Federal bill fuels debate over car parts
Would legislation promoting increased access to aftermarket auto parts help consumers?
The Promoting Automotive Repair, Trade and Sales (PARTS) Act proposes to reduce car manufacturers’ design patent protection for collision repair parts from 14 years to 2.5 years. It also would protect the rights of independent (often known as “aftermarket”) manufacturers to make, test, market and distribute — but not sell — auto parts while automakers’ patents for car parts remain intact.
The bill was introduced by U.S. Reps. Darrell Issa, a California Republican, and Zoe Lofgren, a California Democrat. Advocates claim that protecting access to aftermarket parts will maintain competitiveness — lowering the cost of parts and keeping premiums for auto insurance relatively low.
If passed, the measure would be a blow to car manufacturers and a boon to companies that make aftermarket parts. But what would it mean for consumers?
What are aftermarket parts?
To begin with, what exactly are aftermarket parts, and how do they differ from original parts? The original parts go by the acronym OEM (original equipment manufacturer).
Aftermarket parts can consist of any type of car parts, from air filters to wheels to engine parts. Both collision repair parts and add-ons like car rims or stereo systems fall into this category. However, the PARTS Act would apply only to “collision parts,” meaning auto body parts that would be damaged in a crash, such as fenders and bumpers.
According to a 2011 report issued by the U.S. Department of Commerce, the North American aftermarket auto parts industry is worth $72.7 billion. It’s estimated that original parts account for two-thirds to three-fourths of all auto parts sold, while the remainder consists of aftermarket parts.
When you take your car to a licensed dealership’s service department, you’ll always receive replacement or add-on parts that have been manufactured by the maker of your car. However, if you go to an independent mechanic or body shop, you may receive aftermarket car parts unless you request original ones.
Often, you may not even be aware that your car has been fitted with generic equivalents. Only 12 states require vehicle owners to provide consent for their cars to be fixed with aftermarket equipment, according to the Insurance Information Institute. In some states, the consent applies only to certain situations. In Rhode Island, for instance, consent is necessary only if the car has been purchased within the past 30 months.
Why use generic parts?
For repair shops, auto insurance companies and consumers, there’s a big incentive to buy aftermarket parts: price. The Property Casualty Insurers Association of America notes that aftermarket parts typically cost as much as 40 percent less than original parts.
The Quality Parts Coalition, an association of companies that make aftermarket parts, claims that the aftermarket industry helps consumers save $1.5 billion each year.
“Competition is the best form of consumer protection against excessive prices, and the vibrant aftermarket parts industry in this country has provided it for decades,” Jimi Grande, senior vice president of the National Association of Mutual Insurance Companies, says in a statement. The trade group has endorsed the legislation.
Grande says the PARTS Act would safeguard consumers’ access to competitively priced aftermarket parts and would bolster innovation by manufacturers. “Without this legislation, more and more patents will be filed and competition for aftermarket parts will dwindle, removing options for consumers and increasing their costs,” Grande says.
The National Association of Mutual Insurance Companies is joined in support of the bill by two other major industry groups: the Property Casualty Insurers Association of America and the American Insurance Association.
“The presence of competition puts a downward pressure on the prices of OEM parts,” Jonathan Bergner, director of federal affairs at the National Association of Mutual Insurance Companies, tells InsuranceQuotes.com. “Without this competition, the cost of repairing an automobile after an accident would skyrocket, American drivers would have no choice in repair parts, and it has been estimated that the average auto insurance policy would increase by $109 annually.”
If you don’t have optional collision insurance, the PARTS Act may not make a significant different to your insurance costs. However, you may not have a choice about buying collision coverage when purchasing a car. If you’re getting an auto loan, your lender likely will require you to buy this coverage.
Concerns about aftermarket parts
The Alliance of Automobile Manufacturers, which represents 12 car manufacturers, such as Ford, General Motors and Toyota, is less enthused about the PARTS Act. If the bill becomes law, auto manufacturers likely would lose business to makers of aftermarket parts.
Wade Newton, a spokesman for the automakers alliance, says: “Consumers could purchase parts that may appear to have gone through our rigorous safety and environmental testing but, in fact, have not. Additionally, it would be hard for an automaker to be sure that these ‘imitation’ parts would work in our products in a way that ensures our safety standards are met.”
Bergner, the official at the mutual insurance group, says he thinks such concerns are overblown.
“Collision repair parts are exterior, cosmetic parts that are generally produced out of sheet metal or plastic and are used to restore a damaged automobile to its original appearance,” he says. The mutual insurance group backs the Insurance Institute of Highway Safety’s opinion that “the source of a car’s cosmetic crash parts is irrelevant to crash-worthiness.”
Florida insurance consumer advocate Robin Westcott agrees.
“While there may be some chilling effect on research and development, there should be no affect to quality standards,” Westcott says. “The reduced cost for replacement parts should also be reflected in the cost of automobile insurance since the insurance company will also receive the benefit in terms of paying for repairs under their insurance contracts. That sounds like a win-win situation for consumers.”
Robert Hunter, director of insurance at the Consumer Federation of America, a nonprofit advocacy group, doesn’t agree that aftermarket parts are always held to the same standard as OEM parts. He urges consumers to research which parts are being used to repair their cars.
“Consumers have to be their own advocates on the parts going onto their damaged car,” Hunter says. “You have to ask if the part is from the original manufacturer and, if not, demand OEM parts unless you are convinced that the other part is as good in fit, performance, quality and so on. Insurers, if not monitored, will put cheap parts on your car unless you stand up and say no.”