The patenting of more run-of-the-mill auto part designs is roiling small body shops, many of which make their living by fixing cars with knockoffs of original equipment parts such as grilles, hoods, lights, mirrors, side panels and fenders. Such pieces are anywhere from 10% to 50% cheaper than the real McCoys, but increasingly, the law forbids their use.
Automakers have long sought patents on certain extra-stylish ornamentation to prevent other automakers from cribbing the design for their vehicles.
But the trickle of patent applications has become a torrent in recent years as automakers seek to boost their bottom lines by patenting more parts, thus bolstering their auto repair and parts replacement businesses. Ford, for example, has patented seven parts on its popular F-150 pickup truck, including lighted mirrors and the front grille. Honda has been the most aggressive, receiving about 110 design patents last year, followed by 75 for Ford and 60 for Toyota.
As the restrictions on replacement parts grow, it's a good bet that automakers will increase their share of the $16-billion parts replacement business in the U.S. Large independent repair shops that contract with car dealers or automakers and can get volume discounts on patented parts will also benefit.
However, small shops -- and consumers -- increasingly will get squeezed. Small collision repair businesses will have no choice but to pay full cost for the parts and pass along those higher prices to their customers. People paying for their own repairs out of pocket will feel the pain first.
Parts makers can't sidestep the patent protections, either, by making a hood or door panel that looks similar to the original. "The dilemma is that most states' laws dictate that repair shops use parts that look exactly the same as the original and be of the same quality and fit," says Eileen Sottile, executive director of the Quality Parts Coalition, a trade group.
Over time, the design patent avalanche is sure to dent business for small shops. Moreover, as overall repair costs rise, insurers will tag more banged-up vehicles as total losses, reducing repair work. Insurance companies also will increase auto insurance premiums to cover their added costs.
Look for the auto parts industry to step up a push to persuade Congress to pass a law letting independent parts manufacturers sell replacement parts to repair shops. Automakers would retain the right to sue competitors that copy a part design for their vehicles. The prospects for such legislation would increase with Democrats strengthening their hold on the House and the Senate, as we expect.
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POSTED BY: Jim Ostroff (March 06, 2008 01:27 PM)
Collision repair shop people with whom we spoke said that the price differential between OEM parts and those made by another company often is very substantial. These people noted that the quality may vary, but this is typical of parts sourced from third-party vendors of many industrial and consumer products. These people stressed that they have the experience and expertise to weed out sub-par replacement auto parts. The bottom line is that design patents deny collision repair shops, insurance companies and consumers the right to decide what part can be used. We do not take sides on issues, but highlight the consequences. Kiplinger would do the same if HP or Apple could mandate that only they could supply replacement keyboards, mouses or standalone monitors because they were granted design patents on these parts; that GE, Maytag or Whirlpool could do the same with knobs on their washing machines.
POSTED BY: Tommy (April 08, 2008 09:55 AM)
Stan stated, "Our industry did not grow to supplying more than 12 percent of the replacement market because these parts are cheap and/or inferior." Body shops or vehicle owners do not CHOOSE these parts, they are PUSHED upon them by the insurance industry, TO SAVE MONEY, REGARDLESS OF QUALITY.
State Farm lost a 1.3 Billion dollar lawsuit over the quality of these parts. The differences in quality were never needed in court. State Farm's internal documents about the quality of these parts lost the case for them.
Maybe Kiplinger's is so pro-business that they believe that the end justifies the means.
These parts are not comparable to OEM and should not be forced upon vehicle owners. Ask any car salesman about a/m parts. The first thing they look for when you trade in your car is the a/m stamping in the parts. Once they find that an a/m fender has been installed they knock down the buy price. a/m parts devalue the vehicle at the same time unjustly enriching the multi-billion dollar insurance industry.
POSTED BY: Buck Turner (April 14, 2008 11:59 AM)
No vehicle owner would ever pick untested chinese parts over the real parts made by the company that made his car. The decision to use knockoffs is made by the insurance company, and they do not pass the savings on to the owner of the car with the junk tin hanging off of it. No consumers benefit from chinese knockoffs unless they are paying for the repair directly, themselves - about 3% of all collision repairs.