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Michigan Bill Takes Away Car Owners’ Choice of Less Expensive Parts

EDITOR’S NOTE:  This article first appeared in CAPCON – Michigan Capitol Confidential, a news source for Michigan residents who want an alternative to “bigger government” remedies in policy debates. CapCon reports on the public officials who seek to limit government, those who do not, and those whose votes are at odds with what they say.

Sponsor says Senate changed language to benefit select manufacturers

By JARRETT SKORUP | May 25, 2016

Under current law, auto repair shops can use replacement parts made by a vehicle’s maker or an aftermarket supplier. But under a bill now working its way through the Michigan Legislature, customers’ freedom to save money by choosing the less expensive aftermarket parts would be replaced by a mandate on shops to install only original equipment manufacturer (OEM) parts for repairs on newer vehicles.

“This bill will make our inventory null and void. It will cause people to be laid off. It will raise prices for consumers by taking away their choices, and it will drive up insurance rates,” said Jim Sherman, the owner of Sherman Auto Parts in Washington Township, which sells aftermarket parts. “We offer a safe, viable alternative. Nobody should have to use our products, but we should be allowed to sell our products and consumers should have the option to use them. It’s all about consumer choice.”

He added, “If you have a four- or five-year-old car, and you back into something and take out a back light, under the bill that passed the Senate, you can’t go out and buy an aftermarket part and put it on your own car. That is insanity.”

According to the bill’s House sponsor, the language was added by the state Senate and is protectionism that favors the Big 3 and other automakers over consumers.

House Bill 4344 would overhaul many details of the regulatory regime the state has imposed for 40 years on vehicle repair shops. Most of the changes are uncontroversial, but not so the provision relating to auto parts.

Rep. Peter Pettalia, R-Presque Isle, is the sponsor of the legislation, which originally still limited some options, but allowed consumers more choice when it came to which parts to use. But when HB 4344 passed the Senate, the ability to choose was severely limited.

“Under the Senate version, you have no choice,” Pettalia said. “They’ve put in a couple of words that I will not support. … What the Senate sent back over favors the Big 3 automakers.”

Pettalia, a certified auto mechanic, said his intention was to balance consumer choice and safety. He said the intent of the bill is to ensure that 16 major components could only be replaced with OEM parts for vehicles that are under warranty and less than five years old. The bill also originally allowed consumers to request aftermarket parts if they wanted.

“The intent of these parts is to protect the vehicle and the person,” Pettalia said, adding that he worked with a variety of people for the past two years to strike a balance. “I want to make sure that all of those safety components are operating as they are supposed to. … In my opinion, this is a consumer protection bill.”

The Senate-passed version says mechanics shall not, “During the first five years of a vehicle manufacturer’s original warranty, replace a major component part … with a part that is not an original equipment manufacturer part, or a part that does not meet or exceed applicable federal motor vehicle safety standards and standards for parts recognized as OEM comparable quality as verified by a nationally recognized automotive parts testing agency.”

According to aftermarket parts makers, the national parts testing agency doesn’t exist. The original House bill and the Senate bill do not have a limit of 16 parts — meaning replacing any part of the vehicle with a non-OEM part would be illegal.

“Major component parts,” as defined in the bill which passed the House, includes a vehicle’s front fenders, hood, some doors, front or rear bumper bars, quarter panels, the tailgate or hatchback, the frame, air bags, and seat belts. Many of these are parts in which the difference between OEM and aftermarket parts is non-existent; except for the higher prices consumers will have to pay.

A variety of interest groups opposes the bill, saying that there are plenty of protections in place to encourage repair shops to use quality products and that aftermarket products can save consumers money with no negative safety effects.

“The bill would not only be detrimental to those Michigan residents who sell and distribute alternative parts, it would also be costly to both Michigan drivers and collision repair technicians,” said Ed Salamy, the executive director of the Automotive Body Parts Association.

He continued, “If the car companies are allowed a virtual monopoly on collision repair parts for the first few years of a vehicle’s life, car company service parts prices will increase without competition from the aftermarket. This will more than likely translate into higher insurance premiums in a state where residents pay some of the highest premiums as it is. Also, more vehicles will be totaled due to the higher costs of parts, resulting in less work for those in the business of collision repair in Michigan.”

Some insurance companies, retailers, and auto repair shops say they oppose the bill because limiting competition and choice drives up costs and is anti-free market. The Alliance of Automobile Manufacturers, which represents the largest vehicle makers in the world, supports the bill, saying it supports Michigan jobs and protects consumers.

The original bill passed 84-22 in the House, was changed, and passed 33-4 in the Senate. Because of the changes, it is being considered again in the House.

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