The Nebraska Transportation and Telecommunications Committee heard from proponents and opposition Tuesday on proposed LB 782, which seeks to add structurally totaled vehicles to the state’s list of vehicles that require a salvage title and would require repair facilities to follow OEM procedures for all repairs.

LB 782 defines a structurally totaled vehicle as those that have a kink or crease in a frame rail, a unibody, or a structural component, including an engine cradle or a rear differential. Vehicles with repair costs that don’t exceed 75% of the actual cash value aren’t included.

The bill would preemptively exclude automaker specifications for the use of OEM parts.

Sen. Barry DeKay

“The reason I introduced LB 782 is because there are problems with how cars are repaired today,” said Sen. Barry DeKay (R-District 40), the bill’s sponsor. “There are many instances when some car repair shops do not repair cars correctly. This has led to many cars in the secondary market that are unfit to be on the road. I believe consumers need additional protection.”

Sarah Stillahn, of Bumper to Bumper Body and Paint, said Western Nebraska repairers have a growing concern about previously salvage titled vehicles being improperly repaired.

“Most of these vehicles have been cosmetically repaired to be marketable at a low budget, making these vehicles very appealing in the current market and economic conditions we are facing,” she said. “Consumers are misled that these salvaged vehicles are repaired properly and are safe to drive but more often, this is not the case. It will shock you how easy it is to cover up major structural damage and disregard or leave off safety features that are designed to save lives and prevent accidents. There are far too many people or businesses that take shortcuts or try to cover up major issues to save a dollar or make quick money and take advantage of unassuming consumers.”

Stillahn shared a recent example of a customer who came into her shop to have a cracked bumper repaired and noted some other issues they were concerned about, including a flickering headlight, a non-functioning taillight and radio, and tires going flat. When Stillahn inspected further, she found severe prior damage and improper repairs including electrical tape on wiring, cross-threaded bolts holding the engine cradle, and tabs broken off of a new headlight to make it fit into the structurally damaged vehicle.

“I can’t help but notice that every other industry has rules and regulations to prevent catastrophic accidents,” she said. “We ask you that you would consider doing similar to the vehicles on the road. We need legislation to guarantee repair facilities and insurance companies follow factory repair procedures to satisfy safety standards and beyond this, we need to stop structural total loss vehicles from being on the road and brand these titles for parts only.”

Ryan Clark, vice chair for the Nebraska Auto Body Association and eastern regional manager for Eustis Body Shop, added that he recently had a customer come in for a routine front bumper replacement but his shop found severe damage to the frame rail and other parts of the vehicle.

“The customer would have been risking his and his passengers’ lives by driving around in a structurally damaged vehicle unknowingly,” he said.

The owner said they bought the vehicle with a clean title from an internet car lot out of Omaha and came in for a $2,000 repair only to find out it needed $10,000 in additional repairs.

He and other proponents noted that newer model vehicles have many advanced driver assistance system (ADAS) features that require certain OEM repair procedures, many times replacement of parts, to ensure the features work correctly post-repair.

“If the vehicle is in an accident, don’t we want the vehicle to react in the same manner? If it were to happen again, shouldn’t repairs bring the vehicle back to pre-accident condition? This requires different repair methods than we had even five years ago,” Clark said. “We now have to calibrate sensors post-collision, inspect many more safety components and follow specific parameters of how the vehicle metals can be repaired. Every manufacturer has in-depth testing and engineering on how vehicles should be built, repaired, and serviced. …Billpayers often want to pay what the estimating guidelines pay, not what the manufacturer proves is the proper repair. This is why there should be a requirement to follow each manufacturer’s guidelines.”

Doug Keller, Eustis Body Shop president, pointed out that the structural integrity of repairs “is critical for the safety of all of us that are on the road.”

“Federal rollover standards include windshield and back glass as part of the rollover strength of a vehicle, it must be installed properly with factory recommendations,” he said. “Vehicle windshields are just a small part of our repairs we do in our shops and you can see the importance of following procedures. Rebuilt salvage vehicles are a problem. I have personally witnessed many vehicles coming to our shop for minor repairs and discovering that there are major structural issues. …There must be strong legislation directing insurance companies to brand the car’s title for parts only.”

There was confusion among committee members about the purpose of the bill and questions about how aftermarket, recycled, and salvage parts would be affected if the bill is passed. Proponents of the bill maintained that parts won’t be affected and that the goal of the bill is to mandate adherence to the documented repair instructions from the OEMs.

The amended bill specifically addresses parts by stating, “Any person performing consumer care shall follow the OEM repair procedures
for all repairs to motor vehicles except for use of original equipment manufacturer parts.”

One committee member asked if the bill would prevent rebuilders from taking two halves of separate vehicles and putting them together to form a new, seemingly fixed vehicle. Repairer proponents of the bill believe it would.

Opponents of the bill contended that parts will be affected because many OEM repair procedures require OEM parts and said that will increase the cost of repairs.

Bill proponent James Rodis, process procedure training manager for Woodhouse Auto Family and OEM calibration and past vice chair of Nebraska Auto Body Association said all OEMs have position statements that say repairers have to use factory parts but that’s not what he and other proponents want.

“We’re saying we just want to be able to repair the way that they [OEMs] state,” he said. “In the last 15 to 20 years, vehicle design [has changed] immensely and continues to change yearly. We used to be able to do almost anything to fix the car but serious design changes mean if we don’t use exactly the right glue, the right number of welds in the exact spots, we could lead to catastrophic failures in the next accident.

“We currently have material compositions that even a nick means it must be replaced. …We simply have one side looking at numbers and the other side trying to fix the car for consumers and liability reasons. We’re repeatedly told, ‘This repair is not conducive to the market.’ Or, ‘No one else is asking for this.’ …if the shop writes a repair bill to fix the car correctly per the manufacturer, it needs to be granted.”

Nick Steingart, Alliance for Automotive Innovation (AAI) director of state affairs, noted that most OEM repair procedures are readily available to repairers online through OEMonestop.com.

“Under the current system, collision shops are forced to decide between making a proper repair and receiving proper payment for their work from the insurance companies, which is simply not right,” he said. “Most consumers, and rightfully so, would expect OEM repair procedures are already being followed on their vehicles in absence of any law that would require as such. To steer a collision repair to follow any repair procedure other than the one produced by vehicle manufacturers is a disservice not only to the owner of that vehicle but to passengers who unknowingly make it in that vehicle and fellow motorists. In fact, there are not any other procedures to follow. Either you’re following the practices of the manufacturer or you’re not following any approved repair plan at all.”

In response to aftermarket groups promoting a federal ‘right to repair’ act, Society of Collision Repair Specialists (SCRS) Executive Director Aaron Schulenburg previously told RDN, “Consumers should be able to choose quality repairs, performed in accordance with the specific procedures detailed by the vehicle engineers, with the confidence that all of the specified repairs were performed. They should have the right to be able to do so in an independent repair facility that has invested in the training, equipment and skillset development to meet the rigorous demands of sophisticated, modern vehicles.

“…What consumers deserve is for post-collision vehicle repairs to ensure that their vehicle is repaired to such a standard that should it be in a subsequent accident, its safety systems will operate the same as the day it left the factory. This expectation is achievable today but is routinely denied and disregarded in claims practices and objected to in state legislative hearings by many in the insurance and aftermarket community.”

Schulenburg told RDN on Wednesday, “In the collision repair market, well-trained, well-equipped repair facilities are not struggling to gain access to collision repair procedures, as many of these same aftermarket groups opposing this legislation are championing at the federal level.”

During the hearing, Committee Member Sen. Bruce Bostelman noted that in order for vehicles to be titled and registered in Nebraska they are supposed to meet safety standards and wondered if the issues brought up by the bill are more of a legal issue than a repair issue.

“It’s more of a titling issue in the sense that these vehicles that have been [titled], there needs to be some action taken against the companies or those who have titled those vehicles, period,” he said. “There is a remedy to this — those who do not repair them according to the safety standards can be held liable.”

The John Eagle case, out of Texas, was brought up as an example of an insurer pressuring a shop to cut corners and not follow proper repair procedures to save money, which led to the body shop being held responsible for the majority of damages to a couple injured during a collision in a vehicle repaired by the shop.

In opposition to the bill, Robert Bell, executive director and registered lobbyist for the Nebraska Insurance Federation, said there are occasionally times when structural components can be repaired for less than 75% of the value of the vehicle.

“LB 782 is an attempt by certain auto body shops to require the use of OEM parts and motor vehicle repair and I want to provide a little background,” he said. “The introduction of aftermarket parts into the market broke the monopolies of the OEM parts manufacturer. Aftermarket parts save Nebraska policyholders money. Premiums are lower when insurers and their policyholders are able to have a body shop use aftermarket parts.

“Not all insurers require the use of aftermarket parts. Many policies have provisions for OEM parts for newer vehicles and some riders are available for OEM parts on some policies. …The question you might ask yourself is are aftermarket parts as good as OEM parts in Nebraska? The answer is yes.”

He noted that the state’s Department of Insurance requires aftermarket parts to be at least equal and like kind and quality to the original part.

Korby Gilbertson, a registered lobbyist for the American Property Casualty Insurance Association, said “insurance companies don’t want people out driving unsafe cars.”

“We don’t gain anything by having unsafe cars on the road. …what are we really trying to get at with this bill? And if we’re really trying to get at figuring out how to do salvage titles on vehicles, then let’s talk about doing that.”

Automotive Recycling Industry of Nebraska (ARIN) is also opposed to the bill, specifically section 6, which ARIN representative Scott Merritt said has ambiguous language and even with the amendment, doesn’t clarify the intent and define how recycled parts “fit into this whole scope of things.”

Catalina Jelkh Pareja, with LKQ, said “the bill creates inaccurate definitions and problematic provisions for the use of original equipment manufacturer procedures and parts.”

“I think we have to make a clear distinction between the two very different issues that we are discussing here,” she said. “Today, we have section one addressing the salvage, total loss vehicle issues and then we have the section of concern for most of the opponents found in sections six, seven, and eight dealing with OEM procedures and parts.

“The bill is model legislation supported by the car companies and body shop associations across the nation. In recent years, OEM repair procedure legislation attempting to restrict the use of alternative parts has been introduced in almost 20 states with no success. …LKQ is in strong opposition to the underlying premise to mandate repair procedures originated by the car companies, which by default require the exclusive use of their branded products. Such [a] proposal would outright prohibit the use of alternative parts, including aftermarket, recycled, remanufactured, and specialty parts, as well as the tools and equipment that are needed to conduct diagnostic and repair services.”

The Automotive Body Parts Association (ABPA), Automotive Recyclers Association (ARA), Certified Automotive Parts Association (CAPA), and Auto Care Association submitted opposition letters to the committee on LB 782.

ABPA stated in its letter that the bill would “adversely affect Nebraska drivers as it would establish a restriction against the use of alternative parts including aftermarket, recycled, remanufactured, and refurbished parts when OEM repair procedures are mandated.”

ARA said the bill is “contrary to the public interest as it seeks to modify existing law pertaining to salvage vehicle designations and creates an obligation on entities performing maintenance and repair on vehicles to follow original equipment manufacturer (OEM) procedures.”

“ARA opposes LB 782 for the following reasons: (1) mandating that vehicle repairers follow OEM procedures will grant OEMs a monopoly over replacement vehicle parts; (2) vehicle owners will be forced to pay more to repair their vehicles because of the elimination of a fair and competitive replacement parts market; (3) more vehicles involved in collisions will be declared a total loss due to artificially inflated repair costs; (4) a lack of availability of replacement parts will place an artificial expiration date on vehicles; and (5) may unreasonably cause more total loss vehicles on the basis of a new definition for structurally totaled vehicles.”

CAPA states in its letter that, “High inflation and other economic stressors continue to create huge financial challenges for the people who can least afford to get their vehicles repaired. With so many people struggling to weather multiple economic impacts, it is critical that
consumers continue to have their choice of replacement parts for safe and cost-effective repairs.”

CAPA also said its “comprehensive testing program is a valuable public service that provides consumers, auto body shops, parts distributors, and insurance adjusters with the reliable, objective means they need to identify quality replacement parts. Parts that will fit, perform, last, and be equivalent to the originals.”

The Auto Care Association wrote that, “This lack of choice will reduce competition and cause consumers to pay more for vehicle repairs.”

“Not only would this legislation create higher priced repair costs for consumers but would threaten an industry that generates over $300B in annual sales and employs 4.6 million people across the country while contributing 2% to GDP. The aftermarket industry also contributes significantly to the Nebraska jobs market as well as business and commerce.”

The committee took no action on the bill.

Images

Featured image:  Nebraska State Capitol (Credit: DenisTangneyJr/iStock)

DeKay headshot credit: Craig Chandler/University Communication