2005 Insurance Reference Manual

Personal Insurance Federation of California Insurance Reference Book

BACKGROUND: AFTERMARKET CRASH PARTS

HISTORY

Up until the late 1970's automobile manufacturers enjoyed a monopoly on the sale of replacement crash parts known as original equipment manufacturer (OEM) parts. The manufacturers also charged excessive prices for the parts, in many cases realizing profits from 700 to 800 percent.

In the 1980's independent manufacturers began making, and body shops began using, cosmetic, generic sheet metal replacement parts. The parts were made available at prices 20-50 percent less than OEM parts. Competition via the manufacture of generic automobile replacement crash parts was thus introduced into the marketplace. These parts became known as non-OEM replacement crash parts - or generic crash parts. The arrival of competition forced automobile manufacturers to lower their prices as much as 40 percent.

During the mid-1980's automobile insurers discovered that, in many cases, auto body repair shops were using generic non-OEM replacement crash parts, but still charging for the price of an original part. Insurers began demanding that where generic parts were used, the lower, correct price be charged. The reduction in the cost from the use of generic parts was significant.

By 1987 the insurance industry, at the invitation of a number of leading consumer organizations, agreed to provide funding for the Certified Automotive Parts Association (CAPA). CAPA oversees a testing and inspection program that certifies the quality of parts, and because the insurance industry was concerned that insureds receive only top quality non-OEM parts, it was a natural partnership. Today CAPA is the leading voice in generic aftermarket crash parts for auto body repair.

CAPA, through an eleven-member board which includes representatives of auto body shops, consumer groups, insurance companies, and parts distributors, utilizes a well respected independent testing facility to conduct tests of generic crash parts. CAPA also performs inspections of factories and verifies other compliance aspects of generic replacement crash parts.
A certification is issued by CAPA on individual parts submitted for approval by generic aftermarket auto parts manufacturers. Insurers stipulate that only CAPA-certified parts may be used in repairs.
CAPA certifies sheet metal and plastic non-safety related crash parts that are not subject to federal safety standards with the exception of headlamps which CAPA standards specify must be manufactured to meet federal motor vehicle safety standards.
CAPA has developed standards for certifying aftermarket headlamps.
Once the generic parts manufacturer's factory and its manufactured parts have been approved, random checks are conducted to ensure that the standards are maintained. In addition, all body shops are asked by CAPA to submit incident reports concerning poor fitting or non-quality generic crash parts.
Insurers are asked to develop a system for checking to make sure what part is actually used in the repair.
Since its inception, CAPA has certified over 3,000 generic competitive replacement parts. Such groups as the Consumer Federation of America, Consumers Union, and Ralph Nader's Public Citizen have endorsed the work of CAPA.

FACTS CONCERNING OEM PARTS

In 1995, 17.8 million cars and trucks were recalled for safety defects.
In the last decade the U.S. Department of Transportation has recalled 2.7 million original car company hoods for safety problems. During the same time period Consumers Union allegedly found only one non-OEM hood that failed. Further investigation of that case revealed that a faulty OEM latch or hood mount probably caused the malfunction.
A National Highway Traffic Safety Administration study concluded no data or analysis exists to suggest a safety problem with aftermarket or generic replacement crash parts. Consumer group studies by Consumers Union, Consumer Federation of America and Public Citizen also concluded safety risks are minimal because most of the parts are cosmetic (i.e., fenders, plastic bumper covers, hoods, etc.).
Very often, the manufacturer of the aftermarket generic crash parts makes the same OEM sheet metal parts.

CONCLUSION

Competition is the lifeblood of the American economy. Restricting the use of generic auto body crash parts will eliminate competition and restore a car manufacturer monopoly. This will unquestionably result in higher prices for repair parts and higher insurance costs for consumers.

¹ National Association of Independent Insurers: "Competitive Auto Replacement Parts: Fact versus Fiction" 1997

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