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Insurers Group Sues Florida Agency Over Aftermarket Parts

12 July 2000

Requests Injunction That Would Restore Open Competition
    TALLAHASSEE, Fla. - The Alliance of American Insurers filed a lawsuit today 
in Leon County Circuit Court challenging a notice that Agriculture Commissioner 
Bob Crawford sent to motor vehicle repair shops that unfairly casts a cloud over the 
quality and suitability of generic aftermarket crash parts.

    The suit contends that Crawford's notice is not based on statutory
authority, misstates Florida law, misleads motor vehicle repair shop owners
into thinking it is illegal to use generic aftermarket crash parts, and
inaccurately implies that Florida has a quantitative standard for determining
if generic aftermarket crash parts are "equal in like kind and quality to the
original parts in terms of fit, quality and performance."

    "There is no such standard in Florida law," said William Stander of
Tallahassee, government affairs representative for the Alliance in Florida.
"Meanwhile, the notice has caused a chilling decline in the sales of generic
aftermarket parts.  Under the threat that they may be shut down by the state,
repair shops are being forced to purchase car company aftermarket parts at
steeply inflated prices.  The department's notice effectively sanctions the
monopolization of car company aftermarket parts, a result sure to harm
consumers."

    The Department of Agriculture and Consumer Services sent the notice
concerning generic aftermarket parts to motor vehicle repair shops April 14.
The notice seems to imply that generic aftermarket crash parts -- the "skin"
of a vehicle -- are inferior to aftermarket parts produced by car companies.
The notice also required shops to maintain documentation proving the "like
kind and quality" of a generic part.

    This has created confusion throughout the state where consumers have had
access to generic parts certified by the Certified Automotive Parts
Association.  CAPA is an independent, non-profit organization dedicated to
ensuring that generic aftermarket parts are safe and of high quality.

    "A part that earns a seal of approval from CAPA is, in every way,
comparable to an car company part," said Kirk Hansen, director of claims for
the Alliance.  "During 1999, CAPA received complaints on only 0.08 percent of
the more than 2.4 million parts it certified.  This gives CAPA a record of
quality that is unrivaled in any industry."

    The vast majority of CAPA-certified parts carry lifetime warranties -- an
offer not available for parts manufactured by car companies.  In fact, car
company parts are neither certified by an independent certifying agency, nor
do consumers have any assurances of their quality.

    "Though CAPA provides a complete disclosure of the number of parts it
rejects or decertifies," Hansen noted, "we have only the word of the car
companies that their suppliers produce acceptable parts."

    Meanwhile, consumers have long embraced generic aftermarket mechanical
parts such as oil filters, batteries, spark plugs and brake pads, because they
recognize the value of competition among manufacturers.

    In its annual cost study on automobile replacement parts, the Alliance has
repeatedly demonstrated the excessive cost of car company aftermarket parts.
Generally, the cost of rebuilding a car with new car company parts is triple
the original price of the car itself.

    However, in the Alliance's most recent study (1999), the subject vehicle,
a new Toyota Camry LE, cost $101,335.55 to rebuild -- more than four times the
manufacturer's suggested retail price of $23,263.  Another Alliance study
shows that car companies charge 60 percent more for their parts than certified
aftermarket parts.

    Injunction Sought
    In its lawsuit, the Alliance is seeking an injunction prohibiting the
Department of Agriculture and Consumer Services from continuing to disseminate
the notice and requiring it to issue a retraction stating that the use of
generic aftermarket crash parts is legal in Florida.  The lawsuit also asks
the court to find that the department is attempting to unlawfully delegate to
motor vehicle repair shops the right and responsibility of determining whether
such parts meet this phantom standard.

    "The department is forcing consumers, many of whom have just been through
the trauma of an auto accident, to pay up to two or three times more than they
should for aftermarket parts," Stander said.  "This lawsuit is aimed at
ensuring that consumers have access to quality aftermarket parts at the most
economical price."

    The Alliance of American Insurers, based in Downers Grove, Illinois, is a
national trade association representing 326 property/casualty insurance
companies.