[Congressional Record Volume 145, Number 39 (Thursday, March 11, 1999)]
[Extensions of Remarks]
[Pages E415-E417]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 CHEAP CAR PARTS CAN COST YOU A BUNDLE

                                 ______
                                 

                          HON. EDOLPHUS TOWNS

                              of new york

                    in the house of representatives

                        Thursday, March 11, 1999

  Mr. TOWNS. Mr. Speaker, I would like to bring to my colleagues' 
attention the attached article, ``Cheap Car Parts Can Cost You a 
Bundle'', from Consumer Reports which appeared in its February 1999 
issue.

                 Cheap Car Parts Can Cost You a Bundle

       One January morning last year, Daniel Della Rova was 
     passing another car at about 55 mph on Route 222 near 
     Kutztown, Pa. Suddenly the hood of his 1988 Honda Accord flew 
     up, fractured the windshield, and wrapped itself around the 
     roof. Unable to see ahead, Della Rova gripped the wheel 
     tightly and managed to steer to the side of the road. 
     ``Luckily,'' he says, ``I didn't hit anything.'' But the 
     insurance company declared the car a total loss.
       According to Charlie Barone, a vehicle damage appraiser in 
     Malverne, Pa., who has examined the car, the cause of the 
     mishap was what collision repairers disparagingly call 
     offshore ``tin''--a cheap imitation hood made by a Taiwan 
     manufacturer. It's one of many, mostly Asian-made imitations 
     of automakers' OEM (original equipment manufacture) parts.
       Barone, an outspoken critic of imitation parts, says 
     they're cheaper than OEM for a reason: ``They're inferior to 
     original manufacturer parts.''
       He adds that the previous owner of Della Rova's Honda, who 
     had damaged the original hood in a minor accident, probably 
     paid $100 less for the imitation hood than the $225 the Honda 
     OEM part would have cost. But the real cost could have been 
     catastrophic.
       An auto-repair problem similar to Della Rova's may be 
     parked in your driveway right now. If your car was ever in an 
     accident, the repair shop may have installed cheap initation 
     parts, perhaps without your even knowing it.
       Crash parts are a big business. Each year, U.S. drivers 
     have an estimated 35 million automobile accidents costing 
     some $9 billion in crash parts. The most frequently replaced 
     parts are bumpers and fenders.
       Not all imitation parts are bad. Various brand-name 
     replacement batteries, filters, spark plugs, and shock 
     absorbers can provide quality along with competitive pricing. 
     Some body-part copies are OK, too, but others are junk.
       Several consumer groups have supported imitation crash 
     parts, and for good reason: These parts provide competition, 
     forcing automakers to reduce prices. That's good for 
     consumers--but only if quality doesn't suffer. Unfortunately, 
     the quality of imitation crash parts can vary widely.
       Many collision repairers complain that initation parts 
     generally don't have the same fit and quality as OEM parts. 
     ``Approximately 75 percent of the time, you have to make 
     modifications or tweak the sheet metal to make aftermarket 
     body parts fit,'' says Phillip Bradshaw, owner of Bradshaw 
     Collision Centers in Madison, Tenn. ``And even then, it's 
     often impossible to get the alignment and fit right.''
       In an effort to assure the quality of initation body parts, 
     the insurance industry established the nonprofit Certified 
     Automobile Parts Association in 1987. To date, CAPA's 
     certification program covers a small percentage of imitation 
     body parts.
       Because of the controversy over the price and quality of 
     collision-repair parts, we decided to conduct our own tests 
     on fenders and bumpers to learn about their quality 
     firsthand. All the non-OEM fenders that Consumer Reports 
     tested were CAPA-certified. (CAPA doesn't certify bumpers.)
       We also investigated the claims and counterclaims about the 
     benefits of aftermarket parts. Our tests and investigation 
     uncovered two key findings:
       Most auto insurers endorse imitation parts because they can 
     be 20 percent to 65 percent less expensive than OEM. But the 
     companies we surveyed provided no evidence that those savings 
     are being passed on to policyholders.
       The imitation bumpers and fenders we tested were inferior 
     to OEM parts. The bumpers fit badly and gave poor low-speed 
     crash protection. Most of the fenders also fit worse than OEM 
     fenders, and they rusted more quickly when scratched to bare 
     metal.


                      The price vs. quality debate

       Some insurers acknowledge there's a quality problem. That's 
     why the Interinsurance Exchange of the Automobile Club of 
     Southern California uses only OEM metal body parts. ``We have 
     found significant problems in the quality and specifications 
     of non-OEM sheet metal,'' says spokeswoman Carol Thorp.
       Raleigh Floyd, an Allstate spokesman, says that his company 
     uses OEM parts--and initation parts ``whose quality has been 
     certified'' by CAPA. But our tests of some CAPA-certified 
     fenders indicate that the CAPA seal of approval is no 
     guarantee of quality comparable with that of an OEM part. 
     (The CAPA seal was affixed to the hood on Della Rova's 
     Honda.)
       Also, some consumers may not know what kind of parts 
     they're getting. They may simply assume their car will be 
     restored to its precrash condition.
       Besides fenders and hoods, CAPA certifies other sheet-metal 
     and plastic parts. In the crash parts market, CAPA parts 
     account for 3 percent or less of the units sold. OEM parts 
     account for 72 percent; salvage parts, 10 percent. Non-CAPA 
     imitation parts make up the remaining 15 percent. CAPA loons 
     large in the industry because it's the only organization that 
     sets quality standards for imitation replacement parts. 
     Although its overall market share is small, CAPA is growing.
       The debate over quality should heat up this summer as a 
     $10.4 billion class-action lawsuit, Snider vs. State Farm, 
     goes to trial in Marion, Ill. The suit accuses State Farm of 
     pressing shops and policyholders to use imitation parts that 
     aren't equal in quality to OEM parts. That's ``a breach of 
     their promise to resote the vehicle to pre-loss condition, 
     says Thomas Thrash, an attorney for the plaintiffs.
       State Farm firmly denies this. ``We believe these [non OEM] 
     parts are of the same quality as the manufacturer parts,'' 
     says spokesman Dave Hurst.
       Insurers haven't always looked kindly on non-OEM crash 
     parts. In the early 1980s, State Farm's periodic repair 
     reinspections revealed that many repair shops were charging 
     for OEM parts but installing cheaper imitations and pocketing 
     the difference.
       ``The shops were making a very long dollar,'' says Stan 
     Rodman, director of the Automotive Body Parts Association, 
     which represents manufacturers and distributors of imitation 
     parts--and which was briefly the predecessor of CAPA. ``They 
     were getting a non-OEM fender for 90 bucks that the insurance 
     company was paying them $400 for.''
       By the mid-'80s, however, insurers began recommending 
     imitation parts. Their repair estimates assured policyholders 
     that the parts were as good as OEM parts.
       The plaintiffs in the State Farm suit allege that the 
     insurer knew better. In June and August 1986, for example, 
     State Farm consultant Franklin Schoonover warned the 
     company's research department that a sampling of imitation 
     crash parts tested earlier that year by the Detroit Testing 
     Laboratory represented a ``major risk for consumer usage when 
     compared to the GM OEM parts.''
       The lab found that some of the imitation parts weren't as 
     strong, were more likely to have problems with cracking and 
     peeling paint, and showed weight differences, indicating a 
     wide variation in quality control.
       In 1987, Ford sued Keystone Automative Industries, the 
     largest distributor of non-OEM body parts in the U.S., for 
     using the phrase ``like kind and quality'' to compare its 
     imitation parts with OEM parts. In 1992, a U.S. District 
     Court ruling found that Keystone's claims were ``false'' and 
     ``made with the deliberate intention of misleading the 
     public.'' In a $1.8 million settlement, Keystone agreed to 
     allow Ford to state in its advertising, ``Crash parts from 
     Keystone do not meet Ford OEM quality.''
       ``We should not have made those statements,'' says Charles 
     Hogarty, president and CEO of Keystone, which now uses the 
     term ``functionally equivalent'' to describe its products. 
     Hogarty says the description is ``probably loose enough to 
     mean whatever you want it to mean . . . it's not identical 
     and there may be some minor, we'd say insignificant, 
     differences.''


                        The consumer connection

       After it was established in 1987, CAPA compiled a manual 
     that spells out quality controls, test procedures, and other 
     steps required for manfuacturers to get its seal.
       In 1988, CAPA added consumer advocate Clarence M. Ditlow to 
     its nine-member board. Ditlow is executive director of the 
     Center for Auto Safety, a nonprofit watchdog group founded in 
     1970. (He is also on the board of directors of Consumers 
     Union, Publisher of Consumer Reports. The center received 
     funding from CU during its early years.)

[[Page E416]]

       In 1989, CAPA hired Jack Gillis as its esecutive director. 
     Gillis is also director of public affairs for the Consumer 
     Federation of America and the author of a long list of 
     consumer-oriented books.
       Ditlow says that CAPA parts are better quality than non-
     CAPA imitation parts ``by viture of the fact that you set a 
     standard.'' But when asked, neither he nor Gillis provided 
     compelling evidence to support that claim.
       Gillis also says that CAPA parts are of ``like kind and 
     quality'' to OEM parts. But CAPA's quality-standards manual 
     requires only ``functionally equivalent'' parts. Such a 
     careful choice of words is significant: A Saturn may be 
     functionally equivalent to a BMW, but the two are hardly 
     equal.
       A twice-a-year survey of 500 repair shops done for the auto 
     industry by Industrial Marketing Research of Clarendon Hills, 
     Ill., does suggest that CAPA parts are better than non-CAPA 
     and that the quality of all imitation parts is improving. But 
     according to the same study, only one-third of repair shops 
     termed CAPA parts an acceptable substitute for OEM parts. 
     Two-thirds judged the quality of CAPA parts ``somewhat 
     worse'' or ``much worse'' than OEM parts.
       In the IMR study, repairers also indicated that customers 
     came back twice as often with complaints about imitation 
     parts, and that shops often must absorb the cost of extra 
     labor.
       Last March, the Automotive Service Association (ASA), 
     representing more than 12,500 repair shops, withdrew its 
     support of CAPA because ``CAPA has failed in its mission'' 
     and hasn't assured imitation crash parts that are equal in 
     quality and consistency to OEM.
       ``ASA is no friend of the consumer,'' says Ditlow. ``These 
     are people who have an agenda, and that agenda is higher 
     repair costs.'' But CAPA board member Clark Plucinski, who 
     oversees a network of 30 repair shops, says that ASA has 
     grown frustrated with the slowness of CAPA's progress, 
     despite the fact that CAPA is improving the quality of all 
     imitation parts.
       Gillis says that CAPA has an ``aggressive'' program to 
     solicit complaints from repair shops, but that last year it 
     received only 1,055 complaint forms on some 2.3 million CAPA 
     parts used. However, Plucinski says that hands-on collision-
     repair people are more likely to chew out the parts supplier 
     than to fill out a complaint form.


                           One Size fits none

       Collision repairers we talked to almost universally 
     complained that too many imitation parts, whether CAPA-
     certified or not, leave noticeable gaps and don't always 
     match the car's contours. They ``fit like a sock on a 
     rooster's foot,'' says a Scottsdale, Ariz., collision 
     repairer who fixes almost 200 cars each month.
       ``Fifty to 70 percent of the time the darn things don't 
     fit,'' says John Loftus, executive director of the 8,000-
     member Society of Collision Repair Specialists, a trade 
     association.
       Jerry Dalton, owner of the Craftsman Auto Body chain in 
     Virginia, says, ``I like the idea of alternate parts other 
     than OEM to keep pricing in line, and we try to use them as 
     often as we can. But we still have to return a large 
     percentage of them.''
       In a demonstration in Colorado Springs, Colo., last October 
     by the Collision Industry Conference (CIC), a repair-shop 
     education and training group, a CAPA hood and fender and a 
     non-CAPA imitation headlight assembly didn't fit properly on 
     an undamaged 1994 Toyota Camry, though a non-CAPA parking 
     light and grille did fit. (Gillis, who was at the 
     demonstration, says that the fender had been decertified just 
     days earlier, and that he himself decertified the hood on the 
     spot.) At another CIC demonstration in Dallas last December, 
     all the CAPA and non-CAPA substitute parts fit well.
       Of 160 repairs shops surveyed last year by Frost & 
     Sullivan, an independent international marketing-consulting 
     firm in Mountain View, Calif., 89 percent said that it takes 
     about two hours longer to install an imitation part, costing 
     $60 to $90 extra in labor.


                             How CAPA tests

       CAPA uses Entela Laboratories, an independent test lab in 
     Grand Rapids, Mich., to verify adherence to its standards. 
     Entela has industry-standard equipment and the capability for 
     testing materials.
       Reports provided by Entela detail various side-by-side 
     tests of materials in parts being considered for CAPA 
     certification and their OEM counterparts. Entela reports for 
     the Honda and Ford fenders we evaluated include material 
     thickness, chemical composition, tensile strength, and 
     corrosion resistance. The imitation part must be within 
     certain limits of the OEM part in order to be granted 
     certification.
       The other half of the certification process is inspection 
     of fit, done at the factory. The Entela fender reports we 
     read list measurements of gaps, flushness with mating parts, 
     and size and location of holes and slots. Each report gives 
     the range of dimensions that the CAPA part must fall within.
       The Ford and Honda fenders like those we evaluated appeared 
     to have fallen within CAPA limits in the reports, and they 
     were certified. We did find inconsistencies in the number of 
     holes and slots among the same CAPA-certified part made by 
     different manufacturers.
       There may be two reasons for the poor fit of CAPA parts 
     that repair shops complain about. One is ``reverse 
     engineering''--where manufacturers make copies of OEM parts. 
     Although Gillis didn't acknowledge problems of fit with CAPA 
     parts, he blames OEM parts for being inconsistent.
       But Greg Marshall, Entela's research and development 
     manager, says the OEM parts variations are perhaps 0.060 
     inch. Even when magnified by the copying process, that 
     shouldn't account for the fit problems we found in CAPA 
     fenders.
       The second problem is that CAPA sheet-metal parts are 
     tested for fit on a jig rather than on a car. Gillis says 
     CAPA is changing its standards to require that each part be 
     designed and fit-tested to its intended vehicle as of April. 
     If implemented, that should improve fit. But Gillis says that 
     the requirement will be only for newly certified parts. Parts 
     already certified aren't affected by this change unless CAPA 
     receives at least five complaints about the part in one year.
       Repair-shop owner Dalton, a CAPA adviser and a former 
     member of its technical committee who has visited plants in 
     Asia, raises another issue. He says that CAPA isn't able to 
     exercise sufficient control over quality ``because they don't 
     buy or sell the parts, and CAPA is a voluntary program.''
       To assess the claims and counter-claims of the controversy, 
     we installed a sampling of replacement fenders and bumpers on 
     cars and simulated several real-world challenges.


                       CR's test results: Fenders

       Our engineers mounted three OEM and six CAPA left fenders 
     on each of two popular cars, a 1993 Honda Accord and a 1993 
     Ford Taurus. (Our shoppers, who bought the fenders in the New 
     York area and in California, couldn't find non-CAPA fenders 
     for these cars.) Without making the extensive modifications a 
     professional shop might have to carry out, we judged their 
     appearance.
       Two of the Ford OEM fenders matched up nicely, while the 
     third didn't fit as well, By contrast, we found fit problems 
     with all six CAPA fenders for the Ford. Some would require 
     widening the holes or using shims. The worst didn't match the 
     contour of the car and would require significant reworking.
       All three Honda OEM fenders fit well. Three of the CAPA 
     fenders for the Honda also fit well, but the other three had 
     problems similar to those for the Ford.
       We then had a repair shop install one OEM feeder and two 
     CAPA fenders on each car, allowing the professionals to work 
     the metal as they ordinarily would to make it fit. The shop 
     found problems similar to the ones we found with the CAPA 
     fenders. After working for an extra 30 to 60 minutes, the 
     shop judged the resulting fit acceptable, though not as good 
     as that of the OEM fenders.
       Rust resistance. To simulate what rocks, vandals, or a 
     shopping cart might do in the real world, we scratched a grid 
     down to bare metal on four primed but unpainted fenders--two 
     OEM and two CAPA-certified. We then hired a lab to put them 
     through a cyclic 168-hour salt-spray fog test, in accordance 
     with industry test standards. Both CAPA fenders showed heavy 
     red rust by the end of the test. The Ford OEM fender showed 
     only moderate white corrosion; the Honda OEM fender, nearly 
     none.
       The superior performance of the OEM fenders (and the 
     telltale white corrosion) resulted from galvanization, in 
     which a zinc coating is bonded to the steel. When the paint 
     and primer are scratched, the zinc protects the steel by 
     sacrificing itself, oxidizing into a white residue less 
     damaging than rust. Most OEM parts are galvanized on both 
     sides. The CAPA parts we tested aren't galvanized.
       CAPA's corrosion test is different from ours. Entela 
     engineers scratch an ``X'' in the primer and then expose the 
     fender to a 500-hour salt-spray test. The parts get CAPA 
     approval even when the X-ed area rusts, since the test is 
     designed to evaluate the primer rather than the metal 
     beneath. CAPA regards the results as problematic only if the 
     rust spreads, making the primer blister or flake 3 mm beyond 
     the ``X,'' or if 10 percent of the entire fender shows red 
     rust.
       Gillis says galvanization is ``not much of a value added 
     because today's automotive paint processes are quite good.'' 
     But Bruce Craig, a fellow of the National Association of 
     Corrosion Engineers and author of the American Society of 
     Metallurgists' Handbook of Corrosion Data, says, ``It's kind 
     of a slam dunk that galvanized is better. I'm perplexed why 
     there would be a controversy.''
       That's a reason the Interinsurance Exchange of the 
     Automobile Club of Southern California won't use imitation 
     body parts: ``You get bubbling, paint flaking off, premature 
     rusting,'' says Gil Palmer, assistant group manager for 
     physical damage claims.
       Gillis told us that CAPA would begin requiring all sheet-
     metal parts manufactured starting January 1 to be galvanized 
     to earn certification. That should be a major step toward 
     equality with OEM parts. Meanwhile, distributors will 
     continue to sell ungalvanized CAPA parts that are already in 
     the sales pipeline.
       Strength. We found the CAPA fenders comparable with OEM in 
     one respect: Our tests for tensile strength uncovered no 
     significant differences between CAPA and OEM fenders.


                       CR's test results: Bumpers

       CAPA doesn't certify bumpers. A repair shop under our 
     engineers' supervision installed a total of 4 OEM and 17 
     imitation bumpers, bought in the New York area and in 
     California, on our Honda Accord and Ford Taurus. We saw 
     startling deficiencies in the imitations.

[[Page E417]]

       How they fit. All the OEM bumpers fit nicely. But none of 
     the imitations did, even after we redrilled or widened their 
     holes as needed. All left large gaps or uneven surfaces.
       How they protect. Our hydraulic bumper-basher simulated the 
     thumps that might occur, say, in a parking lot--at 5 mph 
     head-on, 5 mph offset, and 3 mph on the right corner. That's 
     our standard test for new cars.
       The OEM bumpers suffered only minor damage. Even so, 
     repairing the scuffs and indentation on the Ford bumper would 
     cost $235, and replacing the Honda's scuffed bumper cover and 
     underlying brackets would cost $576. Those are pricey scuffs, 
     but at least the OEM bumpers protected the cars themselves 
     from damage.
       In our 25 years of bashing hundreds of new-car bumpers, 
     we've seen few perform as miserably as the imitations. Twelve 
     of the 17 sustained so much damage in the first bash that we 
     couldn't test them any further.
       One imitation bumper shattered and allowed our basher to 
     damage the Ford's headlight mounting panel, radiator support, 
     and air-conditioner condenser. Repairs, using OEM parts, were 
     estimated at $1,350. Another imitation bumper allowed our 
     basher to damage the Honda's radiator, air-conditioner 
     condenser, radiator-support tie bar, and center lock support. 
     Repairs, using OEM parts, were estimated at $1,797.


                            Limited choices

       Most insurance adjusters don't clearly disclose that you're 
     getting imitation parts of potentially lesser quality. 
     (``Like kind and quality'' or ``LKQ'' on the paperwork is a 
     cryptic giveaway.) Some repair shops complain that they must 
     follow the insurer's ``recommendation'' or risk losing 
     customers from ``direct repair programs''--the automotive 
     equivalent of managed health care that most auto insurers use 
     to cut costs.
       The Automotive Service Association says that 33 states 
     require repair shops to disclose the use of imitation parts 
     to consumers. Six others--Arkansas, Indiana, Oregon, Rhode 
     Island, West Virginia, and Wyoming--also require the 
     consumer's written consent.
       But disclosure and consent are meaningless if insurers 
     promise higher quality than they deliver. The lawsuit against 
     State Farm argues that the insurer did not restore damaged 
     vehicles to pre-loss condition as promised.
       Don Barrett, an attorney for the plaintiffs, says that cars 
     repaired with ``2/55 fenders''--an appraisers' disparaging 
     term for fenders identifiable as imitations ``from two miles 
     away at 55 mph''--reduce appraised value by at least 10 
     percent.
       John Donley, president of the Independent Automotive Damage 
     Appraisers Association and a CAPA proponent, says that it's 
     poor fit and poor corrosion resistance, not the mere fact 
     that a part is an imitation, that hurts appraised value. 
     Either way, that could be a problem not only at resale time 
     but possibly at the end of a lease.
       Industrial Marketing Research found that insurers call for 
     imitation parts 59 percent of the time. We surveyed 19 of the 
     nation's largest private auto insurers, who wrote 68 percent 
     of the $115 billion in policies in 1997, and asked if they 
     require or recommend imitation body parts for covered 
     repairs. Nine didn't respond (American Family, California 
     State Auto Assn., CNA, GEICO, GMAC, Metropolitan, 
     Progressive, Prudential, and Safeco). Of the ten that did, 
     Allstate, Erie, Farmers, State Farm, and USAA said they 
     recommend but didn't require imitation parts.
       Allstate says that if a customer insists on OEM parts, it 
     will pick up the bill. Erie, State Farm, and Travelers make 
     the customer pay the difference.
       The Hartford said it doesn't recommend imitations for 
     safety-related parts but does allow them for noncritical 
     applications. And Travelers Insurance doesn't recommend 
     imitations for cars less than two years old or with less than 
     20,000 miles.
       The Interinsurance Exchange of the Automobile Club of 
     Southern California, which writes policies only in Arizona, 
     California, New Mexico, and Texas, calls for imitation parts 
     only for nonmental trim items like bumper covers and 
     moldings.


                         Insurers and consumers

       Many of the insurers maintain that imitation parts keep 
     premiums down, but none provided hard data to prove it.
       CAPA and auto insurers have spent the last decade promoting 
     imitation parts as purely pro-consumer. By breaking the 
     automakers' ``strangle-hold monopoly'' over crash parts, says 
     one recent release from the Alliance of American Insurers, 
     auto insurers protect consumers from high parts prices and 
     high insurance premiums.
       ``There is absolutely no question the insurance industry is 
     on the side of the angels on this issue,'' says Gillis.
       But there is a question.
       Buying imitation parts simply diverts money from the 
     pockets of one big industry--automobile manufacturing--to the 
     pockets of another big industry--auto insurance. The insurers 
     won't earn their wings until they demonstrate that a fair 
     share of the money they save ends up in the pockets of 
     consumers.
       And CAPA, whose executive director often accuses automakers 
     and repair shops of having a financial interest in promoting 
     OEM parts, has its own financial interests. Half of its $3.9 
     million budget comes from insurance companies (the other half 
     comes from the sale of CAPA seals to parts manufacturers). 
     And six of the nine CAPA board members are insurance-industry 
     executives.
       The Center for Auto Safety--whose executive director, 
     Clarence Ditlow, is a CAPA board member and a staunch 
     advocate of CAPA parts--also receives funding from the 
     insurance industry, though to a much lesser extent. In 1998, 
     State Farm and Allstate contributed some $50,000 to CAS, 
     accrding to Ditlow. (He says that amounts to only five 
     percent of annual revenues. He also says that CAS' insurance 
     funding has steadily decreased since the mid-1970s.)
       Where's the consumer in all this? For now, stuck in a bind 
     between automakers that charge high prices for factory body 
     parts and auto insurers that push less-expensive parts of 
     questionable quality. Until things change, car owners--
     including used-car buyers who may inherit the inferior crash 
     parts--are being ill served.

     

                          ____________________