CARB Moves to Extend WarrantiesPosted 5/15/2007
By Robert L. Redding, Jr.
The California Air Resources Board (CARB) voted March 22, 2007, to approve proposed amendments to the California Emission Warranty Information Reporting and Recall Regulations and Emission Test Procedures. The Automotive Service Association (ASA) opposed the amendments included in CARB's original staff recommendations. The expanded emissions warranty requirements apply to 2010 and subsequent model year vehicles and engines.
There were modifications to CARB's original staff recommendations considered at the Dec. 7, 2006, hearing, but these modifications fell short of resolving the warranty extensions opposed by ASA.
After the Dec. 7 hearing, CARB summarized specific recommendations as follows:
Proof of Violations: Staff is proposing that once a group of vehicles exceeds a valid warranty claim rate threshold of 4 percent or 50 claims (whichever is greater), that a group of vehicles would be considered to have a systemic defect and be in violation of test procedures and possibly emission standards. The manufacturer would be required to take corrective action.
Corrective Action: If the defective component is an exhaust treatment device or an emission control component on a vehicle without a functioning onboard diagnostic (OBD) system, corrective action would be a recall of the affected vehicles to replace the defective component. For all other defective components, the corrective action would be an extended warranty covering the defective part. Based on recent data from the warranty reporting program, most corrective actions in the future would be expected to involve extended warranties.
Reporting Requirements: The threshold at which an Emission Warranty Information Report is required would be increased from 1 percent to 4 percent or 50 claims (whichever is greater) for all model vehicles subject to reporting requirements. Follow-up reports would be required on an annual basis, rather than quarterly. When the unscreened warranty claims rate reaches 10 percent (presumed to represent a valid 4 percent rate), a Supplemental Emissions Warranty Information Report would be required. This report would determine the valid claims rate, and if the rate is above 4 percent the corrective action process would be triggered. The currently required Emissions Information Report would no longer be required.
Denny Kahler, ASA's past chairman, testified against the staff recommendations at the December CARB board meeting. Kahler focused on the corrective action recommendation, saying: "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 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 significant impact on our small businesses."
Of the greatest concerns to ASA was the lack of any formal economic analysis as to the economic impact this proposed regulatory change would have on California independent repairers. ASA raised the notion that independent repairers also be allowed to make warranty repairs. This was debated in the state of Washington, too, when its legislative body considered the original California super warranty initiative.
CARB did not agree to independents performing the warranty repairs.
Previous California warranty extensions have been approved by other states around the country. The latest approval is in the state of Maryland. CARB's efforts appear to focus solely on the automobile manufacturer without regard to the economic impact on the independent repair shop owner.
ASA is concerned that the industry has been so narrowly focused on automotive service information that the warranty debate has not gotten the attention it deserves. Federal Right to Repair legislation and now state Right to Repair legislation have threatened the industry's voluntary National Automotive Service Task Force (NASTF) and required much of the automotive industry's resources. This latest CARB action is an example of how the most threatening issues are not related to service information. ASA supports the NASTF and the current structure of third-party providers along with the original equipment manufacturer Web sites. Additional state emissions warranty extensions are imminent. ASA continues to encourage the industry to educate state legislators and regulators as to the potential harm to small businesses caused by these extended emissions warranties.
Efforts to halt further emissions warranty extensions are a top priority for ASA. ASA encourages repairers to work with industry partners in their states to focus industry efforts and resources to halt the extension of emissions warranties.
To find out more about state emissions warranty extensions, go to www.TakingTheHill.com.
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