Calif. Associations Want Auto Aftermarket Competition to Continue

February 22, 2006

Insurance associations in California are opposing legislation that could deter auto aftermarket parts competition. Competition among manufacturers of quality, replacement crash parts has saved consumers hundreds of millions of dollars over the years, according to testimony delivered before a state legislative committee by Robert Hurns, vice president of the Property Casualty Insurers Association of America (PCI).

Hurns, in a statement prepared for an informational Assembly Business and Professions Committee hearing, said, “The competition that currently exists in the auto parts market is reducing prices by 25 percent to 40 percent or more, depending upon the type of repair involved.”

Hurns was testifying on behalf of the Association of California Insurance Companies, PCI’s affiliate in California.

“The PCI opposes all state and federal legislation that would unduly infringe upon aftermarket competition. If competitive crash parts are legislated out of the market place, the cost of original manufacturer parts will soar.”

Hurns explained that at one time only the auto manufacturers produced and sold replacement parts. They are called original equipment manufacturers (OEM) parts. During the mid-1980s, other companies began selling replacement parts at substantially lower costs.

Since then there have a number of attempts, both on the federal level and in state legislatures, to eliminate or severely restrict competition, which would force repair facilities to use only OEM parts.

“Opponents of competition have traditionally claimed that competitive replacement parts are unsafe. The facts show that when these parts are tested, they are absolutely safe and do not pose any safety concerns whatsoever,” said Hurns.

He added that if competition auto parts are legislatively forced out of the market, consumers will be double losers. Consumers not only would lose potential savings from competitive pricing, they also would have to absorb price increases that could be freely imposed if carmaker parts were the only choice,” he added.

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