New Jersey After Market Parts Bill Would Limit Consumer Choice; PCI Urges to Withdraw

May 12, 2005

The Property Casualty Insurers Association of America (PCI) is urging the New Jersey Assembly Committee on Regulated Professions and Independent Authorities to withdraw A-3682, legislation that would reportedly provide car makers a monopoly on replacement parts, limit consumer choice and drive up repair costs.

The legislation, scheduled for a hearing Thursday, increases the regulation for use of after market parts including providing a separate notice of the part’s estimate as well as listing the cost difference between that part and an original equipment manufacturer part. It also forces consumers to use only original manufacturer parts for five years.

“This legislation limits competition in the crash parts industry and unnecessarily drives up the cost of repairs and insurance,” said Richard Stokes, regional vice president for PCI. “These requirements will not only increase costs, but will make it more difficult for consumers to use safe and less costly alternatives to the parts from the original equipment manufacturer.”

Competitive auto body parts were developed as an alternative to costly original equipment parts that reportedly monopolized the market in the late 1970’s. The parts have reportedly helped generate competition and stabilize the price of auto repairs and auto insurance by costing on average 20 to 50 percent less than parts supplied by the original equipment manufacturer.

With few exceptions, competitive parts are used primarily for cosmetic repairs and reportedly have virtually no effect on the safety of the car or its passengers. The parts also reportedly create no price differential in the value of a car compared to a car with original parts. Competitive parts are also guaranteed by both the insurer and the Certified Auto Parts Association, the manufacturer of competitive parts.

“The bottom line is that these requirements will be a big step backwards for consumer choice and competition in the New Jersey auto repair and auto insurance marketplace,” added Stokes. “We strongly urge the committee to withdraw the legislation and permit the consumers the opportunity to continue competition.”

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