December 1999 Editor's Page
Fostering a Competitive Parts Marketplace

Fallout from the State Farm trial continues to affect insurers and non-OE parts suppliers. On November 8, Nationwide joined the list of insurers suspending non-OE crash parts specifications.

Also, a new lawsuit, this time for conspiracy to commit fraud, has been filed against insurance companies that participated in the formation of CAPA and its board of directors.

The State Farm verdict bloodied the insurance industry’s reputation with consumers.

Anecdotal evidence from repairers and insurance claims staff indicates that customers are asking about the parts content in their repairs more frequently than ever before.

The double-whammy in 1999 of a negative Consumer Reports article on CAPA part quality, coupled with the State Farm verdict has raised the red flag for consumers.

Reports are that sales of new, non-OE parts have declined roughly 30 percent in some markets. Some participants are predicting even higher declines that may last over the next 2 years of 40 percent.

As Charlie Baker mentions in the Investment Update, Keystone’s stock is off due to anticipation regarding potential declines in non-OE parts sales. However, Keystone is sufficiently diversified, also selling paint and materials in addition to reconditioned parts, that steep declines in non-OE parts specifications should not hit the bottom line in equal percentages. Mom and pop non-OE distributors will not be so lucky.

One long-lasting impact of the State Farm verdict, and the recent lawsuit against CAPA supporters, is the fact that these events appear to have brought the Taiwanese manufacturers of sheet metal to the realization that they must market their own brand image. Some in the industry have been advising these manufacturers to market their parts and build a brand image of their own, separate from CAPA or simply to rely on insurers to sell their parts for them.

Quality brands can then survive under true competitive situations.

As horrific as an OE-parts monopoly seems, the command economy fostered by the insurance industry requiring specific parts has caused far more problems- for both themselves and repairers.

Finally, I must remind our readers that this is my last editorial this century. I actually started writing a commentary article covering real issues that did not mention the fact that this is My last editorial this century.

Notice I did not state, Last editorial for the Millennium.

There are two reasons for this failing on my part.

First, the Millennium actually ends on January 1, 2001.

Second, you’re probably so tired of hearing about the wonders of the new Millennium that comments on the event within the pages of INSIGHT are the last thing you want to see.

Unfortunately, I would lose my Editor’s Guild card if I did not mention the passing somewhere in print during this month. At least that is how it seems to me reading various December issues of magazines.