that aftermarket parts are only cheaper in price, not in quality or safety, and using these parts benefits consumers by keeping insurance costs down. In contrast, HB574 creates a three-year monopoly which is anticompetitive, allows OEMs to charge whatever they want for these parts, and will clearly lead to increasing rates—“this bill is not without financial implications,” Barriano insisted. Additionally, consumers receive a warranty on the life of LKQ aftermarket parts, plus the shop that repairs the vehicle receives indemnification from LKQ who will defend the collision repair facility if a lawsuit is filed. Two General Managers of LKQKeystone facilities in MD, Jim Lohan and Marcel Hoover, spoke about how the businesses they run contribute to the state’s economy, and they claimed that many customers call them seeking an alternative to highpriced OEM parts. Jack Gillis, Executive Director of CAPA and on behalf of the Center for Auto Safety, opposes the bill because it limits consumer choice, protects an unfair monopoly, restricts competition, and will increase crash repair costs for MD consumers.
In addition to arguing that competition lowers prices, Gillis points out that using OEM parts doesn’t necessarily mean restoring the vehicle to its pre-loss condition, and because OEM parts are frequently recalled, he doesn’t think they should be the only option. Arguing that “there’s nothing wrong with generic products,” he asked why aftermarket parts aren’t banned altogether if they’re substandard and suggests a middle-ground option of requiring aftermarket parts to be functionally equivalent to OEM parts. The final portion of testimony began with Laura Marta Harding of State Farm who focused on the parts procurement portion of HB574, noting that PartsTrader has only been in effect in MD for two weeks. She argued that the collision repair shops control the inputs in PartsTrader, specifying the type of parts they use, and indicated that shops who object to interference in this business are welcome to opt out of State Farm’s Select Service Program. Testifying on behalf of the opposition was Laura Gay, owner of Fort Washington Auto Body and Sullivan’s Auto Body. Gay discussed the de-
WMABA Responds to Unfavorable Vote
The Washington Metropolitan Auto Body Association (WMABA) is disappointed with the outcome of the unfavorable decision by the Maryland House Economic Matters Committee on March 13 for what they believe to be a very important piece of consumer protection legislation. Despite the vote, WMABA legislative liaisons remain encouraged by MD legislators’ reaction to understanding collision consumer issues, as the process and pursuant discussion amply highlighted the workings of the collision industry and how certain claims settlement practices can disadvantage the consumer. Hearing video shows that the association’s representatives did well to outline the issues, advocate for both the WMABA membership and the consumers they serve, as well as to debunk the myths and contradictions put forth by the opposition. WMABA encourages all repairers to view the video in addition to the voting record and furSee WMABA Responds, Page 58
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crease in the collision repair business due to advancing technology, admitting she cannot afford to refuse PartsTrader because she needs the business generated by being on State Farm’s DRP. Lawrence Christiansen of Nationwide estimated that HB574 would increase Nationwide’s premiums by $12 million over the next six months, and as this insurer only writes around 10% of MD’s insurance, the bill would seriously impact MD’s economy. Oyango Snell, Counsel for PCI, concluded the testimony by pointing out that the bill’s advocates haven’t provided proof of consumer complaints, thus aftermarket parts usage poses no threat to the consumer in his opinion. Aftermarket parts only represent 10% of the parts market, so he feels the goal of HB574 seems to be creating even more of a monopoly. He finishes his testimony with the double-edged reminder that “insurance companies don’t sell parts.” If you’re interested in viewing the hearing, you can access it from the link on the www.autobodynews.com website. Search for the online story with the same title as this article.
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