Toyota pushes dealers for certified body shops
Goals are to improve operations, keep customers loyal
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LOS ANGELES -- Toyota Motor Sales wants more of its dealers to bring body shop work inside their dealerships, not farm it out to independents. And it wants those dealers to be certified according to Toyota guidelines.
Toyota believes that a good body shop can keep customers coming back to dealerships for sales and service.
Currently, about 450 of Toyota's 1,230 U.S. dealerships have in-house body shops, but only 189 of them are certified collision centers. And only 20 of Lexus' 230 dealerships have certified body shops.
"We've been studying how to improve operations and customer service," says Gene Coster, Toyota national manager of service and parts program development. "Most people don't think about body shops, but it can have a huge impact on retention."
So Toyota is taking a hard look at the head winds that dealers face in operating a body shop.
"Repairing a car is not an easy job," Coster says. "It's a different kind of back-shop business. A dealer might not have the resources personnelwise to get it done."
Opening a body shop is expensive, too, with capital costs -- excluding real estate -- of $1 million or more.
Toyota also is looking at why more dealerships aren't participating. The program isn't new; collision certification has been a part of Toyota's service program since 2001. A big part of the problem, Coster says, is that Toyota lacks sufficient field staff to certify interested dealers.
Matching paint properly
A Toyota certified collision center assures customers that the proper repair equipment, replacement parts and paint-matching technology are used, whereas independents might use aftermarket parts and not have the most accurate paint codes. Plus, when repairs are completed with Toyota parts, factory warranties transfer. That means the parts department benefits, too.
To be certified, a body shop must have specific equipment and meet certain process and training requirements as well as customer service and business process targets.
Toyota of North Hollywood, northwest of Los Angeles, has had a body shop for nearly 50 years. It became Toyota certified when the program began in 2001. The body shop, with 41 employees on staff, should generate about $6.5 million in revenue from about 2,000 repair orders this year, says Cesar Valera, the store's body shop director.
Equipment required to be certified includes proper paint-spraying equipment with downdrafts and a framing machine with an electronic measuring system and printout.
"You can't just do it mechanically and eyeball it," Valera says.
Lower hourly rates
Every year, or when a new model comes out, body shop technicians, estimators, painters and managers -- "pretty much everyone but the porters and office staff" -- need to be re-certified, Valera says.
While service loyalty jumps with a certified body shop, margins on body shop work are slimmer than those on regular service work.
Body shops tend to charge $40 to $50 an hour, whereas mechanical service work runs up to $120 an hour.
At Puente Hills Toyota's certified shop, 20 miles east of downtown Los Angeles, Rob Huntington's staff of 32 complete about 240 repair orders -- generating $450,000 in revenue -- every month.
Puente Hills Toyota has as much as 40 percent non-Toyota business. That's because the dealership has a trusted "direct report program" arrangement with a dozen insurance companies that eases paperwork hassles for claims, repairs and payments.
"We're stealing work away from other dealers based on our relationship with insurance companies by being Toyota-certified," Huntington says. "The insurance companies know the car will be repaired properly."
But servicing Toyota owners is the body shop's key mission because it maintains customer loyalty, Huntington added.
"We consider ourselves a one-stop shop for our customers," he says. "We like to keep everybody in-house, using all our departments. We work well together. Those dealers who don't have a body shop lose a profit stream."
Huntington appreciates the ongoing education and training that Toyota provides solely to its certified shops.
"They're training us about the new boron steels and what we can and cannot do, where to cut, how to weld," Huntington says. "Those independent shops, I guess they just wing it."
You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on 
