From AAIA Capital Report
Setting aside objections from the motor vehicle aftermarket and the vehicle manufacturers, the California Air Resources Board (CARB) approved new regulations on March 22 that will mandate an extended warranty for emissions-related components with high failure rates. The changes would amend Emissions Warranty Information Reporting regulations that currently require a car company to undertake a recall of a vehicle component if emissions warranty reports, that are required to be filed with CARB by the car companies, indicate that a specific component has more than a 4 percent failure rate.
Under current regulation, a high failure rate for a component triggers an investigation by CARB and a determination that the failure would cause the vehicle to increase emissions above acceptable levels. The car company would then be forced to take corrective action, which under statute could require a recall of the part.
The new rules that were approved last week will require CARB to simply determine that the part failed above the 4 percent rate (no emission impact determination is required), automatically mandating that the manufacturer extend the warranty if the part was monitored by the on-board diagnostic systems. A recall only would be required for a catalyst or for a part that is not monitored by the on-board diagnostic system.
While California statute sets the emissions warranty at three years/50,000 miles, CARB had originally proposed last year to require manufacturers to extend the warranties to 15 years/150,000 miles for parts with systematic defects. However, based on objections from the aftermarket and the car companies, the board sent the proposal back to staff for reconsideration. Under the new proposal that was passed last Thursday, the extended warranty will be the useful life of the vehicle, which varies depending on the type and year of the car, but in many cases will be 10 years/120,000 miles.
During the March 22 hearing, a coalition of state and federal aftermarket groups charged that CARB was acting without statutory authority. The coalition further stated that the "extended warranty would have extensive anti-competitive impacts on small independent shops, sending motorists to the new car dealer not just for the warranty repairs but other add-on repairs that they are sold once they are in the dealership shop."
In order to mitigate the anti-competitive impacts of the warranty, the independent aftermarket called on CARB to permit independent service facilities to perform warranty work after the statutory warranty expired. Therefore, if the warranty was extended beyond three years/50,000 miles, independent service facilities would be able to perform the work and invoice the manufacturer for the cost.
"This action would permit consumers to be able to continue using the independent service facility that they prefer, without forcing them to the higher cost and more inconvenient dealership," said Aaron Lowe, vice president, government affairs, AAIA, to CARB.
The board responded to the aftermarket, claiming that they had the authority to extend the warranty, but did not have authority to permit the aftermarket to perform warranty work.
The new regulation will take effect with the 2010 model year and may be viewed at www.arb.ca.gov/msprog/inusecom/inusecom.htm
