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April 26, 2005
Update on California Crash Parts Bill
The California Assembly Committee on Business and Professions held a hearing on April 25, 2005 discussing the benefits and detriments of modifying the existing Motor Vehicle Replacement Parts Act as proposed by Assembly Bill 1163. For those of you late-comers to the discussion, A.B. 1163 proposes to modify the existing Act in a way that declares certified imitation crash parts to be equivalent to original equipment manufacture (OEM) parts -- irrespective of whether they are truly of the same quality or not. I have commented repeatedly here, here, and here on the illogical, conflict-ridden, and dangerous aspects of passing this bill and how anti-competitive and contrary to American capitalistic ideals it is.
The historical premise about products and competition was "build a better mousetrap". A.B. 1163's premise is "build a lousy mousetrap and get legislation enacted that declares it to be a great mousetrap".
So, here are some of the interesting things revealed via the recent hearing:
We discovered that CAPA, the Certified Aftermarket Parts Association, sponsored this bill. This is interesting in several respects because this legislation would rid CAPA of some of its non-OEM parts competition, while artificially raising CAPA products to the level where they can compete with OEM parts. In other words, CAPA seeks to create an affirmative action program for its parts that cannot, otherwise, successfully compete in the marketplace.
Two consumer groups, Advocates for Highway and Auto Safety and Public Citizen, support the legislation on the basis that it is "good for consumers". I wonder just how it is good for consumers? Under the current law, consumers have more of a choice as to the parts that will be used on their cars and are guaranteed that the imitation crash parts have to be at least equal to OEM parts in terms of fit, performance, finish, and quality. The amendment would take away this safety/quality standard and replace it with nothing other than a declaration that the parts are OK.
One can analogize this in terms of the social security fund. Once upon a time, we had actual money in the SS fund. Now we just have paper I.O.U.s. Don't we feel secure about that? So apply that analysis to the current versus amended crash parts law. Once upon a time, non-OEM parts could only be used to repair cars if they were equal to OEM parts. Now, we just say the non-OEM parts are OK, without any empirical evidence that they have met any quality standard.
The Committee noted that passage of the bill could weaken existing law.
- Under California Code of Regulations, Title 10, Chapter 5, Section 2695.8 (g), an insurer that requires a policyholder to use non-OEM crash parts must warrant that the non-OEM crash parts are " at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit and performance," (emphasis added). While this bill does require insurers and manufacturers or distributors to warrant non-OEM parts, it provides that non-OEM certified crash parts " are of like kind and quality to car company parts," (emphasis added). This is a less precise standard: "at least equal to" versus "are of like" kind. Further, this is a weaker standard because "safety, fit, and performance" (as provided in existing law) are not included in the provision in this bill mandating the quality of certified non-OEM crash parts.
This is a list of the organizations that support or oppose the legislation.
- REGISTERED SUPPORT / OPPOSITION :
Support
Certified Automotive Parts Association (CAPA) (sponsor)
Advocates for Highway and Auto Safety
Keystone Automotive Industries, Inc.
Public Citizen
Opposition
Alliance of Automobile Manufacturers
Automotive Service Councils of California
California Autobody Association
California Motor Car Dealers Association
Toyota Motor Sales, USA, Inc.
United Automobile, Aerospace and Agricultural Implement Workers
of America, Region 5
United Policyholders
The matter has been tabled for now, but there will be an informal hearing to take in additional information sometime in the fall. Any formal matters pertaining to A.B. 1163 are not to come up again until January of 2006.
Posted by E L Eversman at April 26, 2005 08:14 PM
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