State Farm – Parts Trader: It’s about losing profit, control, and your very survival
The following is an Op-Ed piece from Scott Biggs with Assured Performance outlining his take on the new State Farm parts
bidding process currently being testing in four markets.
State Farm’s latest entry into the parts business is more threatening, robust and all consuming than anything attempted in the past. In my opinion, this program will destroy the OEM list price, funnel all of the shop and dealers confidential pricing, discount and profit information to the insurer, undermine the OEM parts distribution network, wipe out thousands of OEM wholesale parts dealers, give control of parts pricing to State Farm and other insurers, and eventually eliminate the shops profit on parts. The shop’s and OE wholesale parts dealer’s survival is now in serious peril. This is a crisis of unequaled proportions. And, that prediction is mild compared to my worst fears!
After researching and listening to the explanation of the program, I came to the conclusion that this is the biggest overreach in auto physical damage (APD) insurance history. I drew the conclusions not because of what they have said or what they will show you today, but rather what they didn’t want to say, and what they try to avoid saying. Based upon 28 years of watching how these things go, I speculated about the logical next steps these initiatives always take. I also looked at what they are doing in the construction industry where contractors only get a 10% material handling fee if they are doing work under state farm’s version of DRP in housing rebuild.
As I heard the State Farm spokesperson say they would continue with their roll out of the parts “Trader” program regardless of the market reaction, it sent a shiver up my spine. I could just hear the quote “Resistance is futile, you will be assimilated,” depicted in the movie Star Trek Universe. The evil Borg took over as they linked the humans into their “one-mind” machine. The parallels are obvious. The Borg were soul-less cybernetic organisms and used forced “assimilation” onto everyone they conquered. They forced electronic connection to the “hive mind” and mother-ship where all control was maintained. Their mission was to “achieve perfection” by eliminating anything they interpret as inefficient. They did it on behalf of their perception of the greater “good.”