Volume 9, Issue 5 - October 2007
Inside the NAGS Benchmark
In the auto glass industry, few topics are as sure to generate controversy as the topic of National Auto Glass Specifications (more commonly known as NAGS). Given the role that NAGS plays in the auto glass aftermarket, there is a certain degree of inevitability to this fact. But, from the perspective of a member of the team that produces the data and technology produced by this organization, it becomes apparent that at least some of the controversy is caused by some misconceptions about what NAGS is and what NAGS does and doesn’t do.
NAGS is part of Mitchell Glass, a business unit of Mitchell International Inc. Prior to its acquisition by Mitchell in 1991, NAGS was a separate company. Now, NAGS is more specifically the glass data, editorial, publishing and licensing products produced by Mitchell Glass. To understand the mission of Mitchell Glass, it is important to understand why Mitchell acquired NAGS and the role that it plays in Mitchell’s broader mission.
How does NAGS fit into this equation? Vehicle glass is broken in at least 10 percent of collisions. Therefore, if you want an accurate estimating system, you need to be able to estimate that portion of the vehicle repair accurately. When Mitchell acquired NAGS, the company was acquiring a comprehensive database of original-equipment (OE) and aftermarket glass information, and Mitchell made a commitment to enhance and grow that data. Today, the NAGS database contains data back to 1949 and includes almost every production vehicle and glass part. NAGS also includes a rich set of supplemental information, such as hardware and mouldings, OE numbers and list prices, kit types and quantities, notes and more.
The Debut of the Benchmark
There was a time when there were few manufacturers of aftermarket glass. For many years, the market was dominated by just two or three manufacturers. As manufacturers began utilizing independent distributors, significant conflicts began to arise over manufacturers’ published list prices. Because NAGS is a neutral third party that does not manufacture, distribute, buy or sell glass, NAGS was asked to develop a unified benchmark price for the part numbers in the catalog. The price was based on a formula built on the published manufacturer truckload price and took into consideration the industry practice of discounting. Distributors quickly adopted the benchmark as a useful mechanism for quickly pricing their product lines and facilitating negotiations and buying practices.
This immediately provided both the collision and auto glass repair sectors a consistent methodology for calculating glass replacement costs for both collision-related and glass-only damage to vehicles. And yes, from the outset, a controversy over the use of the benchmark began to grow. What if the only distributor who serviced your area had the highest price? What if the largest retailers can buy in great quantity and achieve very low acquisition costs? It is safe to say that these are not new questions today; they have existed since the advent of the benchmark.
Mitchell Glass, in its NAGS products, actually publishes two benchmarks for most glass parts: a benchmark price and a benchmark labor time. While the benchmark price generates most of the questions (and other input) that flow into Mitchell Glass, there also are questions that arise on the labor times. The most common question is why the labor times published in the NAGS calculator and distributed to the auto glass industry are often higher than the labor times distributed to the collision industry. This is actually a case in which Mitchell is honoring long-held standards in both industries. In a collision shop, the time for a labor operation (be it glass, a bumper or any other part) assumes that all of the damaged parts have been removed and that the vehicle is ready for the new part. Glass replacement facilities deal with a different reality—they need to clean up broken glass or remove the old glass before the new part can be installed. Because there is no “tear-down” phase, this time is added to the labor time for the part itself.
While no amount of explanation will ever end the discussion, there are a few thoughts worth contemplating now.
First and foremost, Mitchell is simply a publisher of information via NAGS. We gather information from manufacturers, distributors and retailers, and then we develop a comprehensive data set that we believe creates a reliable and consistent way for industry participants to conduct business. Every industry participant will have a different perspective on exactly how to derive the most value from our publications.
Second, NAGS does not have the power to violate the laws of economics. Regardless of whether the benchmark is rising or falling, auto glass providers will be able to command a premium when they are sought out by vehicle owners because of high quality, specialized services or little competition in their area. The inverse also is true—when there is intense competition, prices fall.
Finally, not only does NAGS not have the power to change economics, NAGS has no incentive to do so. NAGS doesn’t buy or sell glass. We don’t make it, nor do we distribute it. When the benchmark goes up, it doesn’t help or hurt us. The same is true when it falls.
James Patterson is the director of product management for Mitchell Glass, a division of Mitchell International in San Diego. Mr. Patterson’s opinions are solely his own and not necessarily those of this magazine.