Friday, 07 June 2019 16:43

Speaker Says Verdict Being Used by OEMs to Limit Use of Non-OEM Parts

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LKQ Corporation’s Ray Colas said automakers are using a verdict against a shop related to OEM repair procedures as part of their efforts to limit use of non-OEM parts. LKQ Corporation’s Ray Colas said automakers are using a verdict against a shop related to OEM repair procedures as part of their efforts to limit use of non-OEM parts. John Yoswick


Automakers are pressing for state laws requiring the use of OEM collision repair procedures as part of their effort to limit the use of alternative parts, a representative of LKQ Corporation told a gathering of non-OEM parts manufacturers and distributors.


“This is about money and profit,” Ray Colas, director of government affairs for LKQ Corporation, said at the Auto Body Parts Association (ABPA) convention held in May in Fort Lauderdale, FL.


In the effort to pass state laws requiring the use of OEM procedures, automakers and repairers are pointing to the John Eagle Collision lawsuit, in which a dealership collision shop was successfully sued for not following OEM repair procedures on a vehicle in which a Texas couple, Matthew and Marcia Seebachan, were subsequently injured, Colas said.


State lawmakers are being told that OEM procedure laws are needed to prevent insurers from calling for the use of non-OEM part and industry-accepted repair practices, he said. However, he said, the dealership shop sued by the Seebachans was “unable to provide evidence that [the repair process they used] was provided by the insurer.”


“The insurer did not force them to follow a certain procedure,” Colas said. “They chose not to, because they didn’t feel they would get paid for the [automaker repair] process which is why the verdict was against the body shop. They chose profits over morals.”


The reality, Colas said, is that nothing prevents body shops from following OEM procedures. The industry regularly uses “best practices” in the many situations in which a documents OEM procedure doesn’t exist. It is “hypocritical” of the repair industry to back legislation mandating insurers to pay for OEM repair procedures if shops aren’t also required to follow them, he said.


“There is no penalty against the body shop” in most of the proposed state bills, Colas said. “They’re going after the deep pocket—it’s the insurer’ fault.”


Such legislation is being backed by automakers as part of their push for the use of OEM parts as called for in their position statements, he added.


“Our position is, as creative as they are, with utilizing this mechanism to restrict the use of aftermarket parts,” Colas said. “Why don’t they use that same level of creativity to get paid [for following OEM procedures]?”


Colas acknowledged that proponents of some of the state bills calling for the use of OEM procedures offered assurances that the legislation was meant to address repair procedures only, not to impact parts choice. The Alliance of Automobile Manufacturers said in December it views the OEM procedure issue as “separate and discrete from the question of what parts are used. In March, the alliance urged Connecticut lawmakers to amend the bill to make it clear it is not an effort to limit the use of non-OEM parts.


Colas said opponents of such legislation “should have never trusted them,” because automakers and shops only sought to amend the bills after the non-OEM parts industry opposed the bills in several states. The proponents of OEM procedure legislation want to use their own wording for any amendment related to parts rather than letting the alternative parts industry “write the exemption language” that it wants, he added.


“The problem is we don’t understand the terminology they are using in different states, and what loopholes they are creating [in the legislation],” Colas said. “They are several years ahead of us. They know what they’re planning to do—utilizing technology and processes five to ten years from now—whereas we don’t have that insight. So obviously we’re very concerned with anything they propose on our behalf. Let us propose what’s best for us and our industry.”


Bill Langley, director of strategy at CCC Information Services, discussed a consumer survey commissioned by CCC that may signal the company is looking to play a larger role in how vehicle owners choose a collision repair shop.


Langely said CCC worked with Magid to interview 7,000 consumers who had collision repairs to a vehicle in the previous two years.


“They were very unsatisfied about finding a repair facility,” Langley said in summarizing the survey findings. “They were more satisfied with the end repair than with the process they were going through” in choosing a shop.


Consumers were asked about their comfort level with getting a variety of tasks accomplished, such as home or vehicle repairs. Nearly two-thirds (64%) said they felt “knowledgeable” about getting a home structural repair, such as roof damage from hail or a fallen tree, handled. A similar percentage felt knowledgeable about dealing with a home appliance failure (63%), a vehicle failure that left them stranded (61%) or another major home repair such as a furnace or air conditioner failure (61%).


However, only about half (54%) felt knowledgeable about how to handle vehicle body damage requiring a body shop. More than 21% of consumers said they felt “uninformed” about addressing vehicle body damage. Moreover, 15% felt uninformed about addressing a home structural repair and 17% felt uninformed about what to do when a home appliance or furnace failed.


“What we’re trying to do is make the consumer process better,” Langley said.