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PCI Aftermarket Parts Study Jan 09

PCI Aftermarket Parts Study Jan 09



PCI Aftermarket Parts Study Highlights Potential Costs of Auto Replacement Parts Monopoly

PCI Aftermarket Parts Study Highlights Potential Costs of Auto Replacement Parts Monopoly



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    PCI Aftermarket Parts Study Jan 09 PCI Aftermarket Parts Study Jan 09 Document Transcript

    • Caution! Monopoly ahead auto parts Competition protects Consumers For decades, the availability of aftermarket parts (also known as quality alternative parts) has kept car companies’ parts prices lower than what they would be in the absence of competition. For nearly as long, the car companies have attempted to turn their near monopoly on the parts that consumers typically need to repair their vehicles after a crash into a real monopoly by any means possible. Left fendeR gt CaR COmpany $149.68 QUaLity aLteRnatiVe (Capa CeRtified) Left and $124.00 Right headLamp assembLy base gt CaR COmpany $156.17 QUaLity aLteRnatiVe (Capa CeRtified) $121.00 2005 Ford Mustang gt MsrP: $25,730* reconstructed with LOweR gRiLLe gt CaR COmpany $47.32 QUaLity aLteRnatiVe (Capa CeRtified) $38.00 car company parts: $73,049 *Approximation a review of the costs of car company Quality alternative Replacement part Car Company $ savings % savings (Capa Certified) replacement parts for the 2005 Ford mustang gt illustrates how a parts $35.17 23% right headlamp assembly base gt $156.17 $121.00 monopoly would put a severe dent in $35.97 23% left headlamp assembly base gt $156.97 $121.00 consumers’ pocketbooks. Even without the cost of paint and labor, a 2005 Ford $9.32 20% lower grille gt $47.32 $38.00 mustang gt built entirely from car company $29.80 19% right Fender gt $153.80 $124.00 crash parts would cost nearly three times the car’s original price. $25.68 17% left Fender gt $149.68 $124.00 Eliminating aFtErmarkEt parts harms consumErs in a numbEr oF ways: • policyholders’ annual insurance costs would increase • A study conducted by the Alliance of American Insurers (now PCI) indicates that car company parts cost as much as 60 because a loss of competition would add roughly $3 billion to percent more than generic parts. Because aftermarket insurers’ costs and increase the cost of physical damage coverage. parts are much less expensive, they reduce repair costs. • Vehicle owners without physical damage coverage may be forced to forgo repairs because of the increase in • Consumers reap enormous benefits by receiving premium car companies’ parts prices. This may result in more rapid savings due to lower claim costs and can be sure of the quality deterioration and depreciation of their vehicles. of these replacement parts. Certification systems, like the Certified Automotive Parts Association (CAPA), are already • Increased repair costs would cause more vehicles to be declared in place to ensure the quality of these parts. A number of total losses. These vehicles would have to be replaced by consumer groups, including the Consumer Federation of consumers, again benefiting the automobile manufacturers. America and the Advocates for Highway and Auto Safety agree that aftermarket parts are good for the consumer.
    • T here is another cost resulting from the prohibition of Alternative parts not only provide lower-priced, quality alternatives, alternative parts that is not readily quantifiable. Before but also keep the prices of car company parts lower, meaning the introduction of non-car company parts, auto manufacturers tremendous direct and indirect savings to consumers. Without quality monopolized the market and were able to price their products with alternatives, the parts that drivers need to repair their vehicles after little restriction. Because aftermarket parts are less expensive than even the most minor of accidents could cost considerably more. those supplied by the car companies, prices for similar car company Annual insurance costs would be increased by roughly $3 billion, parts are often lowered in order to attract and retain business. which, in turn, would be passed on to policyholders with vehicle According to the Insurance Information Institute, competition from damage coverage. aftermarket parts forced car companies to reduce their parts prices by 30 percent on average. Although car companies have attempted to question the quality of non-car company parts, research has shown time and again that these allegations are unfounded. PCI supports the use of certified alternative parts, such as those that are held to the high standards of the Certified Automotive Parts Association (CAPA). n the 1990s, the car companies asked Congress for legislation for certain exterior repair parts for the 2005 Ford Mustang. This providing “copyright” protection for replacement parts. follows a 2005 ITC complaint by Ford Global Technologies — Recognizing the enormous cost such legislation would impose on currently under appeal — that removes competition when any of the consumers, Congress rejected that attempt. nearly 2 million Ford F-150 drivers on America’s roads look to replace seven collision parts on their 2004, 2005, 2006 and 2007 F-150s. Car company parts are already used 69 percent of the time and now it seems the car companies have finally found a strategy and venue to Since 1982, predecessor organizations of the Property Casualty Insurers continue their quest to eliminate competition — the enforcement of Association of America (PCI) have conducted numerous “replacement design patents at the International Trade Commission (ITC). These part” analyses using a variety of automobile models to demonstrate the efforts are an attempt to monopolize the market at the expense of excessive cost of car company parts. These investigations reveal that the the consumer. cost of rebuilding a vehicle with car company replacement parts typically triples the car’s original cost. On May 2, 2008, Ford Global Technologies filed a Section 337 complaint at the ITC against manufacturers and U.S. distributors of automotive collision repair parts alleging infringement of design patents PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $198 billion in annual premium, 40.5 percent of the nation’s property casualty insurance. Member companies write 51.6 percent of the U.S. automobile insurance market. 1. Insurance Information Institute, Generic Auto Crash Parts, July 2008, www.iii.org/media/hottopics/insurance/genericauto/?table_sort_722000=4.