The auto repair business is bracing for tough reforms when a task force issues its report, expected this month. Created by the National Association of Attorneys General to investigate the $150 billion-a-year auto repair business, the task force is likely to recommend state and federal legislation, due to customer fears they are ripped off when they get their cars repaired.
Some car makers, their dealers and independent chains plan to implement uniform procedures early next year to show good faith to task force members, but they're not optimistic that their new programs will be enough.
``I will stick my neck out and say (the task force) will rely on industry programs for things like inspection and repair,'' said Larry Hecker, president of the Automotive Maintenance and Repair Association and its Maintenance Awareness Program (MAP). ``But I do believe there will be regulation in areas such as prices and how technicians are compensated.''
Like the task force, MAP-a coalition of automakers, suppliers and retailers-was formed in 1992 after Sears, Roebuck and Co. was hit with repair fraud allegations.
MAP has devised repair guidelines for brake and exhaust systems, and eventually will suggest what it hopes will become industry standards that include detailed instructions for inspection and generally accepted repair procedures for all vehicle systems.
Although the new standards are voluntary, Mr. Hecker said many large independent repair shops have agreed to use the guidelines, and General Motors Corp., Ford Motor Co. and American Honda Motor Co. will use the standards in their dealerships.
A first-ever survey, released by the attorneys general association in April, showed that consumers still distrust repair shops.
``We're looking at a number of things, and we certainly haven't excluded fraud,'' Lauren Carlton, deputy attorney general of New Jersey and a task force member, told Automotive News, a sister publication of TIRE BUSINESS.
The task force-comprising representatives from 30 states and the Federal Trade Commission-has identified several issues members say need attention, including:
Mechanic competence and access to information needed to diagnose and complete repairs;
Mechanic compensation methods for determining labor charges;
Differences between manufacturer-made and aftermarket parts.
``Manufacturers are a large player in the auto repair field,'' Ms. Carlton said during task force hearings. ``They have information, they have dealers, and they make the cars. Can they enhance the availability of repair information available to non-dealers?''
Car dealers control some $50 billion of the repair business, according to the National Automobile Dealers Association (NADA).
The November report is the result of task force hearings that were held last December in Washington for consumers and an April hearing in which the task force heard from industry members.
The industry witnesses included officials from the Big Three carmakers, NADA, the Association of International Automobile Manufacturers, large retailers such as Sears and AAMCO, and associations representing parts makers.
Although industry officials acknowledge some need for reform, they say government intervention often hurts more than helps.
``Repair fraud is difficult to eliminate,'' Allen Huss, senior staff counselor at Chrysler Corp., told the task force. ``Chrysler has maintained an uncompromising policy of terminating dealers when dealers commit warranty fraud, yet our efforts are often hampered by the often inconsistent and overly protective layer of state laws regulating the manufacturer-dealer relationship.''
Much of the alleged fraud at Sears was tied to the compensa-tion system under which mechanics' pay was based on volume. Critics say that caused technicians to sometimes make unnecessary repairs or make them too quickly.
Sears has ended that practice, but many dealers and independents still use similar systems, witnesses told the task force.
``What we're seeing increasingly is a concern not just over fraudulent repairs, but repairs that are not done properly. That may be as significant or more significant a problem than the fraudulent repairs,'' said Garry Desjardins, Connecticut assistant attorney general.
``And when you have a compensation system in which the technician is rewarded only on the basis of speed, what is the effect on the quality of the repair?''
Rick Dube, an independent shop owner from McAllen, Texas, who represented the Automotive Service Association (ASA) at the hearing, said the commission pay system is a blessing and a curse.
``The issue depends on the integrity of the technician and the outlet,'' he told the task force. ``They do, however, give the customer the least amount of service for the most amount of money. The commission-paid technician wants to move on to the next job.''
But Buzz Braley, a Portland, Ore., car dealer who represented NADA at the hearing, disagreed with Mr. Dube's assessment. Mr. Braley operates Braley and Graham Co. (a Buick-Pontiac-GMC-Hyundai-Isuzu auto dealership).
``Fraud is but a small part of the overall issues facing the repair industry today,'' he told the task force. ``Other issues, such as developing an adequate number of well-trained technicians to service today's sophisticated vehicles and better explaining the repair process to the consuming public, should also be of great concern.''
According to statistics presented at the hearing, the average vehicle on the road is 8 years old; 25 percent are at least 12 years old.
Ford Motor Co. has 8,461 vehicles per dealer on the road; General Motors Corp. has 6,741 vehicles per dealer, the largest numbers of any of the manufacturers.
There was agreement that dealers cannot handle the number of vehicles in need of repair.
Independent shops complain, however, that car makers are becoming stingier in providing data on how to fix vehicles after the warranty expires. The independents say that could eventually create a monopoly for the dealers.
Addressing repair fraud ``will solve only one small piece of the massive difficulties our industry faces,'' Mr. Hecker said. ``Solving our information, technology and training needs will be critical to assuring that the motoring public will continue to have access to affordable and effective repairs.''
According to NADA, dealers controlled about one third of the auto repair business last year.
But Mr. Hecker said independents have 75 percent to 80 percent of the market. He estimates that annually $60 billion in repair work isn't done because consumers choose not to have it done.
Automakers are negotiating with the Environmental Protection Agency and independent shops about what information manufacturers must provide to independents, either for a fee or without charge.
Historically, manufacturers have made the information available to the independents, but the big battle involves the control to reprogram computer chips that are used in most new vehicles.
Those chips enable technicians to determine where any fault may lie in a vehicle component.
A tentative agreement between the automakers and the independents has been sent to the EPA regarding how that data will be released to the independents.
The question about compensa-ting the automakers still lingers.
``Nobody is saying, `Let the independents have everything for
free,' '' said Aaron Lowe, director of legislative and regulatory affairs for the Automotive Parts and Accessories Association. ``We're just asking for a reasonable playing field.''
The industry would like to police itself, but doubts that will happen. Ms. Carlton, the New Jersey deputy attorney general, won't hint in which direction the task force is leaning.
But she said: ``We anticipate making suggestions and recommendations, and that could include both state and federal legislation.''