,” says Dave Sutton, general manager of sales and operations for VW Credit.Sutton estimates that about 5% of the cars returned through the lease programs at VW Credit have some form of frame damage and he adds the percentage increases the longer the cars have been on the road. He explains there was an uptick in the number of cars with frame damage about five years ago when manufacturers began designing cars with frames that could withstand most of the damage in order to better protect occupants. But that amount appears to have stabilized over the past five years, he says.
But the cost may be rising. The current cost to a remarketer for failing to identify, and subsequently disclose, frame damage, can be as high as $2,500 per vehicle and a time loss of up to three months to sell the auto, Sutton says.
“The National Auto Auction Association standards state that a buyer who finds undisclosed frame damage to an auto can take the deal to arbitration. Arbitration can be expensive for sellers. The arbitration costs alone could be more than $1,000 and then it might take you up to three months to settle and you have a depreciating asset during that time,” Sutton says.
By identifying signs of potential frame damage, further investigating suspected cars and then disclosing upfront which cars have frame damage, remarketers can save themselves a lot of time, money and good will. Although some cars with damage can be repaired, in many cases it is more of a matter of disclosing the extent of the damage at the time of auction. Then, the buyer can make an informed decision on the purchase and the seller does not face subsequent actions, Sutton says.
But the hard part can be identifying those autos with damage. At a recent conference, Sutton and Arias explained signs that remarketers should look for in determining if there is frame damage and participants were given a test. In the test, they were shown pictures and told to determine which cars likely sustained frame damage. Most participants failed, Sutton says.
But there is information available to help remarketers make better assessments. Aria recommends remarketers look at the NAAA structural damage policy at the Web site naaa.com. Also, Manheim offers a course entitled “Automotive Structural Dynamics” at the Manheim Technical Center.
In general, signs that remarkets should look for include:
* Bolts that have been removed, loosened or replaced.
* Irregular gaps in panels indicating vertical or lateral deflection that may have been caused by collision forces.
* Body repair and refinishing defects (e.g. paint runs, excessive orange peel, contaminants and sand scratches).
Such signs are often indications that an automobile has been in an accident that may be involved frame damage and require further investigation, Arias says.
“Products like Insight ECR (electronic condition reports) and pre-sale inspections and post-sale inspections can help detect problems, reduce costs and improve customer service,” Arias adds.
This article originally appeared in GreenLight Remarketing, a quarterly journal published by Santander Consumer USA Inc. and located online at www.greenlighttodrive.com.
Comment
About
Events
© 2010 Created by JJ Hornblass.
Powered by 
.
You need to be a member of Inside Remarketing to add comments!
Join Inside Remarketing