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Letter to the Editor

Manageable Risk - or Explosive Mistake?

Several entities vie to certify non-deployed airbaks from salvage vehicles for use in collision repair

If you think it is fun trying to convince customers that a used door is not a bad option for the repair of their vehicle, you're going to love what you may soon be expected to "sell" them: an airbag module from a salvaged vehicle.

While no automaker, U.S. insurer or collision repair association is currently advocating the use of non-deployed airbags removed from "donor vehicles," several organizations are vying to say their "seal of approval" on such modules makes them a safe bet for use in collision repair.

"We have the program laid out," Keith Manich, a vice president of Entela, Inc., the Michigan-based company that tests non-OEM parts for CAPA, said about his organization's salvage airbag certification plans. "I can't give you all the details yet, obviously. But I will share with you that there is multiple testing that would take place to validate that the bag itself is functional. We've engaged some folks who were involved in airbag development and design for many years as consultants in helping us build the process."

Manich spoke with INSIGHT in mid-April, just one day after Entela presented its certification plans to Department of Motor Vehicles officials in New York State, which recently banned the sale or use of "non-certified" salvage airbags. Entela - and several other companies offering certification programs - hope to have their plans endorsed by the state, an important step, they say, in rolling out salvage airbag certification nationwide.

Not a new idea

The idea of certifying non-deployed airbags from salvage vehicles had been kicking around for several years by the time Peter Byrne spoke at the Collision Industry Conference (CIC) in October of 2000. Byrne is the president of Airbag Testing Technology. In 2000, he said that his new company would be certifying salvage airbag modules in some Canadian provinces by early 2001.

Byrne said the testing process includes checking for proper electrical integrity and resistance; checking the mechanical fasteners and cosmetic appearance of the module; ensuring that no foreign matter (such as glass) has entered the cushion cavity; and checking for surface levels of sodium or calcium that would indicate the module had been immersed in water and is thus unusable.

"Water is the Achilles' heel of an airbag," Byrne said. "An airbag is not designed to withstand immersion in water. We have developed this test so that even in the remote chance that an airbag has been immersed in water - such as in flash flood - and even if the surface of the bag is clean cosmetically to make it appear that the bag has not been submerged in water, we can test to determine scientifically whether or not this has occurred."

The company conducted tests on 68 Ford Taurus airbag modules (58 salvage modules, and 10 new modules used for comparison) in 2000 to verify its testing procedures. All of the modules were successfully deployed following the certification testing.

Byrne correctly predicted that the initial market for certified modules would be in Canadian provinces with government-run insurance monopolies. This is due in no small part to the fact that these insurers own and control the airbag from the time the vehicle is declared a total loss to the time the salvaged airbag is sold and delivered to a repair shop. There's no transfer of totaled vehicles to a salvage pool and then a salvage yard to be parted out - added steps in the U.S. that could result in misidentification or mishandling of the airbag module.

"We recognize that it will take a long time for the insurance-paid section of the marketplace [in the U.S.] to come around to this," Byrne said at CIC in 2000, acknowledging the liability concerns for shops and insurers. "We recognize that we would have to indemnify body shops that are currently handling insurance-paid work."

But, he said, certified modules - which come with test results and a written warranty - could reduce liability for those currently using non-tested salvage airbag modules.

The pros and cons

Entela's foray into airbag certification was prompted by a client - who Manich declined to identify - in the auto recycling industry, in response to New York's ban on the sale of salvaged airbags that are not certified. And it's easy to understand why: Herb Lieberman of Lakenor LKQ Auto Salvage in Santa Fe Springs, Calif., said one New York auto re-cycler that is part of LKQ Corporation sold $1.2 million worth of non-deployed salvaged airbags in 2002 before the ban went into effect.

Lieberman points to a number of benefits the use of certified salvaged airbag modules offers: lower costs for insurers; competition for new OEM modules which should reduce prices and the likelihood that non-OEM alternatives would gain a place in the market; fewer totaled vehicles, so more work for repairers.

But repairers often counter with a long list of concerns, above and beyond the lower parts margin salvaged airbags will offer them. How the module is protected from the elements while in the salvaged vehicle, along with how it is removed, stored and shipped can impact its performance. The liability concerns for a shop installing a salvaged airbag are obvious. Higher salvage value for totaled vehicles with non-deployed bags could actually increase the number of totals.

And getting the right module for the vehicle being repaired is critical. Many modules may look alike and fit interchangeably - but perform very differently.

Jeanne Silver, an Illinois shop owner and co-chairman of CIC's Parts and Airbags Committee points to problems found each time the committee has had salvage parts ordered from several recyclers. Last December, for example, identical parts were ordered from three salvage parts providers and brought to CIC in Dallas, Texas; none of the three parts exactly matched the year, make, model, condition or completeness as ordered or specified on the invoice.

"We've seen through our studies that the identification of salvaged parts has not necessarily matched what the VIN is on the bill," Silver said. "So my big concern is that we use the proper airbag in the vehicle, and that would take very strict identification procedures."

Entela's Manich insists his organization's certification program will address such issues, covering all steps of the process, including how the module is removed, stored, identified, tested and shipped.

"It's kind of like a chain of custody that you would have with evidence," Manich said. "Very specific and very stringent processes would have to be put in place that would be audited to ensure that the airbag was preserved. [The program] not only goes into what has to be done at a salvage yard or recycler, let's say, but also what the responsibilities would be as the vehicle goes into the total loss process: covering it, securing it, putting a plastic bag with tie-wraps over the steering column and over the dashboard so there's no water intrusion, etc. There's a lot of steps that would be included in this. We're looking at this as an end-to-end system."

Entela is developing a piece of equipment that it will own but lease to the certifying entity - whether that's a specific recycling facility or a centralized certification location for multiple recyclers. The equipment will both test the modules and allow entry of specific data, such as the VIN of the donor vehicle. (This information will be compared to theft data to ensure the bag has not been stolen.)

A certification seal on modules that successfully pass the testing will include such information as the donor vehicle VIN; at the time that module is sold, the VIN of the vehicle in which it will be installed will need to be logged. Unannounced audits will also be part of the program, he said.

Manich admits that a certification program in the U.S. is more challenging than one for single-payer Canadian markets where the insurer maintains "custody and control" of the module through more of the process.

"But if I'm a recycler, I'm just going to demand of the people that I buy cars from at auction that this is the way they handle these things so I can use them as resale items," Manich said. "They will probably have to get together with insurers who will say, 'One of the requirements that we're going to have to buy a piece of salvage is that there's protection of these parts… that these are the steps you will have to make sure someone takes in order to get the maximum value from that salvage… .'"

The liability question

Will airbag certification programs adequately address shop owners' liability concerns? "This is a way to protect them from the liability of using something that someone could question to save a vehicle," Manich said. "Now that [the module is] certified, there'd be less question."

Lieberman says reputable recyclers have $500,000 or more in product liability insurance; he estimates the industry average is $1 million in coverage.

"That does not exclude airbags," Lieberman said. "In fact, the major insurer that insures my industry, the recyclers, also insurers the automotive repair industry, and I've had that discussion with them. They say they have no problem with it."

Rod Enlow of USAA said that while it will be a brave insurer who is the first in the U.S. to begin calling for use of salvaged airbags, it is becoming a question of whether it has become a manageable risk.

"Remember how we felt 20 years ago about unibody sectioning?" Enlow said. "No one would touch it with a 10-foot pole, and now it's a standard practice, a necessary part of our process to restore cars back to preloss condition."

These answers may not allay all shop owners' concerns, but one thing seems clear: It may not be long before shops face the task of selling a customer on the idea of a non-deployed airbag.

"If we get a thumbs-up from our initial client we're developing this for, our timeframe is 60 to 75 days from the time that we get the initial nod," Entela's Manich said last month. "I will tell you, we're already building the equipment."

INSIGHT will be keeping careful track of any new developments on the airbag front throughout the rest of 2003.   o

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