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Letter to the Editor

An Industry in Disarray

Quality is not the only issue the non-OEM Parts Industry is struggling with, and all segments of the Collision Repair Industry contribute to some of the problems related to the parts.

It would be easy to look at the latest flare-up in the decades-long battle over non-OEM parts to say the key issue is poorly-made parts. Demon-strations seemingly indicating a non-OEM bumper reinforcement is made of different metal than the OEM has led at least four insurers to back away from the use of such parts, resulted in the development of a number of new testing and certification programs, and culminated this spring in threats of lawsuits against those raising concerns (See CIC article on page 12).

And indeed, it is not difficult to locate indications that parts quality is not what it should be. A video of some recent crash testing of non-OEM bumper parts begins with an energy absorber that visually appeared to match its OEM counterpart well, even down to the marking indicating what type of plastic it was made from. But lab testing showed the non-OEM part was actually made from a different type of plastic. When crash tested at 6.1 mph, the OEM absorber deformed but sprang back, with only a small amount of crushing and cracking; in the same test, the non-OEM version shattered.

But the problems surrounding the use of non-OEM parts involve more than just parts quality. And virtually every segment of the industry – manufacturers, distributors, insurers, shops and information providers – shares some of the responsibility for what some see as a very “dysfunctional market.” Here is a look at some of those issues.

The issue got off on the wrong foot early on.

Many in the non-OEM parts industry contend that insurers began a push for non-OEM parts in the 1980s as they realized how many such parts shops were using even when being paid for OEM. Jack Gillis, executive director of the Certified Automotive Parts Association (CAPA), said repairers only began to voice concerns about non-OEM parts quality when they were suddenly only being paid for non-OEM parts, although he acknowledged that some critics of the parts have been shops that had never used the parts because of quality concerns.

In hindsight, Gillis said, some of the controversy about the parts over the past three decades could have been avoided if insurers had allowed shops to earn similar profit dollars with non-OEM parts as they did with OEM.

“When you got paid $400 and could buy a $50 part, it didn’t matter if you spent an hour trying to put it on,” Gillis said, acknowledging that early on parts quality was not great in many cases. “When you suddenly were only getting $50, then that hour comes out of your pocket. So there was a logical reason for collision repair shops to start resisting the use of these parts. In hindsight, had the insurers said something like, ‘We’ll give you $200 to use the $50 part,’ everyone probably would have been happy. Insurers would have saved money. The body shops still would have been whole. And the issue would have never surfaced.”

Gillis acknowledged, too, that some of CAPA’s trouble in overcoming the view of some repairers that it is little more than a rubber-stamp for insurers may stem from the program’s initial weaknesses. When Gillis was hired in the late 1980s, CAPA’s funding was nearly all from insurers, the majority of its board were insurance company representatives, and its standards were not ensuring parts quality.

Today, 70 percent of CAPA’s funding comes from parts manufacturers that buy CAPA stickers and pay for other services, such as the vehicle test fit program launched by CAPA over a decade ago that has dramatically improved the quality of CAPA-certified parts, Gillis said. Insurers now make up only half the board and cover about 30 percent of the organization’s $10 million annual budget.

The parts manufacturers do not hear demand for quality.

Tour some of the manufacturing plants in Taiwan, or check out some of the certified non-OEM parts, and it is hard not to acknowledge that there are companies capable of producing high-quality non-OEM parts. The problem, many observers have noted, is the manufacturers hear primarily the voices in the industry urging them to focus on cost, not quality. And if they are able to sell the lower-cost, lower–quality parts – in part because of the other issues in the marketplace – what incentive do they have to take on the added costs of producing and certifying a higher-quality part?

Distributors are not always delivering the type of parts shops order – and the shops are not calling them on it.

Some states, and at least until recently at least one insurer, require that only non-OEM parts certified to be equal to OEM be used. But Gillis said too few shops realize that only a yellow CAPA seal on the part indicates it truly is a CAPA-certified part.

“It doesn’t matter if the electronic estimating system says they’re certified,” Gillis said. “It doesn’t matter if the distributor says they’re certified. It doesn’t matter if the package says they’re certified. If it doesn’t have this seal on it, it is not a CAPA certified part.”

Gillis said he is very much aware that shops requesting CAPA-only parts are sometimes getting something else from distributors. CAPA itself orders parts as part of its marketplace monitoring.

“We get non-CAPA parts delivered even to us even though we have standing orders with parts distributors,” Gillis said.

Too few shops, he said, are checking to see they got what they ordered – and calling distributors when they do not.

Complaints about quality aren’t getting to the right ears.

If a shop returns a part because of a fit or quality issue, the odds that those who could best address the problem with the part – CAPA (if the part is certified) and the manufacturer – will never know that part was returned. Gillis said of the more than 38 million CAPA-certified parts that have been sold over the years, CAPA has received complaints about only four one-hundredths of one percent of them.

Taking the ten minutes or so necessary to fill out an online CAPA complaint form (www.capacertified.org) may not feel like it should be a shop’s responsibility. But Gillis said such complaints gives CAPA the chance to get the actual part and find out what caused the issue. That better communicates to the entire parts channel – manufacturers through distributors – that the industry wants quality parts.

The estimating system indicates there is a CAPA certified parts when there might not be.

Gillis said the Big Three estimating system providers have traditionally indicated when there is a CAPA-certified part based on information provided by parts distributors. Only CCC Information Ser-vices, he said, began cross-checking that information with CAPA several years ago, after it was listing CAPA-certified headlights – based on information from distributors, even before the CAPA light program was fully operating.

But even if CAPA certifies a part, that does not actually mean such parts are available in the market. Choose any particular part from the list of parts CAPA certifies, and there is a 40 percent chance that part wasn’t even produced in the last year. Another 14 percent of the parts were produced in quantities of 250 or fewer in the last year. Only two percent were made in quantities of 5,000 or more. Why?

Gillis said in some cases it is because once a part is listed as certified in the estimating systems, the parts manufacturer may go back to making only non-certified versions because the distributors can sell them to shops that may or may not realize they are getting non-certified parts.

Gillis hopes to correct this problem by working with the information providers on a program that would only list a part as certified in the estimating systems if 250 or more of the parts are being produced in a year. The next phase, he said, could be a distributor certification program that would show in the estimating systems only the CAPA-certified parts that distributor could deliver to a shop within 24 hours.

Shops are being confused about various claims about parts testing, quality and certification.

Part of the disconnect between what shops order and what they receive is the result of an ongoing mish-mash of claims about parts quality, testing and certification in the market.

LKQ Corp., the parent company of Keystone Automotive, the largest distributor of non-OEM parts in the United States, has a “Platinum Plus” and “Assured Quality Replacement Parts” (AQRP) programs that it says identifies the top quality parts among those it sells.

With the recent uproar over bumper parts, another testing lab, NSF International, is launching its own certification for such parts, with Reflexxion Automotive and Production Bumper Stamping, Inc., which manufactures Diamond Standard brand non-0EM parts, as the first companies to participate in the program.

For his part, Gillis said CAPA is unique in that its standards are publicly available, its vehicle test fit and ongoing monitoring ensure quality, and its focus is certifying specific parts, not just certifying a factory and thus all parts that come out the factory. As CAPA finalizes its standards for bumper parts, he said, it will do both low- and high-speed crash tests of such parts to ensure the standard is identifying parts that perform similarly to OEM.

He said CAPA has taken some heat for legislative and other efforts to ensure it is seen as the standard-bearer for parts. But he has realized there really should only be one standard for non-OEM parts just as there is one standard, for example, for electrical outlets. If a buyer is trying to choose between three tools or three toasters and each is made to meet different standards, Gillis asked, how can a buyer make an informed decision?   o

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