A LARGE number of Australian car dealers are reaping rewards from selling memberships to a body repair assist program, run along the lines of car club roadside assist services, which saves members hundreds of dollars at the panel shop and prevents loss of their car for days on end for each minor repair.

Schmick’s Scratch and Dent Assist program, which has more than 150,000 members and is sold through 600 dealerships, repairs minor scratches and dents from a fleet of fully equipped mobile vans staffed by qualified spray painters who repair cars on site for a low fee that is usually just $50 per repair.

The managing director of Schmick, Jason Jaap, told GoAutoNews Premium that “one of the most frustrating moments of car ownership is when you or someone else puts a minor ding on your car”.

“Trouble is those dings play on your mind every time you use the car and yet body shops and insurance companies are not really geared up to fix such minor damage, and when they do, it still means you lose your vehicle for days.”

Mr Jaap said panel shops can charge hundreds of dollars and sometimes thousands to fix quite minor damage and claiming on insurance can impact premiums.

“Yet, if the damage is not fixed, owners lose pride in their car and can just see the dollars falling off the value of their vehicle when it comes time to sell or trade up, with valuers more than allowing for the actual cost to rectify every damaged panel,” he said.

For dealers, selling memberships to Scratch and Dent Assist is appealing because not only does it provide exceptional value for their customers, but the dealership’s retail margin from the sale goes straight to the bottom line with Schmick looking after the servicing costs of each membership over its term.
It also means that trade-ins are cleaner when the cars come back to the dealership to be replaced. These cars need no or low rectification because the owners have had them repaired by Schmick as the damage occurred.

According to Mr Jaap, the Scratch and Dent business model has gained real traction in the past three to four years.

“Scratch and Dent Assist is getting a lot of market acceptance and it is the fastest-growing aftermarket product in dealerships,” he said.

Schmick Scratch and Dent Assist is based on a business model styled on the way car clubs operate their roadside assist services.

Members can join for a term of one to five years, which earns them the ability to have an unlimited number of repairs (currently at $50 each).

“Where drivers break down; the car clubs come to you and get you going. With Schmick, when you get a scratch or dent, we come to you and repair it,” Mr Jaap said.

He added that when owners get a scratch or dent they face a dilemma.

“Do you go to a panel beater and get a quote or do you put it through insurance? Many people don’t bother with either because it costs so much for such a small thing and they don’t want to be without their vehicle,” Mr Jaap said.

As such, Scratch and Dent Assist was designed to fix smaller things, with the repairers coming to the car and performing the repair on the spot. No top dollar. No loss of car.

Mr Jaap said that when the business was starting out “we were very mindful to ensure we had the right technology backing us up. So all our mobile repair vans are fitted with the latest technology from around the world”.

“We only employ qualified spray painters, and our team have an average of about 20 years experience in the trade,” he said.

Mr Jaap said that Schmick spent “a lot of time and effort ensuring the business model wasn’t crossing over into insurance. So we place a lot of emphasis on the membership model we have now and proper training of sales staff is integral to this”.

“It is a very different model from tyre and wheel, which was insurance,” he said.

“There are a lot of distinct differences and dealers and finance companies through their own advice are fast becoming aware that our business model is different and is not an insurance product.”

Mr Jaap said that ASIC had given the company “some clarity on where we stand”.

Repairs covered by membership include bumper bar scuffs and scrapes, small dents and scratches up to 60mm long (about the size of a credit card) on all vertical side panels, any surface scratch that can be buffed out, covering up to four panels, alloy wheel scuffs and scrapes, interior leather and vinyl repairs (tears, rips or cigarette burns).

Mr Jaap said that alloy wheel scuffs and scrapes were one of the most attractive parts of the program.

“It can cost anything $100 to $500 to get a single wheel repaired. Any one repair with Schmick costs just our current repair fee of $50 for a Schmick platinum member for each repair requested. They can use the service as often as they like and request as many repairs they require,” he said.

Schmick Scratch and Dent Assist is fast approaching more than 3000 repairs a month.

Mr Jaap said that evidence of repair volumes was very important to dealers in the current dealership environment because “now it is all about whether your product provides value and we stack up very well in this area”.

The most common repairs are near-side front and rear bumpers because they are the most shielded from the view from the driver’s seat.

“The higher-valued repair is a deep scratch on a metal panel. Elsewhere they can cost $1000 or more to get any one scratch repaired, so we do provide significant value to members and this has become a very big talking point in dealerships in view of what has been happening with ASIC and the ACCC with other products recently,” Mr Jaap said.

“There are also instances where we can do larger repairs that fall outside the membership low-repair fee guidelines. These are charged out to members at a 20 per cent discount on our normal retail cost for that repair. So long as it’s a repair we can still do on-site using our mobile equipment.”

Members can join for up to five years, although they normally align the membership term with the term of the finance and new-vehicle warranty. Four years is the most common period. The annual fee is paid up front so there are no annual payments ongoing.

Four-year memberships retail for between $895 to $995. Scratch and Dent Assist is a national product available in most major cities of Australia.

“This is ideal for dealers looking for additional products to generate revenue as the readjustments are taking place elsewhere in the F&I department,” Mr Jaap said.

“It is becoming very popular within F&I departments, and it is certainly being seen as a product that will help fill the shortfall in revenue that is being experienced in many dealership aftermarket and F&I departments at the moment.

“It’s also extremely well supported by a dedicated and professional national sales team that are more than just account managers and spend much of their time training and providing support in many ways.”

Mr Jaap said that Schmick Scratch and Dent Assist is a product that complements chemical paint protection products “really well”.

“Ceramic-type paint protection provides excellent body protection from all the elements, and the Scratch and Dent Assist provides protection to members when their car gets a hit or knock. So they go hand-in-hand,” he said.

“When they are combined together it is a compelling product for dealerships to sell but also works great as a standalone profit opportunity as well.”

By John Mellor