Alliance Study Proves Car Company Monopoly on Crash Parts is Costly to Consumers

October 31, 2001

Rebuilding an automobile from the ground up using car company crash parts costs more than four times the car’s original retail price, according to a study commissioned by the Alliance of American Insurers.

Even without the cost of paint and labor, a 2001 Chevrolet Cavalier LS four-door sedan totaled out and rebuilt entirely from car company parts cost $63,240.14 compared with the car’s original retail price of $15,395.

Over the past 20 years, the Alliance has conducted a number of studies on the cost of crash parts using a variety of automobile models to demonstrate the excessive cost of car company parts. The cost of rebuilding a vehicle with car company parts generally triples the car’s original cost, although for the last two out of three years the car rebuilt with car company parts cost four times retail.

According to Kirk Hansen, Alliance director of claims, the cost of repairing damaged automobiles accounts for between 40 and 50 percent of the insurance premium for most auto insurance consumers. He added the cost of crash parts has a major, direct impact on the price consumers pay for auto insurance.

Expensive parts result in more costly repairs, which in turn result in greater premiums. In addition, many vehicles that should be repaired must be totaled as a result of the high cost of car company parts.

To help hold down the cost of vehicle repairs while assuring quality, the Alliance and its member companies support the sale of competitive replacement parts approved by the Certified Automotive Parts Association (CAPA), which tests auto parts produced by independent manufacturers. To earn the CAPA seal of approval, a part must pass stringent tests by an independent laboratory to assure that it is equal or superior to its car company counterpart. The only difference is price.

According to Hansen, while Ford and General Motors recalled 2.4 million hoods over the last decade, the Alliance knows of no accident or injury that has ever been proven to be caused by the failure of a competitive replacement part.

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