December 11, 1998
To:
LYNX Services Participants
Other Interested Auto Glass Service Providers
RE:
NAGSŪ "Benchmark Pricing System"
As we have all been expecting since the NAGSŪ announcement
late last year, the new "Benchmark Pricing System" from NAGS for automotive
replacement glass parts will take effect on January 1, 1999. NAGS' objective for the new
Benchmark Pricing is to be generally "revenue neutral" while reducing overall
the list price for auto glass parts to bring the list price into closer alignment with the
actual competitive price of glass parts in the marketplace.
The question we all face is how best to transition to the
Benchmark Pricing in light of the actual competitive prices for auto replacement glass in
the marketplace. It's a complex assignment due to the broad involvement of NAGS list in
the auto replacement glass industry. Our objective is to make the transition generally
cost neutral to all parties and at the same time remain competitive in the market as
required.
We have found that the Benchmark Price reduces the NAGS list
price of windshields by a factor of .314, i.e. an average reduction of 68.6% to the NAGS
windshield list price. On tempered glass parts, the new NAGS list price is reduced by a
factor of .510 i.e. an average reduction of 49% on tempered parts. Although we did
identify a few inconsistencies among the thousands of parts priced by NAGS on its
Benchmark list, our analysis indicates that this .314 factor is accurate for over 99% of
windshields; the .510 factor is accurate for about 90% of tempered parts.
This means that we have had to create new discounts for all
insurance and fleet work we dispatch beginning January 1, 1999. At this time we anticipate
no change on pricing kits, moldings, and other related parts. The new discounts will be
dramatically lower than year-end 1998 discounts because of the much lower NAGS list price
that takes effect on January1, and are intended, on average, to make the transition
transparent. We know and anticipate, due to inconsistencies in the NAGS list price, that
the compensation for certain selected parts/jobs will not convert directly from the old
NAGS to the new NAGS. In some cases net payments will increase, in other cases it will
decrease. However, in most cases, the new discount structure will make the conversion to
the NAGS Benchmark System will have little effect upon payments.
Starting on January 1, these new discounts will be confirmed
on the LYNX Services dispatch fax. As always, you should read this dispatch fax and call
for any required special part approval, or if you have questions about the job. You will
see these new discounts on the dispatch fax which we send with each job. Please be sure to
revise the pricing in your point-of-sale software according the the new discounts
identified in the fax. All work dispatched after December 31, 1998 will be audited and
paid according to the new Benchmark list price and the corresponding new discounts. Work
dispatched on or before December 31 will be audited and paid according to the current
(old) NAGS list price. Any work dispatched after December 31 which is invoiced at the old
list price and / or old discounts will not be accepted for payment. The new discounts that
apply in January will also be available though your local PPG Branch representative as of
December 27, 1998.
We expect that the transition to the new NAGS Benchmark Price
will require patience and a learning curve for everyone in the auto glass industry. We
look forward to your cooperation and understanding as we go though the transition process
together, and as we maintain the utmost in customer service to our mutual insurance and
fleet customers. As we move forward in 1999 and beyond, we will continue to work with you
to monitor and manage the impact of any subsequent revisions to retail price lists
issued by NAGS.
Sincerely,
Chris Umble
Director, National Sales and Marketing
Lynx Services from PPG |