Generic Auto Crash Parts

Generic Auto Crash Parts

2014

UP FRONT

  • Crash parts are those most frequently damaged in auto accidents, such as fenders, hoods and doors panels.

  • There are two sources for crash parts: auto manufacturers, who sell them under their own names, also known as original equipment manufacturers (OEMs), and generic, or aftermarket, crash parts suppliers.

  • Generic crash parts are between 26 to 50 percent less expensive than parts made by OEMs and also often have longer warranties.

  • The use of generic crash parts saves consumers about $2 billion in insurance costs a year.

 

THE TOPIC

Crash parts, also referred to as cosmetic parts, are the sheet metal and plastic components of vehicles; the outside “skin” most frequently damaged in auto accidents, such as fenders, hoods and doors panels. There are two sources for crash parts: auto manufacturers, who sell them under their own names, also known as original equipment manufacturers (OEMs), and generic or aftermarket crash parts suppliers. Before generic parts existed, creating competition in the marketplace, OEMs were able to sell their parts at much higher prices than they can today. The introduction of aftermarket parts forced down the price of OEM parts by an average of 30 percent. The Property Casualty Insurers Association of America said that non-OEM parts saved consumers over $2.2 billion in insurance costs in 2010.  In addition, aftermarket parts are between 26 to 50 percent less expensive than parts made by OEMs and also often have longer warranties.

In the continuing debate about whether generic parts are as good as parts from OEMs, the issue of safety is in the forefront. Critics claim that using parts from sources other than OEMs could compromise safety. However, the Insurance Institute for Highway Safety (IIHS) says that with the possible exception of hoods, there are no safety implications of using cosmetic crash parts from any source. This has been demonstrated by crash tests conducted at the IIHS. In addition, an independent, third-party nonprofit organization, Certified Automotive Parts Association (CAPA), rigorously inspects generic automotive parts and guarantees the quality of those that meet its high standards. Generic crash parts do not interfere with a vehicle's existing warranty and are often manufactured by the same supplier and in the same manner as OEM parts.

RECENT DEVELOPMENTS

  • According to the Property Casualty Insurers Association of America, in November 2013 the Automotive Body Parts Association filed suit against Ford Global Technologies challenging the validity and enforceability of Ford’s design patents on certain collision repair parts and asking that the court declare Ford’s patents invalid. In addition, the suit seeks to have Ford permanently enjoined from enforcing or attempting to enforce the patents. Ford has until February 24, 2014 to respond to the suit.
  • In January 2014 Chrysler filed suit against LKQ/Keystone alleging that the company infringed on 10 design patents relating to its Ram pickup trucks. The suit asks the court to impose a permanent injunction from further infringement and to impose awards for lost profits and royalties along with other damages.
  • LKQ/Keystone was involved in a court case in 2009 with Ford in which the automaker settled its enforcement actions against LKQ concerning patent infringement. This was the last attempt by original equipment manufacturers (OEMs) to enforce design patents, prior to the 2013 and 2014 lawsuits mentioned above. (See Background: Ford Motor Company Settlement.)

BACKGROUND

Prior to 1970, auto body repair shops could only buy replacement parts like fenders, door panels and grilles from auto manufacturers. Original equipment manufacturers (OEMs) had virtually no competition in this market, a monopoly they had fought to preserve. When independent manufacturers in several countries, including the United States, began making sheet metal replacement parts, OEMs found themselves facing tough competition.

By the early 1980s independent suppliers were making crash parts to fit vehicles made by all auto manufacturers. The economic impact of aftermarket crash parts is significant. Not only are most of the independently made parts less expensive, but their existence has forced the car companies to lower the prices of their parts. Whenever there is an equivalent aftermarket crash part, OEM prices have been forced down by 30 percent or more. This has helped keep the rate of increase in auto repair prices in check, which in turn, has stabilized auto insurance premiums.

Certified Automobile Parts Association (CAPA) was established in 1987 through the efforts of the Auto Body Parts Association (ABPA). The CAPA Certification Program is a multistep program. It includes a detailed review and inspection of a participant’s factory and manufacturing processes, followed by an analysis conducted by an independent testing laboratory. Should the participant meet all production and quality requirements, samples of the parts that will bear the CAPA certification label are submitted for testing to ensure that the material and physical integrity of the part is satisfactory.  Certification is granted by a technical committee composed of collision repairers, manufacturers, distributors, insurers and quality consultants.

The factory and parts continue to be subject to random inspection by CAPA to ensure that quality standards continue to be met. Users of parts bearing the CAPA Quality Seal are encouraged to file complaints should they find that a part does not live up to expectations. CAPA reserves the right to decertify parts that are found to no longer comply with CAPA quality standards. Today over 7,400 part types have achieved CAPA certification.

In 2000, the Insurance Institute for Highway Safety reaffirmed that the source of a car’s cosmetic crash parts is irrelevant to crashworthiness. Using a 1997 Toyota Camry, OEM cosmetic parts were removed and the hood replaced with a CAPA-certified hood from an aftermarket supplier. The crash test results from a 40-mph frontal offset impact were compared with results from an identical crash test performed on an identical Camry with the OEM parts still intact. Both Camrys performed with distinction and earned good crashworthiness ratings according to the Institute’s evaluation procedures. CAPA-certified parts have been proven to perform identically to car company brand parts in every significant aspect. CAPA uses the term “functionally equivalent” to describe how its parts rank in relation to the OEM cosmetic parts it replaces, a much stronger term than “of like kind and quality,” the term used in state and local laws and regulations to describe the standard for replacement parts used in the repair of automobiles.

Consumer Protections: In response to collision repairer concerns about tracing problem parts, consumers and auto repairers can use CAPA TRACKER, a free, web-based program that connects the CAPA seal number to the exact vehicle on which it was installed. In the event of a part recall, CAPA could quickly notify every shop that installed one of the parts in question. The shop could then alert their customers and take any necessary action. The TRACKER program will also enable insurers to better monitor the actual use of CAPA certified parts and to trace those parts.

State Farm Lawsuit: In a victory for consumers, in March 2006, the U.S. Supreme Court refused to hear an appeal from the plaintiffs in State Farm v. Avery, the class action lawsuit targeting the use of aftermarket parts. The Illinois Supreme Court had overturned lower court rulings, finding not only that the use of aftermarket parts did not breach State Farm’s contract with its policyholders but also that the class action had been wrongly certified.

The lawsuit had charged State Farm with breaching its contracts with its policyholders when it specified the use of non-original equipment (non-OEM) parts in the repair of vehicles damaged in crashes. The suit covered the entire United States, except for Arkansas and Tennessee and some State Farm policyholders in Illinois and California, depending on the date of their crashes. The loss of the appeal paved the way for insurers to start using generic auto repair parts once again. Many insurers had reverted to using the generally more expensive OEM parts, in the wake of the lower court rulings. The use of aftermarket parts of the same or higher quality than those from OEMs is credited with keeping down the cost of car repairs.

In its ruling on the validity of the class action certification, the Illinois Supreme Court ruled that the claims in the case, which stemmed from repairs using many different parts from various vendors following accidents in 48 jurisdictions, each with its insurance laws and regulations, varied too much to be dealt with as a class action.

Ford Motor Company Settlement: In April 2009 the Ford Motor Company and LKQ Corporation, which manufactures non-OEM crash parts, announced a settlement of patent infringement cases involving F-150 trucks and Mustangs. The settlement, which ended two separate legal actions, allowed LKQ to become the exclusive supplier for non-OEM replacement parts on which Ford holds a design patent, not only the parts that were subject to the litigation, according to the Property Casualty Insurers Association of America (PCI). This agreement is still in place, and LKQ/Keystone has indicated that it has similar agreements in place with other car companies.

 

STATE AFTERMARKET PARTS LEGISLATION AND REGULATION (1)

As of February 2014

State Logo, ID number or mfg.'s  name Estimate must identify non-OEM parts Disclosure statement Prior consent
Alabama X X X  
Alaska        
Arizona X X X  
Arkansas X X X X (2)
California X X X X
Colorado X X X  
Connecticut   X X  
Delaware        
D.C.        
Florida   X X  
Georgia X X X  
Hawaii   X (3) X X
Idaho X X X  
Illinois X X X  
Indiana   X   X (4)
Iowa X X X  
Kansas   X (5) X (5)  
Kentucky        
Louisiana X X X  
Maine        
Maryland   X X  
Massachusetts   X X  
Michigan   X X  
Minnesota        
Mississippi X X X  
Missouri X X X  
Montana        
Nebraska X X X  
Nevada   X X  
New Hampshire X X X  
New Jersey X X X  
New Mexico       X
New York   X   X (6)
North Carolina   X X  
North Dakota        
Ohio X X X X
Oklahoma X X X  
Oregon   X X X (7)
Pennsylvania   X X  
Rhode Island   X (8) X X (9)
South Carolina        
South Dakota X X X  
Tennessee X X X  
Texas       X
Utah X X X X
Vermont        
Virginia   X X  
Washington   X X X
West Virginia   X (10) X (10)  
Wisconsin X X X  
Wyoming X X X X

(1) This chart covers regulations concerning only aftermarket parts, which are new parts made by a company other than the original vehicle manufacturer. This chart does not cover regulations for using used, rebuilt, or reconditioned parts.
(2) Consent required if vehicle is still under original warranty.
(3) Vehicle owners who choose aftermarket parts are entitled to a written estimate identifying the aftermarket parts used.
(4) Consent required for the five years after a vehicle's model year.
(5) Does not apply to vehicles more than 10 model years of age or older.
(6) Prior consent necessary if the repairer uses aftermarket parts from more than three suppliers on any one repair.
(7) Consent required unless an independent test facility has certified the part as being at least equivalent to the original part.
(8) Applies to the repair bill.
(9) For vehicles less than 30 months beyond the date of manufacture.
(10) For vehicles in the year of manufacture or in the two years thereafter.

Source: Property Casualty Insurers Association of America.

 

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