ARA ProPresentationto CIC July 2008

8/14/2019 ARA ProPresentationto CIC July 2008

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Parts CommitteeScottsdale, AZ

July 23rd, 2008


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Mission Statement

The mission of the CIC Parts Committee is

to work towards the establishment of best

practices for OEM, recycled/recyclable,remanufactured/reconditioned, and non-

OEM parts to facilitate fair, equitable,

timely, and quality motor vehicle repairs.


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Committee Membership

Bob Smith, Brian Vannoni, Carl Samuels, DanMorrissey, Dan Young, Dave Barzoff, Don Porter,

Dwight Howard, Erica Schaefer-Saari, George Laurie,

Greg Freeman, Herb Lieberman, Jay Scruton, JayMueller, Jeff Schroeder, Jim Watson, John Bosin,Joseph Olmedo, Julian Hart, Karen Fierst, Keith

Manich, Ken Weiss, Kyle Gallagher, Larry Wood,Mary Lou Lubrano, Mary Lou Silveira, Mel Hunke,

Michael Wilson, Michelle Alexander, Nick Scheid,Scott Westbrook, Steve Nantau, Suzanne Royston


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Committee Contacts

Chairman

Ken [email protected]

Vice Chairman

Jim [email protected]


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Airbag Update


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New Options For The Collision RepairIndustry

ARAProOEM Non-Deployed Airbags


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Introduction The ARAs Airbag Protocol; Scope. Limited to airbag units

exclusively;

The Airbag market; growth driven by new regulations and sustaineddemand

Goal; lower total loss rates . A common industry goal shared by all

Addressing the Airbag Challenge

The Airbag Protocol & its implementation through AirbagResources.com; training, employee certification, handling &inspection, certificates of inspection, branding ARAPro OEM Non

Deployed Airbags, ARAPro exclusive part search engine, 24/7

availability Carrier Experiences

Conclusion

Q&A

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ARA Airbag Protocol; Scope

Airbag Protocol is the international recycling industrystandard for OEM non-deployed airbag inflator modules(aka airbags), addressing: Technician training Technician certification Part Removal, handling and storage Part inspection Documentation

Strictly limited to the airbag component itself; Protocoldoes not address system issues i.e. SRS system levelperformance, (ECU/ECM, clockspring, sensors or wiring)or related parts, e.g. front windshield

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Airbag Market Factors Aftermarket airbags are now available to the collision industry for some

make/models. Applications are very limited and likely will remain so forforeseeable future because:

Development costs prohibitive; Payback is too long

Broad make/model availability not realistic in foreseeable future

OE airbags are the only option to maintain crashworthiness of vehicle;franchised OE dealers & Recyclers are the only supply sources for OEairbags

OE part from a franchised dealer and recycler are the samepart, simplya differentsales channel

ARA Protocol designed to 1)address this sales channel/chain ofcustody issue 2) be in place for the inevitable widespread use of OEM

Non-Deployed Airbags in insurer paid repairs 3) ensure BestManagement Practices applied at all times

ARAPro OEM Non Deployed Airbags are the same OE part, handled,

inspected so chain of custody issues are neutralized11/1/2013


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Shared Objective; Lower TotalsVehicle

Age

Group

Mid Yr

2006

Mid Yr

2007

Mid Yr

2008

Mid Yr

2006

Mid Yr

2007

Mid

Yr

2008

% of Appraisals FlaggedTotal Loss

% of Total Volume ofAppraisals

CurrentYr orNewer

3.8% 4.0% 3.8% 4.3% 4.7% 4.1%

1~3 yrsold

4.8% 5.2% 5.2% 33.1% 32.0% 31.7%

4~6 yrsold

9.3% 9.8% 9.5% 28.4% 27.2% 27.0%

7 yrs

old

24.0% 24.4% 24.3% 34.2% 36.1% 37.2%

Total 12.6% 13.3% 13.4% 100% 100% 100%

Total Loss (TL) Data and Airbags Ave. vehicle age on the roads is now > 9 years

Vehicles aged 7 Years account for the largest

share of all appraisals written & rate is growing

These older model year vehicles also have thehighest total loss percentagei.e. year-to-date2008 nearly 25% of all appraisals generated for

vehicles aged 7 Years and Older were flagged as

total loss

Of vehicles declared a TL, 66% + are 7 yrs old

(as of mid 2008)

Airbags a major factor, though other issuescontribute

ARAPro OEM Non Deployed Airbags, inappropriate circumstances, w/ customerconsent, certainly will reduce total losses andretain customer loyalty

ARAPro Airbags are the only viable alternativefor dealer new units. Likely to improvecompetitiveness in the airbag market (ashappened with AM parts)

Saving repairable cars from becoming totallosses means more collision part sales by ARAmembers, otherwise lost.

Total loss data courtesy of CCC Information Services Inc


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Collision Market; Airbag Use

Growing

Hyundai Sonata 6 airbags standard Honda Civic 6 airbags standard Toyota Camry 7 airbags standard Ford Fusion 6 airbags standard Chevrolet Malibu 6 airbags standard

2008representative

models

2012 10, 12, 15 airbags as standardequipment??

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Addressing the Airbag Challenge A common challenge facing the industry is: how do we lower airbag material

costs while maintaining quality, managing risk and keep our customers happy?

The ARA Airbag Protocol delivers the best solution:

Quality

ARAPro Airbags ensures the customer receives OE quality (performance,reliability and durability)

Airbags are engineered to meet international automotive reliability standards forsafety parts (i.e. five 9s reliability (99.999% )

Risk Management

All actions performed on the airbag are recorded. No change, modification,alteration of any kind permitted. Unique record created for each unit in database.

Unit thoroughly inspected by qualified technicianEvery ARAPro part is checked by the recipient cars diagnostic system (ECU/ECM)

prior to delivery to customer

ECU isOEM equipment, which performs 2 checks a) continuity b) resistance

Continuity checks confirms circuit in airbag intact and able to carry current

Resistance of circuit is measured to confirm circuit is within specification

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Key Elements


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Airbag Protocol Assumptions

OE performance, quality, reliability & durability are designed inand unchanged Part has been fully checked by Tier One maker. a) electrical

b) ballistic performance checked prior to shipment to OEM

Reliability level of airbag unit is the Gold Standard, five 9s Part is comprehensively inspected according to the Protocol

before shipping Part is checked electrically by on board diagnostics once

installed by body shop; on board ECU is an OEM part; cannotdistinguish between new and non-new parts; confirms airbag

conforms electrically

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All employees involved in extracting, inspecting,handling or shipping units must be trained & certified

All shipping employees must also be trained andcertified & comply with all DOT/state or local rules reairbag shipments

Vehicle Owner Consent Required

All units must be inspected (visually)

Donor vehicle information must be recorded

Cover inspection/no damage acceptable/no re-finishing

Flood damage inspection/no flood cars acceptedModule housing inspection/no foreign objects/all partssecure

Shorting bar/in position

Wiring Inspection/no damage to wires or connectorsacceptable

Supplier to confirm unit is correct match for application

Recall Check prior to shipping

Documentation to accompany part

Audit & compliance system part of Protocol

Each recycler must carry product liability insurancewhich includes airbags

ARA Airbag Protocol;

Key Features

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Airbag Resources.com

Executes the AirbagProtocol

Web Based software;

access limited to ARAPromembers

Training for Technicians

Technician Certification

Inspection of PartsDatabase/Reportgeneration

Certificates of Inspection

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Training

Techs are trained insafety, handling,basic technology

and inspection usingweb based software

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Exam

Techs are tested

with a computer

scored exam. Score

to pass: 100%

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Certificate

When examsuccessfullycompleted a

personalizedcertificate isgenerated(kept with employee file)

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Inspection

Once certified,technician maybegin inspection ofairbag.

Step 1; capturedonor vehicle andairbag details

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Inspection contd.

Tech evaluates each unitagainst question posed.E.g. Airbag cover must bevisually inspected and

show no evidence ofnicks, cuts, abrasions or

other damage. Tear seam

must be intact. Does the

module under inspection

meet these criteria? Yes

or No Technicians

answers are saved indatabase.

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Inspection contd

Recall check is

automated. NHTSA

recall file is updateddaily.

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Certificate of InspectionCaptures all relevantdata. Copy sent withpart. Paper copy keptwith ARAPro member

supplier. Digital copyin database

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Web based searchengine returns ARAProbranded parts exclusivelyEasy for collision repair

specialists and adjustersto search for, and find,ARAPro partsImmediate responseNo cost to use

Available 24/7

Part Search Engine

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Audits

An Independent audit

is required to

participate in the

program Audit confirms key

program requirements

are being complied

with

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Controls

Control

areaControl

Test in

current

period?

Test of controls

Control

evaluati

on

Notes on results

EmployeeTraining;airbagsafety,extraction,handling,inspection &storage

Company has a formal training program,which addresses the elements required, towhich all required employees have easyaccess.

Yes Review the training material which thecompany has made avilable to itsemployees. Evaluate the material to ensureit addresses the required elements.Evaluate whether employees have easyaccess to the training material.

Effective

EmployeeTesting andCertification

; AirbagTechnology,Inspection,Safety,Storage &Handling

Company has a formal employee testingand certification program, which evaluatescompetence in the the elements required,

to which all required employees have easyaccess.

Yes Review testing and certificati on material.Ensure it addresses the required elements.Ensure that on successful completion of the

testing material, the employee is issued witha certiifcate, in his or her name, valid for aperiod of 12 months.

EmployeeTraining;HazardousMaterialsregulationsas theyrelate toairbagmodules

Company has a formal training program,which addresses the elements required, towhich all required employees have easyaccess.

Yes Review the training material which thecompany has made avilable to itsemployees. Evaluate the material to ensureit addresses the required elements.Evaluate whether employees have easyaccess to the training material.

EmployeeTesting andCertification; HazardousMaterialsregs as theyrelate toairbagmodules

Company has a formal employee testingand certification program, which evaluatescompetence in the the elements required,to which all required employees have easyaccess.

Yes Review testing and certificati on material.Ensure it addresses the required elements.Ensure that on successful completion of thetesting material, the employee is issued witha certiifcate, in his or her name, valid for aperiod of 36 months.

InspectionFacility

Management has dedicated a suitablespace (s) witihn the operations area for

airbag inspection. Inspection area to beclean, dry and organized. Inspectionsurfaces to be non- scratching, non-sparking, non-abrading. Ample light forclose inspection required. Area must befree from EMI/RFI interference orexcessive heat.

Yes Visit and evaluate the inspection area andevaluate against required criteria. If

possible, observe actual inspection process.

InspectionProcedure,datacapture andreportingrequirements

Systems to be in place to enable efficient,effective and standardized inspection ofeach unit under inspection in compliancewith the ARA Airbag Protocol 1.4 or later.Inspection system must address andcapture these criteria: donor vehicle data,incl VIN, unit under inspection serialnumber, type, color and part number andor interchange number. Unit underinspection, to be visually inspected for anyevidence of re-painting, flooddamage/exposure, foreign matterintrustion, cover damage, tear seamseparation, damage to original labels,shorting bars out of position,damage toconnectors or wiring. Mechanical fastenersto be in place and secure. Unit underinspection must be checked againstNHTSA Recall Database. Data and

responses to each answer for each unitunder inspection to be captured in acomputerized database system. Databasesystem to capture and store informationand be available 24/7. On successfullcompletion of inspection procedure eachunit to receive a Certificate of Inspection,which must accompany part to customer.

Yes Document key systems used to supportinspection procedure. Check to ensuresystem to record data promotes standardwork and addresses the required elements.

Recordsretention

The company maintains a formal recordsretention policy, which complies with bestmanagement practices.

Yes Review the retention policy; conduct a sitevisit to determine if historical records arestored in alignment with the retention policy.

LiabilityInsurance

Company must maintain an insurancepolicy with at least a $1 million (USD) limitper occurence

No Review the insurance policy on file.

Physicalsecurity

Key documents, including employeerecords, certificates of compliance,customer information, and otherconfidential materials, are kept in locked orotherwise physically secure locations.

Yes Observe the physical locations for keybusiness-related documents to gaugewhether the level of security is appropriate.


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ARAPro Benefits Fewer repairable vehicles totaled

Less fraud

Airbag fraud appears

extensive (see chart)

Improved customer satisfaction Provides quality alternative to

new parts

Lower severity

Identifies best in class vendors

A real alternative!

Airbag Module

Fraud Estimate,

Single Vehicle

Example 2003 1

Ford Taurus 1999

State Farm Paid Forin '03

379 airbag units

Ford Supplied in '03 40 airbag units

1 Data source: Fleet Maintenance Magazine 09/2007

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Insurer Experience/Market Usage

In Canada, 2 major western province carriers are using OEMnon-deployed airbags; ICBC has used them successfully since2003 and for Saskatchewan General Insurance (SGI), OE Nondeployed airbags are the first choice.

In US, while no insurer publically acknowledges use of OEMNon Deployed Airbags..

Recyclers report replacement airbags are in strong demandnationally

Airbags consistently rank in the top 15 of part inquiries for

many recyclers Numbers sold too great to be explained by rebuilder market

alone

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When To Consider ARAPro Airbags

When a new OEM airbag not available due to:

Prolonged backorder

Obsolescence Customer fully informed and consents

Customer asks for ARAPro Airbag

When using an ARAPro airbag will keeprepairable vehicle from becoming a total loss

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Conclusion

The ARAPro is a standard basedalternative solution for vehicle repairwhen used as appropriate, can lessen

severity.

ARA will continue to review andupgrade the ARAPro standards as air

bag market trends and technologyadvance.

11/1/2013

Documents

ARA ProPresentationto CIC July 2008