States Continue Warranty Expansion EffortsPosted 1/11/2007
By Robert L. Redding, Jr.
Several states are in the throes of expanding current vehicle warranty requirements in their jurisdictions. The California Air Resources Board's (CARB) successful efforts in 1998 to extend vehicle warranties in the Low Emission Vehicle II program from three years/50,000 miles to 15 years/150,000 miles continue to shadow the independent repair industry. Other states followed with similar clean car initiatives: Oregon, Washington, Maine, Vermont, Massachusetts, Rhode Island, Connecticut, New York and New Jersey. There are variances in these state regulations such as Washington state's plan to not include the warranty extension. Pennsylvania's clean car program is expected to finalize its regulation before the holidays. Efforts to block the proposed regulation were dropped at the end of the legislative session.
The Automotive Service Association's (ASA) most recent warranty concern involves attempts to expand California's warranty provisions even more. CARB held a hearing to consider amendments to California's Emission Warranty Information Reporting and Recall Regulations and Emission Test Procedures. Prior to the hearing, ASA members in California had contacted CARB and expressed their opposition to the proposed regulation. Denny Kahler, ASA past chairman, testified for ASA at the Bakersfield, Calif., hearing recently.
ASA believes the CARB proposal expands the current warranty provisions under California law. It reported to the CARB that independent repair facilities maintain approximately 75 percent of all out-of-warranty vehicles. As warranties are extended or expanded, these repairs are removed from independent repair facilities. ASA members are concerned that this regulatory proposal will increase the number of repairs removed from California independent shops.
The California Air Resources Board staff report identified three specific aspects that needed to be improved in the existing Warranty Information Reporting and Recall Regulations and Emission Test Procedures:
The "Corrective Actions" in the CARB staff report should cause independent repairers much alarm. The staff report concludes: "Depending on the type of defective emission-control component and whether or not OBD is able to detect the problem, corrective action would be either the recall of all affected vehicles or the extension of the emission warranty for that specific component."
Despite the importance of the corrective action proposal, ASA is concerned about the staff evaluation of the potential impacts on other businesses. The staff report states, "The proposed amendments should have minimal impact on the independent service and repair industry and aftermarket parts manufacturers since the proposal deals with relatively new vehicles and engines that are still within their certified useful life period."
ASA believes that any extension or expansion of the vehicle warranty status negatively impacts the independent repairer in the state of California. Customers in independent shops generally will not repair one or more items at the independent shop and take the vehicle to a new car dealer for the warranty item only. With this expanded warranty staff proposal, independent repairers could potentially lose a large number of customers, having a significant impact on the small business community.
Was a formal "economic analysis" conducted by CARB as to the impact this proposed regulatory change will have on independent repairers? ASA has been unable to determine whether a formal analysis was completed.
During the Washington state debate over clean-car legislation, policymakers considered requiring that independent repairers might also be allowed to qualify for warranty repairs. Eventually in that state, the super warranty provisions were disposed of in the final deliberations. If CARB moves forward with this major policy change, ASA has requested that independent repairers be allowed to perform these warranty repairs. Otherwise, the state of California will clearly have instigated a process that will arbitrarily remove customers from independent repair shop bays.
This policy debate should not be taken lightly. CARB's decision on whether to move forward with an expansion of vehicle warranties will impact a large number of California small businesses. It is also quite likely that if previous clean car warranty changes are an indicator, that other states across the nation will follow suit.
Many state regulators will argue that their targets for these expanded warranty programs are the automobile manufacturers. This may be the case but clearly the collateral damage is within the independent repair marketplace. ASA leaders have felt for some time that the most immediate threat to independent repairers is not a lack of service information, as advocated by some, but the slippery slope of state-mandated, expanded warranties.
The repair industry failed to stop the LEV II extension in California and has paid the price in subsequent states. It is imperative that the most recent California warranty expansion proposal be rebuked by CARB's leadership. To review items related to the CARB regulation, please go to ASA's legislative Web site, www.TakingTheHill.com.
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