Recall concerns

As we pass the halfway mark of 2015, automotive manufacturers continue in crisis as they struggle to manage their epidemic of safety recalls, which has rocked the world’s confidence in the quality of their motor vehicles. More than 100 million vehicles in the U.S. have been recalled since the beginning of 2014, compromising the extensive automotive parts supply chain and creating multiple challenges for consumers and the industry at large as well as for professional automotive recyclers who provide safe, quality recycled OEM (original equipment manufacturers) automotive parts to the marketplace.

Automakers must be open to bold and revolutionary remedies to regain the trust of the world’s drivers. They could take several actions to illustrate their commitment to providing quality parts in motor vehicles. Last June, the leadership of the Automotive Recyclers Association (ARA), Manassas, Virginia, urged General Motors (GM) to live up to what its CEO Mary Barra called its “new industry standard for safety” by providing professional automotive recyclers with access to crucial OEM parts data.
 

Joint effort

Complicating the automakers’ recall issues is the ever increasing complexity of motor vehicles. Today, electronic systems are tasked with controlling almost every aspect of the vehicle, which makes for a very diverse automobile population as the average age of the American motor vehicle has risen to an all-time high of 11.5 years. Motor vehicles that stay on the roads longer provide a replacement parts market for repairs that is much different than 20 years ago, when the average age of motor vehicles was 8.4 years. In fact, it is forecasted that the average vehicle age will rise by another 10 percent over the next several years.

Growing demand for older vehicle parts offers an opportunity for professional automotive recyclers and automakers to work together to provide consumers quality, OEM replacement parts. Articles 7-8 of the European Union’s End of Life Directive recognizes the need for our industries to work together, calling on European Union member states and automakers to “take the necessary measures to encourage the reuse of components which are suitable for reuse” and “take the necessary measures to ensure that manufacturers of components used in vehicles make available to authorized treatment facilities, as far as it is requested by these facilities, appropriate information concerning dismantling, storage and testing of components which can be reused.”

The professional automotive recycling industry worldwide calls on the European Commission to hold member states and automakers accountable to these articles.

Furthermore, the European Commission must uphold requirements under current European law mandating auto manufacturers to provide data such as “…the VIN (vehicle identification number), OE parts numbers, OE naming of the parts, validity attributes (valid-from and valid-to dates), fitting and where applicable structuring characteristics.” (See, Article 6 Regulation [EC] No 715/2007 [Euro 5/6] and Annex XIV to Regulation [EC] No 692/2008, as amended in June 2011 by Regulation [EU] No 566/2011.)

Just as automakers warmed to certified preowned vehicle programs in the late 1990s, they must embrace professional automotive recyclers’ role in addressing consumers’ needs. In a current Toyota Certified Used Vehicles brochure, the automaker says, “The best new cars make the best used cars. It stands to reason that the better a product is made the longer it will last.” The same logic is true of genuine automotive parts harvested from those vehicles by professional automotive recyclers for vehicle repair purposes.
 

Action needed

Automakers must integrate into their business models an enduring commitment to the ability to track the life cycle of their motor vehicle parts. To this end, ARA is aggressively promoting the need for access to bulk VIN recall data and parts data so that it is possible to identify OEM parts in a streamlined, integrated and efficient manner. Only with this access can the industry identify the universe of OEM parts that have been recalled.

Automakers are fully aware that the life cycle of their parts can go beyond their initial use in a motor vehicle from the factory and that access to specific parts data is absolutely necessary to be able to effectively identify the specific recalled parts.

Access to bulk VIN data. Ongoing conversations with the National Highway Traffic Safety Administration (NHTSA), congressional policymakers and consumer groups are occurring during which ARA is emphasizing the industry’s need to be able to integrate bulk VIN data into inventory management systems so that those VINs/parts that have been recalled can be flagged throughout the automotive recycling process to avoid possible market penetration.

Access to parts data. In addition to their dismantling and recycling processes, professional automotive recyclers provide consumers a choice when it comes to how their vehicles are repaired and represent a growing segment of the parts supply market. Each day more than one-half million recycled OEM parts, the very same parts designed by automakers to meet their fit, finish and durability standards, are sold by professional automotive recyclers to consumers around the world who purchase these recycled OEM parts to address their motor vehicle repair needs. Auto manufacturers as well as automotive recyclers must have strong supply chain management procedures in place to correctly identify automotive parts for these repairs in a global electronic marketplace.

It is undeniable that OEM parts numbers are vital to automakers and professional automotive recyclers to track genuine automotive parts harvested from millions of end-of-life vehicles. Regrettably, repeated efforts by the automotive recycling industry to obtain access to important OEM parts numbers from the automakers continue to be widely ignored, largely because of market implications.

Automakers are fully aware that the life cycle of their parts can go beyond their initial use in a motor vehicle from the factory. This recognition was underscored in August of last year, when GM “coordinate the purchase and return of certain used parts, which are subject to a product safety ignition switch recall, from salvage yards.”

In a notice from this third-party supplier on behalf of GM to automotive recycling facilities, the correspondence not only included the make, model and year of the vehicles subject to the recall but also detailed the specific parts numbers, which the notice stated, “are provided so the manager can identify the parts being recalled.”

Clearly, GM understands that specific parts numbers are vital to correctly and efficiently locate the affected parts. Also clear is that only when it is in the company’s best interest will this information be shared.

Automakers are accountable for the safety of their parts throughout their life cycle and should be required to share whatever parts information is necessary to identify and locate recalled parts within the recycled OEM parts population. Only in this way can the automakers truly be genuine in their renewed commitment to safety. This practice of sharing OEM parts numbers with professional automotive recyclers should not be an anomaly, rather it should be standard automotive industry practice, especially in light of the new “safety norm.” GM executives should be leading the effort to make this parts data available as one of the pillars in the company’s new industry standard for safety.
 

Official education

The ARA also is working to educate federal officials and industry stakeholders about the need for access to parts data:

• In response to a question asked on behalf of ARA by a member of Congress, U.S. Department of Transportation Secretary Anthony Foxx recently stated for the record that automakers should provide “parts numbers related to recalls” in an “efficient and easy-to-use format directly to recyclers and others who need this information.”
• In December 2014 and June 2015, again on behalf of ARA, a member of Congress asked automakers as well as organizations representing domestic and foreign auto manufacturers why professional automotive recyclers do not have access to the automakers parts data. We are awaiting the answer to that question, which will be entered into the official hearing record.
• During a May 2015 NHTSA Recall Workshop, ARA argued the case and a consensus of participants agreed with the position that stakeholders should have access to both bulk VIN data and parts data.
• Ongoing discussions with consumer groups have resulted in an increased understanding of how consumers benefit from continued access to OEM recycled parts.
• As a result of several meetings ARA has had with the new NHTSA administrator and his staff, recognition of our issues and the important role that professional automotive recyclers play in providing safe OEM recycled parts to the marketplace has increased.
• The NHTSA administrator has agreed to serve as a keynote speaker at ARA’s 2015 annual convention, during which he indicated his interest in talking with ARA members about their role in the automotive parts supply chain.
  
   

Obligatory reminders

As part of its ongoing investigation into whether Fiat Chrysler Automobiles (FCA) has met its obligations to remedy its recalled vehicles, NHTSA recently held a public hearing in which ARA participated. Included in this hearing process was an invitation to submit comments for the record on FCA’s remedy actions to date. ARA took this opportunity to convey to NHTSA that no recall program can be successful unless the automakers recall remedy calculations include recycled OEM parts. In addition, ARA urged the NHTSA to enforce the current federal statute that requires automakers to remedy their defective equipment located in the inventories of professional automotive facilities. To support this assertion, ARA noted that the statute defines “motor vehicle equipment” to include “any system, part or component of a motor vehicle as originally manufactured.”

Lastly, ARA recommended that NHTSA partner with agencies such as the U.S. Federal Trade Commission to ensure safety in a fair, competitive automotive parts market.
 

Now's the time

ARA continues to educate all stakeholders in the automotive recall process about the unique and critical role professional automotive recyclers play in the OEM parts life cycles and how access to parts numbers can improve consumer safety and supply chain decisions. This issue will be central to the nation’s automotive safety agenda for the foreseeable future, and ARA will not stop in its efforts to compel the automobile manufacturer community to truly live up to its new safety culture. If manufacturers are serious that a focus on safety is the “new normal,” they will eliminate decades-old data restrictions by working together with professional automotive recyclers and providing them with access to the same parts numbers already provided to dealer networks, the insurance industry and the automotive repair community.

The world’s automakers indeed are in a safety crisis and need to do much more in the coming months to win back the confidence of vehicle owners. ARA implores the automakers to take this significant step forward in their renewed safety campaign, providing access to bulk VIN and parts data to professional automotive recyclers to allow for a safer parts identification system to be the “new normal” in the marketplace.

The author is CEO of the Automotive Recyclers Association, Manassas, Virginia. He can be contacted at michael@a-r-a.org.