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Aftermarket Auto Parts Retailers Say Bill Could Put Them Out of Business

This article originally appeared in the MIRS (Michigan Information and Research Service Inc.) Capitol Capsule newsletter on Friday, May 6, 2016. It was written by Lauren Gibbons, Senate Reporter.

Legislation requiring auto mechanics use parts coming from the original manufacturer, if at all possible, is drawing criticism from some retailers who claim the bill would threaten their businesses while hitting their customers’ pocketbooks by totaling crashed cars that could be saved with less-expensive aftermarket parts.

Sponsored by Rep. Pete PETTALIA (R-Presque Isle) and amended in the Senate by Sen. Tory ROCCA (R-Sterling Heights), HB 4344 is supported by car companies and dealerships.

But some insurance companies and aftermarket retailers claim the bill creates a near-monopoly on auto parts most often damaged in accidents and could drastically raise consumer costs, confuse repair shop employees and put aftermarket retailers out of work.

The bill’s current language stipulates that aftermarket parts can be used, but only if the parts are certified.

Original Equipment Manufacturer (OEM) are parts that come straight from the manufacturer, while aftermarket parts are generally produced or sold by a third party and are often substantially cheaper than their OEM counterparts.

The bill initially passed the House 84-22, and cleared the Senate Regulatory Reform Committee unanimously.

Jim Sherman, who owns Sherman Auto Parts in Washington Twp. and distributes aftermarket parts in Michigan and Ohio, likened HB 4344 to “highway robbery.”

Keeping uncertified aftermarket parts off the market would likely prevent insurance companies from using estimates for aftermarket parts and raise prices on how much parts costs, Sherman said.

“Consumers should have a choice,” Sherman said. “By granting the monopoly, the Big Three will just pillage and burn. They’re going to charge more than what they do now, and put people out of work in the rust belt in Michigan.

“I’m really concerned about Michigan jobs going away,” he continued. “Independent car shops will be going out of business . . . there’s going to be no purpose for our existence.”

But Ray Fisher, the president and executive director of the Automotive Service Association of Michigan, is fully in support of the language and said it’s for safety’s sake that certification is necessary.

Any additional price that requires should not be considered more important than human life, he said.

“It’s crucial that these parts act the way they’re supposed to and be tested accordingly. It’s very important to occupant safety,” Fisher said. “The bill’s not excluding them, just asking them to get the parts certified. If they don’t feel the parts can be certified, then I’m concerned about the safety of the part in the first place.”

Nicholas Scheid, a past president of the Auto Body Parts Association and a member of the Certified Automotive Parts Association technical committee, said certification is not a difficult process and is one the aftermarket industry embraces, but can be costly. The other issue is that there are not standards of certification set for all part types.

“That aspect could eliminate a lot of good parts from competitive consideration,” he said.

In addition, the automakers would not be required to go through a similar independent certification process, putting aftermarket parts and their producers under an additional burden their competitors don’t  have, Scheid said.

“Everything about this, in my opinion, is going to create an environment where minor collisions are going to create a totaled vehicle, where the consumer now has a debt that they’re paying off while they’re trying to by another car,” he said. “The car companies are being extremely aggressive to use the government to protect monopolies, and it’s wrong.”

During a March 23 Senate Regulatory Reform Committee hearing, AAA Michigan, Progressive Insurance and the Michigan Retailers Association were among those who testified in opposition to the bill. Representatives of General Motors, Ford and Toyota indicated support, as did the Auto Dealers of Michigan, the Auto Alliance, the Automotive Service Association of Michigan and the Secretary of State’s office.

The full Senate has yet to take additional action on the legislation.

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