JANUARY 2011
                                        

ARA responds to manufacturer attacks on recycled parts

At their annual meeting of members in Austin, Texas, the Automotive Recyclers Association (ARA) announced that the organization has issued a formal complaint letter with the Federal Trade Commission (FTC) against two car manufacturers, Hyundai Motor America and American Honda. Both companies have released statements that warn against the use of recycled auto parts, and indicate that their use will void vehicle warranties issued by the companies. In the letter ARA said the statements made recently by these two companies and their threatened warranty refusals could be violations of the Magnuson-Moss Act.

Use of these recycled parts, a 22 billion dollar industry, has been widely accepted for decades and there is a very long track record of their successful use. Recycled parts are original equipment manufacturer (OEM) parts. They are fully functional and are in many cases identical to the original parts Hyundai Motor America and American Honda are requiring. Recycled parts were new OEM parts at some point, yet both Hyundai Motor America and American Honda are calling for the use of their own new parts in repairs.

“Neither manufacturer has provided any evidence that parts unaffected by an accident become inadequate once reused, which begs the question why their use is not supported by either company,” ARA’s chief executive officer Michael E. Wilson stated in his appeal to the FTC. “Following the logic held by these companies, as soon as a new Hyundai, Honda or Acura drives off the lot, its parts are unsuitable for use as replacement parts in another vehicle, implying that the parts are unfit for use as soon as the car drives off the lot.”

In addition, recycled parts have several additional benefits compared to new parts:

  • Recycled parts allow consumers to save on costs while using parts identical to new OEM parts.
  • Recycled parts are much better for the environment, since no additional resources or energy were used to create an unnecessary new replacement part.
  • Auto recyclers provide warranties on any recycled part used in a repair, indicating that recycled parts are not used in an attempt to cut corners with customers.

“We believe the statements made by Hyundai Motor America and America Honda are part of a concerted effort among automobile manufacturers to limit competition in the automotive parts market to try to limit their competition,” said Wilson.

According to the most recent Mitchell Repair Collision Data, new OEM parts accounted for 67.9 percent of all parts used in repairs, which represented a decline from previous quarters. In the second quarter of 2008, new OEM parts accounted for 74.4 percent of all parts used in repairs. Much of this decline can be explained by consumers and the collision repair industry becoming better educated about quality part alternatives, such as recycled OEM parts. As automobile manufacturers watch their large market shares shrink from legitimate competition, they become concerned about loss of profit. “We believe that many, if not most manufacturers are attempting to maintain their market power through inappropriate restrictive activities including issuing statements that their warranties will not cover the use of recycled parts,” said Wilson.