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Genuine Parts vs. Imitation Parts
You insure your valuable watch and it is lost or stolen. How would you feel if you received an imitation watch, as a replacement from your insurance company, and you were not told that it was a fake?
When an owner takes his/her vehicle to a collision repair shop, there is a basic consumer assumption that the vehicle will be restored to its pre-accident condition.
What exactly constitutes a pre-accident condition? That depends upon whom you ask, as this definition is the basis of a contentious debate among consumer advocacy groups, insurance companies, vehicle manufacturers, auto parts manufacturers and collision centres.
For auto collision repairs, there are two general classifications of available replacement parts ? OEM (Original Equipment Manufacturer) parts and imitation parts (manufactured by third party vendors). There are important distinctions between the two, particularly in the quality of metal used in the manufacturing of these parts.
Most consumers would be amazed at the thousands of imitation collision parts that are available for their vehicles.
By and large, collision repair experts consider imitation parts to be inferior in quality and performance to OEM parts, particularly with respect to fit, finish, paint adhesion, coating performance, weld integrity, adhesive performance and corrosion resistance. OEM parts are engineered to higher standards in order to maintain the structural integrity and safety of vehicles.
The refusal of some insurance companies to pay for OEM replacement parts resulted in a landmark, class action lawsuit in the US. In 1999, the plaintiffs in that case (Avery), representing policyholders from nearly 50 states, challenged the insurance company?s practice of requiring imitation parts on policyholders? vehicles that were damaged in accidents. The plaintiffs won their case, and in 2001, an appeals court unanimously upheld the verdict.
The basis for the class action lawsuit hinged on the definition of ?pre-accident condition?. Clearly, the plaintiffs? counsel successfully argued that imitation parts were of a lesser quality than OEM parts, and that using imitation parts did not restore vehicles to pre-accident condition. They further argued that using non-OEM parts reduced the value (and compromised the safety) of their vehicles.
Do consumers have the right to demand OEM parts in collision repairs? Yes, consumers do have the right, but in some cases, insurance companies may ask policyholders to pay for the difference in price. Imitation automotive parts typically cost less than OEM parts, and therein lies a major sticking point in the ongoing debate.
Insurance companies that prefer the use of non-OEM replacement parts say that the lower cost of non-OEM parts helps to keep insurance premiums down.
The Collision Industry Action Group, which represents the largest three collision repair industry companies in Canada, reported in 2001, that the insurance companies in Canada identified a $122 million savings each year, when imitation replacement parts were used.
Indeed, the availability of these imitation parts has had a favourable impact. OEM manufacturers have, in many cases, reduced their parts pricing in order to compete with the price of imitation parts.
Insurance companies often defend their positions by arguing that their right to use non-OEM parts is included in the fine print of policyholders? contracts. An issue this significant should not be hidden in the fine print.
Consumers should check with their insurance companies to see what their policies say about using OEM parts vs. non-OEM parts. Some insurance companies permit the use of OEM replacement parts without question, while others are more restrictive.
General Motors released the results of a study that measured the effects of an impact using genuine GM parts vs. non-OEM parts. The results proved, unequivocally, that the imitation parts were ?inferior in design, fit and performance?. The study also concluded that the ?installation of non-OEM parts may require increased labour to install ? labour that costs collision repair facilities and their customers, time and money?.
How do imitation replacement parts affect rust perforation warranties from the vehicle manufacturers? No auto manufacturer will honour a rust perforation warranty on imitation parts installed during collision repairs.
My position is not to favour one side over others; each side in this debate has legitimate points to make, and there are many self-serving reports to justify each respective position.
Some insurance companies become very upset with body shops that voluntarily disclose the imitation parts issue to consumers. Body shops depend on insurance companies as a source of future referral business, so do not expect voluntary disclosure to occur regularly.
Collision centers should, therefore, be required by law to disclose which type of parts will be used in repairing a vehicle.
What consumers deserve, legally and morally, is full disclosure of the parts used for collision repairs. Their interests should NOT get lost in the fine print.
Ken Shaw Jr. is President of the Toronto Automobile Dealers Association and is a new-car dealer in Toronto. E-mail comments to president@tada.ca
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