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Economic Benefits of Competition to Consumers
As our nation’s stock market and home values continue to decline, the benefits consumer reap from competition in the automotive collision repair marketplace is more important than ever.
In the case of the collision repair parts marketplace, first, when there is direct competition between a car company part and a high quality alternative part, the cost of the quality alternative part is considerably less. Second, the existence of competition in the marketplace causes the car company part to be more readily available at a lower cost than parts without competition.
Insurers will likely be forced to pass on these costs to their policyholders in the form of higher premiums. The insurance industry estimates that a monopoly on these parts by the large automakers will add more than $3 billion each year to its costs. In fact:
- The ability to choose alternative crash parts saves consumers up to $1.5 billion a year.
- Quality alternative replacement crash parts are typically anywhere from 26 percent to 50 percent less expensive than car company parts and often have warranties that exceed those offered by the car companies.
- Roughly 13 percent of consumers pay collision repair costs out of pocket. With increased parts prices, customers may forgo repairing their vehicle.
- With car companies and dealerships shuttering their operations and reorganizing amid this economic downturn, consumers may experience longer-than-average wait times for parts to repair their vehicles. This will be compounded if car companies are allowed to secure a monopoly in the marketplace.
- Increased costs for crash parts will also lead insurance companies to declare more damaged vehicles as "total wrecks."
- Today, the car companies control more than 72 percent of the repair parts market, resulting in limited choices and increased costs to consumers. Shutting out competition in the auto parts market would further increase costs. This is not in the best interest of the American consumer.
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