Ohio Auto Salvage Bill Pits Industry Against Insurers

Ohio’s salvage industry says proposed state legislation that would open the auto salvage auction market to unlicensed buyers could cost up to 2,500 salvage jobs and eliminate consumer protection.

Opponents of Senate Bill 273 say allowing unlicensed in-state and out-of-state buyers to purchase vehicles from Ohio salvage pools and auctions could cost jobs by creating unfair competition for the salvage businesses that are heavily regulated.

Salvage vehicles are typically ones that have been wrecked or damaged and deemed too expensive to repair. Salvage yards usually buy them to sell the parts.

The Ohio Auto and Truck Recyclers Association opposes the bill, which is says would drive up the price of vehicles, increasing costs for smaller salvage yards by 20 to 30 percent.

Association President Jim McKinney says the damaged cars are dangerous and could be sold to unsuspecting consumers, the Springfield News-Sun reported.

The association’s executive director, Robert Lambert, said cars damaged in Superstorm Sandy could be sold to unsuspecting consumers and end up on Ohio roads if the state’s salvage pools and auctions are opened up to unlicensed buyers.

Supporters of the legislation, which include the insurance industry and auto auctioneers, say it would reduce insurance rates for Ohio consumers by making the market more competitive.

Dean Fadel, vice president of government affairs at the Ohio Insurance Institute, says Ohio’s salvage vehicle market is “the most exclusive” in the country and the insurers who are the main producers of salvage vehicles in the state can only sell them to about 1,000 potential buyers.

“From an insurance standpoint, the cost recovery is very low in Ohio compared to other states and ultimately that cost plays into our insurance premiums for auto insurance,” he said.

State Sen. Keith Faber, a Republican from Celina, introduced the bill earlier this year. A message seeking comment was left Dec. 7 at his office.

Ohio now requires an identification card to purchase one of more than 100,000 cars a year deemed total losses by insurance companies, and licensed dealers in Ohio and other states currently can apply for the cards.

But insurance companies in some states can sell salvage vehicles to anyone via online auctions with less regulation, the newspaper reported.

Opponents protested this week in Columbus outside a House Insurance Committee hearing on the bill. Another hearing is scheduled for next week.

Gene Wyen, vice president of Walt’s Auto salvage yard in Springfield in southwest Ohio, says allowing essentially anyone to buy the cars at auction “is going to drive up the cost of the cars” and hurt his business.

State Sen. Chris Widener, a Republican from Springfield, originally co-sponsored the bill. He voted for it when it passed through the Senate in April, but now opposes it and has removed his name from it.

He says there is “probably a validity to having a licensed group of dealers deal with abandoned and demolished cars.”