ASA challenges State Farm's parts procurement program

ASA claims PartsTrader program stifles competition.


The Automotive Service Association (ASA) has sent letters to state insurance regulators and state attorneys general regarding State Farm’s nationwide rollout of changes in its direct repair program, “Select Service.” The letter requests that state regulators review State Farm’s mandate to use the PartsTrader LLC parts procurement program to determine if it violates state law.

Under the rollout, which will be completed by 2014, State Farm will mandate that shops participating in its "Select Service" program use PartsTrader’s software to electronically order parts, according to ASA.

ASA contacted State Farm and PartsTrader after the pilot program was made public, expressing members’ concerns with the program. ASA dispatched a team of collision repair leaders to State Farm’s headquarters to discuss the pilot, the impact of the program on collision repairers and any expanded program rollouts.

Dan Risley, ASA executive director, states in the letter: “We believe this mandatory parts procurement program stifles competition and harms both the consumer and the small businessperson.”

According to ASA, State Farm’s mandate has the potential to impact repairers in the following ways:

            •  Limit a repairer’s right to choose the parts vendors from whom they purchase parts;

            •  Limit a repairer’s right to choose an electronic parts ordering vendor;

            •  Increase the number of days to repair the customer’s vehicle;

            •  Increase the indirect costs to the consumer;

            •  Increase the repair facility’s administrative time;

            •  Negatively impact the repair facility’s profitability;

            •  Reduce local automotive parts sales, negatively impacting local economies.

            To view the full text of the letter, visit ASA’s legislative website at www.TakingTheHill.com.

           

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