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SERIOUS concerns about insurance companies controlling the pricing of work carried out by small smash-repair businesses has been the catalyst for a cost calculator tool that can accurately determine repair costs.

Developed by the Motor Trade Association (MTA) of WA, it becomes available nationally to motor body repair businesses this week.

MTA WA CEO Stephen Moir said repair businesses had historically been concerned about how much an insurance company would pay for work and how much the job actually costs the business.

“If an insurance company says to the repair business that a job is to be paid at $40 or $50 an hour, the repair business usually agrees yet has not previously had the means to calculate if the price is viable,” he told GoAutoNews Premium.

“This tool puts the information back in the hands of the repairer and allows it to accurately determine the cost of the work.

“Insurance companies have had the upper hand in pricing previously and now we believe that the repairer has the tool that demonstrates – to the business and to the insurer – what the real cost will be.

“Too many motor body repair businesses, who have heavily invested in training, equipment, tooling, and in meeting the demands of a rapidly changing automotive industry, are being forced to accept rates and charges demanded by work providers that simply do not reflect the costs of their business and placing them at a significant disadvantage or even jeopardizing their future.”

He said most work providers to the motor body repair industry have their own calculators or processes that are required to be applied in order to secure work.

“These tools or processes rarely capture the complete picture and contain elements or parameters designed to produce a predetermined charge rate outcome,” he said.

“This leads to different motor body repair businesses, with different capabilities or services, differing levels of staff and costs, being subjected to a rate for their services which is not reflective of their actual costs – even though they may have already made significant improvements, generated efficiencies and productivity enhancements to be competitive.”

Mr Moir said that the MTA WA had worked with its motor body repair members, its national association, the Motor Trades Association of Australia (MTAA), Australian Motor Body Repairers Association (AMBRA) and other stakeholders including prominent accountancy firms in developing the calculator.

He said the calculator was independently analysed by national business advisory and accountancy firm BDO and has been examined by the Australian Tax Office.

In addition to showing all motor body repair business owners and management all the costs associated in running their businesses, it also includes helpful worksheets for profit and loss, tradespersons’ costs and can highlight business operations where further efficiencies can be made.

“We expect that use of the cost calculator will improve transparency over costs and charges and help MTA WA to defend its members rights to fair and reasonable compensation reflective of the input costs and not some determined rate by a work provider,” he said.

Mr Moir said that the calculator could be adapted to other sectors of the motor industry – such as technicians and dealership administration – and that would be the subject of a meeting with the national MTA next month.

The calculator will be distributed and be available to MTA WA motor body repair member businesses from this Friday morning, February 2, 2018.

By Neil Dowling

KPMG
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