Friday, 17 June 2016 08:07

UPDATE: Controversial Parts Bill Vetoed by Michigan Governor

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A controversial bill that would have restricted aftermarket parts vendors to sell only certain types of parts on newer vehicles to licensed repair facilities in Michigan was vetoed by Michigan Governor Rick Snyder in June.

House Bill 4344 would have required body shops to use new or used OEM parts or certified aftermarket parts on vehicles during their original factory warranty period or five years, whichever is less, unless they received written permission from a customer to use non-certified parts. The 62-page bill updated the 1974 Michigan Motor Vehicle Service(s) and Repair Act.

“I am unable to sign this bill because it overreaches in the limitation of aftermarket parts negatively impacting consumers and creating the potential for negative consequences for Michigan’s automotive industry,” Snyder wrote in his veto letter.

“As Michigan continues its comeback and continues to be a leader in promoting new technology in the automotive industry, it is imperative that we ensure all components of that industry can remain strong, including Michigan’s robust aftermarket parts industry. I am concerned about HB 4344’s effect on market competition for replacement parts on motor vehicles.”

House Bill 4344 was first introduced March 12, 2015 by Rep. Peter Pettalia of Presque Isle, who co-owns an automotive mechanical repair facility in Alpena, Michigan.

On February 10, 2016, the bill passed in the House 84-22 in favor of the amended bill and was sent to the Senate. The bill was unanimously voted out of the Senate subcommittee with the understanding that modifications to the bill were necessary for compromise. The amendments were made and voted on in the Senate with a 33-4 vote in favor of the amended bill and returned to the House.

On May 31, Rep. Pettalia reintroduced an amendment to the bill that provided the opportunity for the vehicle owner to authorize in writing the use of non-certified aftermarket parts during a repair. The House then voted on the bill with 86-23 in favor and sent to the Senate for concurrence to the changes, which did occur. It also received an affirmative vote of 33-3 the next day with one Senator being absent.

The following amendment was added to House Bill 4344:

If a motor vehicle repair facility that is subject to this act replaces a major component part described in section 2A(A)(iii) to (xiv) during the term of the vehicle manufacturer’s original warranty, or during the first 5 years of the vehicle manufacturer’s original warranty, whichever is less, the motor vehicle repair facility shall replace the major component part, and a person that is an owner or operator of the motor vehicle repair facility shall ensure that the major component part is replaced with 1 of the following:

(A) A new original equipment manufacturer part;
(B) A used or a recycled original equipment manufacturer part;
(C) A part that meets any applicable federal motor vehicle safety standards established under 49 CFR 571, and meets the standards for parts recognized as OEM comparable quality as verified by the Certified Automotive Parts Association, NSF International, or another nationally recognized automotive parts testing agency.
(D) A part that does not meet subdivision (A), (B), or (C), if the facility is directed by the owner of the motor vehicle in writing to install that part.

"On its face, this policy seems to be intended to protect consumers and ensure vehicles are safely repaired. That is a laudable goal,” Snyder wrote. “The Insurance Institute for Highway Safety indicates that some structural parts, such as bumpers, do impact a consumer’s safety. However, the Institute also points out that some parts, such as fenders, grills, door skins, bumper covers, etc. are primarily cosmetic and ‘are irrelevant to crash safety.’ This bill doesn’t sufficiently delineate between the two types of parts, thereby limiting the use of safe, high-quality aftermarket parts designed specifically for particular vehicles.”

In his veto letter, Snyder also voiced concern that HB 4344 would negatively affect auto insurance prices in Michigan. “Requiring OEM parts when a perfectly suitable and safe aftermarket part is available at a lower price will result in higher costs to insurers; higher costs which will be passed on to consumers in the form of increased premiums, deductibles, or both,” he said. “Those increased costs would be directly attributable to artificially limiting competition by requiring OEM parts when less expensive aftermarket parts are available.”

The Auto Care Association (ACA) issued a press release on June 3 voicing the association’s concerns over the bill being passed and urged members in Michigan to contact the governor’s office and request that he veto the bill.

ACA said the new restrictions using “major component parts” only apply to sheet metal and body parts.

“The Auto Care Association is extremely concerned with the bill author’s intent to restrict the vehicle repair community’s access to the broad range of non-OEM parts,” ACA wrote in the press release. “Based on this language, it would not be difficult for vehicle manufacturers to lobby to extend these requirements to many other aftermarket parts, as we have seen attempted in other states. Such action would provide a clear competitive advantage for OEM parts over those sources from the independent aftermarket.”

The ACA applauded the governor’s veto. “We had a tremendous effort from the industry to communicate directly with the governor’s office and I have to thank everyone who took the time to personally write the governor,” said Bill Hanvey, president and CEO of ACA. “We worked hard to sit down with the stakeholders early on in this process, but those efforts did not produce the compromise we were seeking, and we are very grateful that Governor Snyder had the astute ability to get to the heart of the matter and send this bill back to the legislature.”

Autobody News spoke to Ray Fisher, executive director of ASA-Michigan, about House Bill 4344. Fisher has been on a mission to update the state law in order to ensure that all parts used in collision repairs are certified. (See accompanying article)

To read the Governor’s veto letter, visit: http://www.michigan.gov/documents/snyder/HB_4344_Veto_Letter_526837_7.pdf.
For more information about House Bill 4344, visit: http://www.legislature.mi.gov/(S(ierxzfdah0oope2jnvq1lyfg))/mileg.aspx?page=GetObject&objectName=2015-HB-4344.