Alliance Study Highlights Replacement Parts Rip-Off; The $72,000 Minivan

10/9/2002

From: Kirk Hansen, 630-724-2125, e-mail: khansen@allianceai.org Charles Schmidt, 630-724-2158; e-mail: cschmidt@allianceai.org Roger Morris, 630-724-2131, e-mail: rmorris@allianceai.org, all of the Alliance of American Insurers

DOWNERS GROVE, Ill., Oct. 9 -- A new study by the Alliance of American Insurers clearly demonstrates that auto owners and their insurance companies continue to pay outrageous prices to repair damaged vehicles using so-called "genuine" parts supplied by car manufacturers.

Over the past 21 years, the Alliance has conducted numerous studies on the cost of crash parts using a variety of automobile models to demonstrate the excessive cost of car company parts. The cost of rebuilding a vehicle with car company parts generally triples the car's original cost.

This year's study focused on a 2002 Dodge Grand Caravan Sport, which has a retail price of $24,815. When totaled out and rebuilt entirely from car company parts, the cost soars to $71,631, not including the cost of labor and paint.

"The cost of repairing damaged automobiles accounts for between 40 and 50 percent of the insurance premium for most auto insurance consumers," said Kirk Hansen, Alliance director of claims. "Therefore, the cost of crash parts has a significant, direct impact on the price consumers pay for auto insurance. Expensive parts result in more costly repairs, which in turn result in higher premiums. In addition, many vehicles that should be repaired must be totaled due to the high cost of car company parts."

Recently, the Certified Automotive Parts Association (CAPA), Washington D.C., announced that between 1999 and 2002, it had put 1,907 "genuine" car company parts through an extensive vehicle test fit and discovered that 50 percent of the parts did not meet CAPA standards for fit, finish and appearance.

Despite the questions of quality that this raises, the car companies consistently market their parts as "genuine" and charge an average of 60 percent more than generic parts supplied by independent manufacturers.

To help hold down the cost of vehicle repairs while assuring quality, the Alliance and its member companies support the sale of competitive replacement parts certified by CAPA. To earn the CAPA seal of approval, a part from an independent manufacturer must pass stringent tests by an independent laboratory to assure that it is equal or superior to its car company counterpart. The only difference is price.

Studies show that a majority of consumers are content with certified replacement parts. A 1998 Public Attitude Monitor conducted by the Insurance Research Council found that a majority of survey respondents stated they would have confidence in the quality of a part certified by CAPA.

NOTE: To download graphics, price/parts list and more info, go to http://www.allianceai.org/documents/spotlight/aftermarketpartslin ks.htm, or contact Charles Schmidt at 630.724.2158; cschmidt@allianceai.org.

The Alliance of American Insurers, based in Downers Grove, Illinois, is a national trade association representing 340 property/casualty insurance companies.