When analyzing the whole aftermarket (A/M) crash parts issue, it reminds me of a story I tell in business seminars that goes like this: Two hikers are walking through the woods when they come across a baby bear cub. Both become intrigued because they’ve never been able to get so close to a bear before. Well, anyone knows that if you see a baby cub, the momma bear must be lurking close by. Sure enough, the hungry momma bear, standing 8 feet tall, comes racing around the corner. Frightened, both hikers take off running as fast as they can. When one of the hikers sees the momma bear stopping to check on her child, he quickly stops and pulls a pair of tennis shoes out of his backpack. Astonished, his friend says to him, “Are you crazy? You’re not going to outrun that bear!” His friend looks up calmly and says, “I don’t have to outrun the bear … I just have to outrun you.”
The moral of the story: Know who your real competition is. The answers regarding this whole A/M topic are obvious if you only focus on the small issues. Of course cycle time will be longer if you must document more paperwork. Adding paperwork will obviously make things more bureaucratic. Of course notice isn’t bad to the consumer. Notice is already required by law. If some legislation or regulation passes in Florida, other legislatures will follow the same lead. Florida is a mega-state with lots of influence. These are the obvious faults with the notice, but they aren’t the big issues.
What most businesses fail to see in this whole A/M debate is the real competition to their future prosperity. The real competition is the abuse of authority that’s so obvious and present with [Florida Department of Agricultural and Consumer Services] Commissioner Bob Crawford’s letter to Florida repair shops and the efforts by the OEMs to gain a monopoly on parts. This is the classic case where big government uses its mighty hand to force small businesses to be held responsible for something they can’t be held responsible for.
Commissioner Crawford recently sent a memo to all licensed automotive repair shops regarding the use of A/M parts. The letter’s message is simple: Repair a motor vehicle with A/M parts not equal in kind and quality to the original terms of fit, quality and performance and your license will be revoked. He’s also decided to take several actions against insurance companies who insure vehicles where A/M parts are used. These actions have been taken with no tangible evidence that anything is being done wrong.
According to Crawford’s letter, your license may be subject to revocation, suspension, refusal of registration and administrative fines pursuant to Florida Motor Vehicle Act, Part IX, Chapter 559, Florida Statutes, if you place parts on a vehicle that aren’t equal in kind and quality to the original parts in terms of fit, quality and performance from an estimate prepared by an insurance company.
This is a scare tactic and isn’t true. There’s no language within the Florida Motor Vehicle Act in Florida Statute, Chapter 559 – nor the regulations – that give the commissioner’s office this level of authority. The only requirement of a repair shop when a repair is performed as part of an insurance estimate is that it provide the proper disclosure to the consumer that A/M parts will be placed on their vehicle. With regard to the types of parts installed on a vehicle, the only action an automotive business can be held accountable for is not providing the proper disclosure to the consumer. That’s it.
Crawford’s issue is with the insurance companies and not with the automotive repair businesses. Insurance companies may be restricted from making certain requirements of a repair shop. A repair shop can install any parts necessary for any repair that are properly disclosed to the consumer prior to installation.
Government is forcing automotive businesses to be their watchdog on an issue that’s been fought and defeated in 23 legislatures across the country. Due to the defeats, government has decided to make its own laws and create its own authority. It’s this type of abusive power that small business must take a strong stand against. Any other industry would be outraged and completely united to defeat this type of intrusion from government.
Have this letter and actions by Crawford had an effect on Florida businesses? The Florida Automotive Industry Association (FAIA) has recently learned that a number of A/M companies are considering layoffs if the pressure by Crawford continues regarding the usage of A/M crash parts.
When asked about the issue of lost jobs in the aftermarket, a staff person in the commissioner’s office stated, “The economy is good, and we’re in a strong job market. They can find jobs at places that make other parts.” I’m sure legislators, where jobs are important in their districts, would enjoy that comment.
It’s inconceivable that the commissioner would take such drastic regulatory measures that have significant negative impact on jobs in this state before sitting down with the industry to try to work this issue out. It’s very apparent that something is up and that they aren’t interested in working out the issue. You’d think that being defeated in 23 state assemblies and a very fair representation in an interim study done by the legislature would’ve shown there’s nothing illegal about the current usage of A/M parts.
But according to a staffer for the commissioner’s office, those bills were defeated by “good ol’ boy networks.” I’m sure elected officials would like to discuss that comment.
FAIA has tried to work with Crawford to come up with a viable solution, but to no avail. FAIA had a very positive meeting with the commissioner and his key staff members right before the letter was sent to repair shops. It’s apparent the commissioner knew the notice was going out while FAIA was meeting with him, yet he never mentioned anything.
Everyone thinks this notice affects just paint and body shops and crash parts distributors. This is far from the truth. It affects the entire aftermarket whether you’re a general repair shop, paint and body shop or a parts store.
As FAIA predicted in its April 1999 news release in AutoNews, the amount of vehicles being totaled due to the increase usage of OEM parts is beginning to occur. When motor vehicles aren’t repaired, consumers are forced to purchase new cars. The consumers lose because they’re forced to purchase another automobile and the aftermarket loses because it got nothing. That means zero revenue and lost jobs for any aftermarket business.
At a recent convention, one hard parts distributor said his sales were down 5 percent because of less work from his body shop customers due to more cars being totaled.
Questions still remain regarding why the commissioner is putting such incredible pressure on A/M parts. Does Crawford realize his actions will cost jobs in Florida? Does he realize his actions will raise the cost of vehicle repairs? Does he realize his actions will raise insurance premiums for the poor and senior citizens of Florida?
Henry Ford, the original OEM, said it best, “I’d give away the cars if I could get all the parts and service.” That’s exactly the goal of the OEMs. As with their attempts to lock out the aftermarket with on-board diagnostics, OEMs are attempting to lock out the independent collision industry with anti-A/M legislation. FAIA opposes any legislation that gives OEMs a legislated monopoly. The regulation proposed by Commissioner Crawford does exactly that.
What FAIA has seen, which many associations have been slow to recognize, is the battle lines aren’t drawn between the insurance companies and the automotive industry, but rather between the OEMs and the independent aftermarket. The success of the entire aftermarket hinges on our united efforts against the real adversaries to our future business, which is the potential OEM monopoly that’s established through misguided regulation.
FAIA believes that consumers should be given their choice at the time they purchase an insurance policy. Consumers who want to guarantee coverage for OEM parts should be able to choose and pay more for a policy up front that guarantees OEM parts. This wouldn’t penalize the poor and senior consumers who can’t afford new cars every three years with higher insurance premiums.
The crash parts regulation isn’t about consumers or safety. It’s about locking the independent aftermarket – including every automotive repair shop in Florida – out of a significant portion of the parts and service business and providing an insurmountable advantage to the OEMs.
One final thought for every automotive service shop: What if every OEM began requiring techs to be OEM-certified to work on their automobiles? What if they promoted to the consumer that they can’t guarantee the workmanship on your car if the technician isn’t OEM-certified? Where does that leave you and your technicians?
It’s my belief that the Florida Department of Agriculture and Consumer Services’ notice is good for Florida’s collision industry, the consuming public they serve and the insurers who offer their product to consumers.
The ruling simply mandates that a repairer (regardless of who writes the repair estimate) obtain and have on hand appropriate documentation clearly establishing that each specific aftermarket (A/M) component or part called for in the repair estimate is indeed equal in kind and quality to the original parts in terms of fit, quality and performance. If no documents are provided, then the part simply doesn’t meet the definition and shouldn’t be utilized.
I can’t see where anyone could possibly find any fault with this very simple and clearly responsible mandate. I’m sure Florida consumers welcome such protection by their state. A disclosure must be attached to – or included in – the estimate and must contain the following information in no smaller than 12-point type:
“This estimate has been prepared based on the use of crash parts supplied by a source other than the manufacturer of your motor vehicle. The aftermarket crash parts used in the preparation of this estimate are warrantied by the manufacturer or distributor of such parts rather than the manufacturer of your vehicle.”
Who could find fault with letting the vehicle owner/customer know what parts are being called for in the repair? Who would want – or expect – anything less? Consumers and insurers alike should embrace this requirement for their own safety and liability.
Additionally, the notice states that if an insurance company requires a repair shop to use A/M crash parts that fail to meet the criteria as noted above, the repair shop should report this incident to the proper authorities, as referenced in the notice. This isn’t a situation of “snitching” on an insurer, however. This is a situation of a repairer complying with the laws of the state! To not report situations where an insurer places pressure on a shop to break state laws is a responsibility, and failure to comply carries significant penalties, including the loss of the privilege to conduct business in Florida.
The three main parties involved in the repair process benefit from Commissioner Crawford’s notice. Consumers benefit by receiving repairs that best serve their need for safety, reliability, appearance and restored value to the best of human ability. Shops benefit since they can perform repairs compliant with Florida law in a manner that enables them to provide the best finished product without restrictions – other than their own capabilities and desires. Insurers benefit as the repaired vehicles are more road- and crashworthy. They also take full advantage of the countless hours, dollars and efforts expended by the various auto manufacturers that test and engineer the energy management and supplemental restraint system of every vehicle. This will lessen the liability associated with improper or unsafe repairs caused by the utilization of low quality parts that may not react the same as the original components in a post-repair impact.
This is in addition to the reduced likelihood of severe injuries that may be sustained in post-repair collisions where poor quality A/M
crash parts were utilized, failing to provide the energy management or safety features engineered in today’s highly technical automobiles. This saves consumers, insurers and shops from more premium dollars being spent and insurance rates being increased.
Meanwhile, all manufacturers of A/M crash parts will be required to continue to improve their manufacturing processes and quality control. This will give a manufacturer the opportunity to elevate itself to the pinnacle of its industry just as other well-known A/M companies (i.e., Diehard batteries, Craftsman tools, etc.) have done. They can then compete on the basis of quality and value of service – not on merely pricing alone.
I would think that the courage and farsightedness of Bob Crawford’s office will be looked upon favorably by representatives in the other 49 states in an effort to protect their consumers.
But will shops be faced with added responsibilities and liability? I believe the burden placed upon Florida shops will be decreased considerably. In the past, many shops felt stuck between the insurers’ mandates and their clients’ best interests. Many shops merely bought and used the lower-quality parts to avoid a conflict with the insurer, but felt guilty about providing inferior quality and value to their own customers.
I firmly believe the Florida repairer embraces Crawford’s actions. Now, all shops have to do to be compliant is ask for the proper documentation. If they don’t get it, they’re stopped from continuing repairs until the insurer or customer provides the required documents, illustrating that the called upon A/M crash parts indeed met the criteria of like kind and quality. Or an alternative method of repair is provided. This will save the repairer considerable time and lessen liability significantly.
No tolerance should be the rule! Yes, there’s an obvious line here between right and wrong. Sufficient documentation that clearly illustrates that the parts are equal as outlined is provided, or the parts aren’t to be used!
How will insurers react to shops that blow the whistle on them? I’d hope they react in a timely manner! Our company policy is clear when confronted with an estimate that lists A/M crash parts but contains no documentation for us to legally utilize such parts. We immediately send out a notice to the insurer and the vehicle owner to advise that it’s become necessary to take the vehicle out of production. This is required to avoid delaying other vehicles that may be in process. Once out of production, we have no choice than to charge storage (either inside or outside, at the election of the vehicle owner) until the parts issue has been resolved in its entirety and the vehicle is placed back in production.
As far as some form of reprisal to a shop that reports an insurer, I don’t see this as a deterrent from doing what the law or state mandate requires. I’d hope the threat of losing one’s right to conduct business in Florida would be enough incentive for repairers to fully comply with Florida’s mandate – an incentive that would overshadow the insurer’s pressures to not be compliant. After all, this is a means of implementing ac-countability to insurers and shops. Why wouldn’t a shop wish to fully comply?
This mandate may have a negative affect on shops’ cycle time at first – at least until they develop a program to limit the delays. Once insurers realize repairers require the appropriate documentation, they’ll likely recommend the use of factory replacement parts, which will actually speed up the repair process.
To be totally compliant, repairers should place the burden of documentation and related repair delays on the insurer, otherwise shops will be totally accountable and may, if they fail to abide, lose their right and privilege to conduct business in Florida. Therefore, control is exerted (by the shop) by taking a totally passive and non-confrontational approach where non-OEM parts are concerned.
What will make it easy for shops to fully comply:
1. For Florida to edify the consumer as to the issues regarding this parts issue.
2. For Florida to be stringent in its monitoring of complete and 100 percent compliance by insurers and shops alike. Florida must make some examples for everyone to understand the negative ramifications of not following the rules. Once this takes place on a regular basis, full compliance by all should follow.