Thursday, 31 July 2003 17:00

CA BAR takes aftermarket crash part certifiers to task

News and Analysis

Aftermarket parts manufacturers and CAPA are likely vexed by the newly-released Crash Parts Certification Study, published in July by the California Bureau of Automotive Repair (BAR). The report blasts the parts certification process, concluding that "certification has no value to the customer . . . if there are problems with the certified product the certifying entity does not stand behind their own certification process." 

In 2001 the California legislature authorized $125,000 to be spent by the Bureau of Automotive Repair (BAR), a subagency of the California Department of Consumer Affairs, to study the best process for certifying crash parts and to designate the agency responsibile for overseeing crash parts certification. For two-and-a-half years, the BAR held meetings with repairers, insurers, OEMs and aftermarket parts certifiers. It sent out surveys to auto body repair shops, and conducted field tests on crash parts. In the end, the BAR reached several conclusions, most notably:
• Elimination of non-certified aftermarket crash parts is not a viable option. Outlawing non-certified aftermarket parts (as suggested by CAPA) would make the market less competitive and leave a shortage of such parts. Manufacturers of aftermarket parts who choose not to be certified, may in fact produce quality parts and deserve a place in the market.

• Certification does not protect consumers from poor quality parts. According to the report, "there is no warranty difference between a certified non-OEM part and a non-certified non-OEM aftermarket part. With regard to product warranty, certification has no value to the customer; if there are problems with the certified product the certifying entity does not stand behind their own certification process. Customers who purchase certified aftermarket crash parts do not receive any warranty protection from the entity certifying the crash part. If the certifying entity warranted their certified parts it would provide 'added value' to the certified part, and protect consumers against poor quality parts."

CAPA vs Good Housekeeping

The study compared the CAPA Quality Seal to the well known Good Housekeeping Seal of Approval. The Good Housekeeping Seal of Approval carries a Limited Warranty stating that if any product bearing the seal or advertised in the magazine proves to be defective within two years of the date of purchase, the product will be replaced or the purchase price refunded. In other words, Good Housekeeping provides added value for that product in addition to the manufacturer's warranty.

The report asks: "If CAPA or Global Validators Inc., MQVP feel that their certified parts fit the criteria of their certification program, why don't they stand behind their certified parts?"

Legislature funds study

The first step in the study was a meeting on November 14, 2001 between the BAR and interested parties - California Department of Insurance (DOI), the Certified Automotive Parts Association (CAPA), representatives of vehicle manufacturers, new car dealer associations, auto body shops, the California Autobody Association (CAA), and a consumer advocacy representative from Consumers for Auto Reliability and Safety. 

The BAR stated that they had no investment in whether OEM or aftermarket parts were used for repairs as long as the consumer was given the legislated disclosures and accurate information to make informed decisions when authorizing vehicle repairs.

Pay us to make it fit

The first concern expressed by the auto body shops was that non-OEM crash parts do not fit well. It was pointed out in discussions that OEM parts do not always fit well either, but one owner stated that the OEM parts fit more consistently than non-OEM parts. The auto body shop group said they would use non-OEM parts if they either fit better or if shops knew they would be compensated for the additional time it takes to make them fit.

One question raised was whether the use of non-OEM crash parts could void manufacturer's warranties. Toyota, Ford and GM indicated that was indeed the case.

The BAR questioned CAPA about "de-certified" crash parts and wanted to know the procedure for notifying suppliers that the part no longer bore the CAPA seal. CAPA stated that "the distributor can return the inventory to the manufacturer for credit, refund or replacement, or they can remove the CAPA Quality Seal." CAPA, however, has no control over the distributor and cannot guarantee that the part will not be sold in other markets.

In response to the question "what happens to the parts that are on vehicles that have now been de-certified," CAPA claimed that it was the insurance com-pany's responsibility to satisfy its customer, since the insurance company had to warrant the non-OEM crash part if they required its use.

Consumers benefit from competition

The report states that "consumers benefit from competition among manufacturers, however, when CAPA was created by the insurance industry, non-CAPA manufacturers were not allowed the opportunity to prove themselves on a level field of competition."

An issue raised by the aftermarket distributors was difference between OEM "production parts" - original assembly line parts - and "service parts," OEM replacement parts manufactured or contracted to be manufactured to the specifications of the vehicle manufacturer. The new vehicle manufacturers declared that the two kinds are exactly the same.

The BAR was then asked to meet separately with the participating groups while doing the study, as some groups did not feel they could speak freely in the mixed group setting.


Auto body shop survey

The Crash Parts Survey was sent by the BAR to 1,300 randomly selected auto body repairs shops on December 7, 2001; 461 were returned. The survey asked six questions. The answers are in italics.

1. Have you ever found that replacement crash parts do not fit?

All respondents said yes.

2. Are you ever directed to use a specific crash part for the repair of a vehicle?

Most respondents said yes.

3. If you answered "yes" to question #2, what percent of the time are you directed to use a specific crash part (OEM, non-OEM, used) for the repair of a vehicle?

(a) 58% of the time they were directed to use OEM parts; (b) 28% non-OEM parts; and (c) 25% used parts.

4. If a part does not fit, are you compensated to make the part fit?

21% yes. 79% no.

5. How would you rate the return policy for each type of crash part that does not fit?

6. For each type of crash part, what percent of the time have you found that it does not fit properly?

(a) OEM did not fit 12% of the time; (b) non-OEM did not fit 56% of the time; and (c) used parts did not fit 19% of the time.

The BAR concluded, "these answers indicate that the insurance companies are not pushing the use of non-OEM parts to the extent that the BAR was led to believe in earlier meetings."

The report noted that these statistics are based on a limited sample and may not be statistically significant.

Unsolicited responses

Because the survey was anonymous, some respondents felt free to make some clarifying comments, such as:

In response to Question #4 - are you compensated to make the part fit?

• "Rarely - never enough"

• "Takes forever to get paid"

• "Insurance companies will not pay additional time"

• "Not sufficiently"

• "We do not use aftermarket any more"

• "We don't use aftermarket that doesn't fit"

• "Will not use part"

• "Exchange - try again"

• "Not usually"

Other comments were written in the margins of the surveys.

• "We want our customers to be satisfied, so we don't ever charge them an additional amount to fit A/M parts. But something has to change. These parts are definitely inferior to OEM." "Used [part] is not always OEM, sometimes they try to pass A/M parts or they don't know vehicle has been repaired with A/M. There is always modifications to get gaps to be right."

• "A/M parts void most warranties. Don't fit. Are not made the same. Not primed the same and rust out. The only thing they do is save the insurance companies $."

• "Service Auto Body (name of repair facility) used no non-OEM replacement parts. Insurance companies that require non-OEM are rejected from the shop for repairs."

• "It depends on the insurance company. If you have State Farm you use only OEM. All the rest of the insurance companies want aftermarket parts, and they don't tell the customer. Never have a problem with OEM parts."

Meeting with automakers

When the BAR met with automakers on December 19, 2001, two major issues were brought up: the manufacturer's responsibility for overall safety of the vehicle and the alleged difference between OEM assembly line production parts and replacement parts.

On safety, the manufacturers ex-plained that only they were accountable to NHTSA, the federal agency that sets and enforces safety performance standards for new motor vehicles. The report notes, "Safety testing is extremely expensive for the vehicle manufacturer."

As to differences between production and replacement parts, the manufacturers claimed that the parts are identical because they are produced from tools and dies made to the manufacturer's specifications. At a certain point, after the vehicle model ages, these tools and dies can then be contracted out to another manufacturer to continue producing service parts. They cannot be used by the contract manufacturer to produce parts for the aftermarket.

To dispel an earlier implication that tolerances of the tools and dies sold to the contract manufacturers change over time, the vehicle manufacturers explained that because of the strict quality assurance standards, samples of the contracted parts are periodically tested to ensure they meet the required specifications.


Insurance industry workshop

The BAR met with representatives of the insurance industry on January 9, 2002. Most of the major insurance companies were represented, some of which have relationships with CAPA.

The BAR revisited the subject of parts that are "certified today" and "decertified tomorrow." The BAR queried "What happens to the former CAPA-certified part on the shelf at the distributor? CAPA cannot force the distributor to return decertified parts to them, and there is a market for the decertified part(s) - they're sold elsewhere." What if a supplier has a "no return" policy? The insurance representatives granted that CAPA may need better control over the distributor.

The insurance companies who use aftermarket crash parts contend that if the parts meet the certification standards, they are equal to OEM parts in kind, quality, safety, fit and performance. They admit that while the use of certified aftermarket crash parts may not reduce policy premiums, their presence in the marketplace helps reduce insurance costs by keeping the price of OEM parts lower.

As to state oversight of parts certification, the insurers argued that "if the State of California were to get into overseeing the certifying process of aftermarket crash parts, it would probably drive up the price of the parts."

Adding insult to injury

The BAR addressed the problems auto body repair shops have when non-OEM parts do not fit. If the non-OEM part they are told to use does not fit, some insurers authorize the use of OEM parts. The problem here is that the shop is not paid any additional labor for the extra time it takes to remove and install, let alone the time it takes to pack up and return the part.

Further, in some instances, when the shop uses the mandated non-OEM part, and the vehicle owner later complains to the insurance company about the part, the insurance company will take the vehicle to a different body shop and pay the second shop to install an OEM part to please the vehicle owner. Then, adding insult to injury, the insurance company may turn around and deduct the cost from the first shop's payment, even though the first shop followed the insurance company's instructions. The result is that the insurance company may be in essence "not warranting" the non-OEM part, since the body shops are absorbing the labor cost to put an OEM part on when the non-OEM part does not fit.

"Some auto body shops have told the BAR..." said the report, "that it is difficult or impossible to get paid for aftermarket parts modifications. Out of fear of losing insurance business, auto body shops may not report the violations to the DOI." The DOI confirmed that they receive a minimal number of complaints from auto body repair shops.

Why doesn't CAPA advertise?

The BAR next met on February 20 with CAPA and its contracted testing laboratory, Entela,

At that meeting, CAPA's executive director, Jack Gillis, had made the statement, "We [CAPA] believe that the state has a responsibility or the federal government has a responsibility to protect consumers against poor quality parts. If you [government] passed a law that said all parts had to be certified, that's what would happen."

The BAR took this statement to mean that "CAPA basically wants to 'outlaw' non-certified non-OEM parts, however, there is limited availability of certified parts, and only about 35% of certain types of aftermarket parts are certified. This represents approximately 5% of the total aftermarket crash parts, which includes the OEM, non-OEM and recycled parts combined."

The BAR asked why CAPA does not advertise their certification program. CAPA responded that "they could not afford to advertise and that certification supporters are unwilling to support the process to a level that name recognition and process recognition can be developed."

"In a free enterprise, entities need to advertise their products to sell them," stated the BAR report. The BAR suggested that if insurance companies want to use CAPA-certified parts, it might benefit them to support an advertising campaign, so it would not appear that the insurance companies were forcing the use of these parts on clients without disclosing any support as to their quality."

Up next: Global Validators

Representatives of CAPA's come-lately competitor, Global Validators, met with the BAR and DOI on April 4, 2002. Global Validators, Inc. is the creator and administrator of the Manufacturers Qualification and Validation Program (MQVP®). Ac-cording to the report, "the fundamental tenets of MQVP are to deliver products of the same quality as the OEM by using OEM processes and standards.

"They also validate and warrant product quality and validate through traceability . . . MQVP is quite different from CAPA's certification program in that it is founded upon the principles of ISO/QS-9000, which is a comprehensive quality management standard specifically de-signed to meet these customer specific requirements. Compliance with MQVP assures both manufacturer and distributor continued access to the collision repair industry serving national, regional and local automotive insurance carriers."

Global Validators discussed the differences between their process and CAPA's:

•A complaint by a body shop filed through the Global On-Line Corrective Action Reporting system automatically triggers a complete Root Cause Analysis and Corrective Plan. This process satisfies the BAR's concern over what happens when a part is de-certified.

•Every part offered through MQVP has been test fit. Among other requirements, the manufacturer of the aftermarket crash part must submit five production parts to be test fitted on two production vehicles, in comparison to a test fit of the original production part.

•To purchase MQVP certified parts, the participating auto body shop must use the participating insurance estimating system. In addition, values are built into the estimating guides in an effort to make sure body shops are paid fairly for their time when using MQVP certified parts. The target selling price is 26% off the OEM part price, according to the Global Validators..

One downside reflected in the report is that since the MQVP program is barely two years old, there are a very limited number of aftermarket parts that meet the program requirements. At the time of the report's publication, only about 3,000 parts were certified, the majority being lamps, fascias, grills and some sheet metal parts.


BAR field tests

In May and June 2002, the BAR program representatives purchased both OEM replacement and non-OEM aftermarket crash parts and conducted five vehicle fit tests. The undamaged test vehicles had original OEM parts removed. Four of the non-OEM aftermarket crash parts were CAPA certified and one was not certified. On one of the vehicles, the OEM replacement crash part was not available.

The report describes the first test: "A CAPA-certified right fender was installed on vehicle #1, a 1991 Toyota 4WD Pick Up. The right fender "A Pillar" bolt did not line up with the factory hole and was not able to be installed. Additionally, the door rubbed on the right fender causing the paint to chip. This fender would require modification to its inner edge to prevent the door and fender from rubbing. The upper bolt hole located at the "A Pillar" would need to be either slotted or bent to allow the bolt to be installed. The front of the right fender would need to be bowed outward to that the front bolt hole could be lined up to relieve the tension on the right fender. To modify the right fender at the windshield pillar and the cowl vent panel could require an extensive amount of repairs. The edge would need a piece of metal or welding material welded to the part, and the ripples on the top left edge of the right fender would need to have plastic filler applied and finished before painting the part. The labor hours to modify this right fender for installation would be approximately two hours.

"Four out of five non-OEM aftermarket crash parts were inferior to the OEM parts installed on the vehicles. The non-OEM parts did not have proper fit; body line alignment and/or needed additional modification to be properly installed on the vehicles. The non-OEM aftermarket crash parts would require additional labor to modify the parts to be installed. The additional cost of the labor to modify the non-OEM aftermarket parts added to the cost of the non-OEM parts would make the non-OEM parts more expensive than the OEM replacement parts. Three out of the four available OEM replacement crash parts fit correctly and did not need any type of modification performed to fit the vehicles."

An attachment to the report lays out each of the five tests in detail, complete with photos showing the vehicles (1) before the original parts are removed, (2) with the OEM parts in place, and (3) after the non-OEM have been installed.

Results of the study

In addition to concluding that certified parts do not protect consumers and that eliminating non-certified aftermarket parts would serve no useful purpose, the report contains several other interesting observations:

Shops afraid to report violations

Some auto body shops have told the BAR that insurance companies "control the purse strings" and it is difficult, or impossible, to get paid for making the necessary modifications to aftermarket crash parts. Although the Fair Claims Settlement Practices Regulation requires that "insurers specifying the use of non-OEM aftermarket crash parts shall pay the cost of any modifications to the parts which may become necessary to effect the repair," body shops continue to worry that if they report violations, the insurance companies will no longer refer business to them.

Certification isn't really a hot issue

There is an overall lack of insurance industry support and auto body repair industry support for aftermarket parts certification. "Certification supporters are unwilling to support the process to a level that name recognition and process recognition could be developed. CAPA claims they don't have money to advertise. The BAR suggests that the insurance companies step up and provide support for one of the two certifying entities. The report points out that major insurance companies, along with having created CAPA, belong to CAPA, have seats on the CAPA board or on their technical committee.

Lack of certified part availability

There are a limited amount of certified parts that are not sufficient to drive the market. As previously cited, only about 35% of certain types of aftermarket parts are certified, merely 5% of the total aftermarket crash parts.

Lack of control over distributors

The report states "CAPA's certification process lacks control at the point of distribution - recalled de-certified parts are still sold on the open market. There is no enforcement at the retail outlet." The study cites the example of a 1995-2000 Toyota Tacoma hood that was decertified by CAPA on reports that it flew up while the car was being driven. Under the pre-sent system there is no reliable way to determine who is in possession of a de-certified part and no mechanism for its recall.

Pricing is legally suspect

The BAR is concerned about "the arrangements that one non-OEM aftermarket parts certifier has with participating insurance carriers. One certifier has indicated to BAR that participating insurance companies have made a decision and are willing to pay auto body shops more to use their certified parts. The values are built into the estimating guides that are used by the auto body shops to develop estimates, and the 'target price' is 26% off the OEM part price." The BAR is concerned about the legality of this arrangement.


The BAR report makes the following recommendations:

"Allow the market to drive the acceptability of aftermarket crash parts, similar to the way mechanical aftermarket parts have evolved. As it stands, by mandating the use of certified non-OEM parts, the insurance company is curtailing the aftermarket parts industry. Non-certified non-OEM crash part manufacturers should be given the opportunity to prove that they can produce quality products. These manu-facturers should be allowed to build brand name recognition, much as has occurred in the mechanical aftermarket parts segment," says the study.

The BAR concluded that OEM crash parts have an edge over non-OEM and certified non-OEM crash parts with respect to fit and finish. And that while OEM parts are more expensive, the added labor time to make an ill-fitting non-OEM part acceptable causes those parts to end up at least as costly or even more expensive than OEM parts.

The BAR suggests that aftermarket crash part certifiers should establish warranties for the parts they certify and stand behind those warranties when an auto body repair shop demonstrates that the parts are defective or don't fit correctly.

The report emphatically states that "the insurance industry created the certifying entities to assure regulatory bodies that insurance companies were doing all they could to ensure that non-OEM parts were of like kind, quality, safety, fit and performance as OEM. It is not the responsibility of the state or federal government to 'oversee the certification of crash parts.' The 'overseeing of crash part certification' by any governmental entity would imply that the government is endorsing and/or warranting products manufactured by a private business and certified by another entity."

The report concludes there is no need for any state agency to oversee the certification of non-OEM crash parts.

Finally, the report recommends that "consumer protection should be enhanced with the warranty provided by the insurance company when they require the use of non-OEM parts, provided that the auto insurers stand behind these warranties."