WASHINGTON (August 1, 2012) Consumers benefit from a competitive market for aftermarket auto parts and would be forced to pay more for repairs if auto companies are able to obtain excessive patents for cosmetic parts, according to the National Association of Mutual Insurance Companies.
“The impact of eliminating competition in the collision repair parts market would fall directly on consumers,” said Neal Menefee, president and CEO of the Rockingham Group in Harrisonburg, Virginia a NAMIC member company. “If competition is eliminated, the insurance industry estimates that $2.4 billion would be added to insured automobile repair costs every year. Ultimately, the higher costs of those repairs would be passed on to consumers in the form of higher insurance premiums.”
Auto companies currently control about two-thirds of the market for parts, and are seeking to increase that share by filing design patents that would bar competitors from offering a similar part for 14 years. Menefee testified in support of the Promoting Automotive Repair, Trade, and Sales, or PARTS Act. The legislation, also known as H.R. 3889, would establish a 30-month patent period in which aftermarket parts could not be sold, providing a measure of protection for the original part manufacturer without eliminating competition.
“American consumers should not be forced to pay a monopoly price on a part such as a fender or a quarter panel whenever it has been damaged in an unexpected accident and needs repair,” Menefee said. “Yet Americans will find themselves unknowingly in just this situation as car companies enforce their design patents on collision repair parts against alternative suppliers – unless Congress enacts the PARTS Act.”
Aftermarket parts generally cost between 26 and 50 percent less than those made by the original manufacturer, and the existence of competition in the marketplace saves consumers between $1.5 and $2.4 billion each year. In his testimony, Menefee also noted that the parts involved are cosmetic, and have no bearing on the safety or crash worthiness of a vehicle.
“We are not here today to advocate for the use of one type of part over another, but we are here in support of a measure that we believe would clearly benefit consumers regardless of their choice,” he said. “At its core, this is a consumer issue; the costs of auto body repair are borne by all consumers who drive, either reflected in their insurance costs, or directly when they pay for repairs themselves.”
Director, Federal Public Affairs
Posted: Wednesday, August 01, 2012 1:33:29 PM. Modified: Wednesday, August 01, 2012 1:33:29 PM.
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