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Automotive Recyclers Association Urges Collision Repair Stakeholders to Recognize the Genuine Value, Safety and Benefits of All Repair Part Options



CONTACT: Caryn Smith                                          FOR IMMEDIATE RELEASE
(571) 208-0428                                                    Date: January 11, 2012

Automotive Recyclers Association Urges Collision Repair Stakeholders to Recognize the Genuine Value, Safety and Benefits of All Repair Part Options

The Automotive Recyclers Association (ARA) today announced that its Board of Directors has approved a statement calling on all stakeholders involved in the collision repair marketplace to recognize the genuine value, safety and benefits that each repair part option (recycled, new, aftermarket, remanufactured) may provide in a given repair. To help address unfair market disincentives for the sale of some types of parts versus others in the $53.4 billion parts segment of the collision repair industry, ARA encourages adoption of an unbiased compensation structure to remedy the current system that provides the largest financial rewards to collision repair shops only when they utilize the most expensive replacement part option in repairs.

 

“In making this important statement, automotive recyclers are continuing their ongoing campaign to inform and empower the consumer, balance the market and protect the environment," said Michael E. Wilson, ARA CEO, adding “more and more frequently it appears that compensation levels on parts, rather than the quality of the underlying product, are dictating the parts choice outcome.” ARA strongly believes that it should be the collision repair professional and consumers who determine which part is best suited for a particular repair need, and not the potential compensation.

This collision repair market is significant since 45 percent of an average consumer's insurance claim specifically covers the cost of parts. In addition to elevated repair costs, insurance claim payouts are unnecessarily higher because more often than not only the most expensive parts are being used, which in turn then leads to insurance companies having to charge higher insurance coverage premiums. Furthermore, the high cost of repairs using only the most expensive parts results in more total loss determinations because the preaccident value threshold is reached that much sooner. Consider this: consumers vehicles are currently “totaled” in 19 percent of all insurance claims. This totaled figure soars to over 68 percent when vehicles 7 years or older are involved and incentives that promote use of more expensive parts over more reasonably priced parts contribute to this high level of total loss determinations. These circumstances take on added significance in today's market where according to automotive research company, Polk, the average age of a vehicle in 2010 was 11 years old, up from 8.4 years in 1995.
 
ARA believes that professional collision repairers can make efficient and environmentally sustainable repair decisions only if insurers promote a balanced incentive compensation system recognizing the viability of all parts options. By addressing significant parts compensation disparity, the integrity of the sale will be better assured. Also, markets will be driven by true consumer needs instead of higher compensation incentives disbursed to repair shops for using the most expensive parts. Under this structure, shop owners could be reimbursed at more appropriate levels for using more economic genuine recycled parts and others rather than only using the most expensive part. Under such a process, however, ARA acknowledges that professional collision repairs must be properly compensated by insurers for valid supplements.

In making its statement, ARA is on record as supporting a collision repair system under which professional collision repair representatives are better able to pursue all repair options to fix repairable vehicles owned by consumers within the insurance structure. Repair procedures that advance only the highest priced parts option ensure more vehicles owned by consumers will ultimately be declared total losses by insurance companies. Regrettably, these "total loss" vehicles are increasingly being purchased and repaired by individuals with little to no accountability and sold to unsuspecting consumers.

For almost 70 years, ARA has represented an industry dedicated to the efficient removal and reuse of “green” automotive parts, and the proper recycling of inoperable motor vehicles. ARA members provide consumers with quality, environmentally friendly, low-cost alternatives for vehicle replacement parts. Today, ARA represents the interests of over 4,500 auto recycling facilities in the United States and fourteen other countries around the world. For more information on green recycled parts, please visit http://www.greenrecycledparts.com
 

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