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Thursday, Jul 31, 2014
Joe Henderson

Auto salvage industry feeling pinch in Tally car wars

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Let’s begin with a short hypothetical: Following an accident, your car was declared a total loss. You probably shrugged, took the insurance settlement, and went shopping for a new vehicle. More than likely, you don’t care what happened to your old car.

A lot of people do care, though, and they have been engaged in what state Sen. Tom Lee, a Brandon Republican, called, “a good ol’ fistfight.”

It was a high-stakes showdown between the state’s auto salvage industry and the auction houses that specialize in used cars. Those sides have waged a three-year battle in the state Legislature, resulting in a bill that changes the rules for what happens to cars that are classified as total wrecks.

Under the old law, those cars went to salvage companies and were stripped for parts, which were resold to customers needing, say, a cheaper alternative for replacing a side-view mirror or something like that.

Under the new law, which becomes effective July 1 unless Gov. Rick Scott vetoes it, even a car classified as a complete loss can be bought, repaired and resold by an auction house.

In other words, your neighbor could one day be pulling into his driveway in your old totaled car. More likely, though, someone in Central America could be driving your old, totaled car. That’s a big market for reconditioned vehicles.

“The public doesn’t know about this law,” said Steve Holland of Brandon Auto Services, which sells salvaged parts to body shops, mechanics and the general public. “We have a hard time supplying parts now.”

This law could make it worse, resulting in a squeezed market for used car parts, higher prices and potential job losses.

“There is no doubt this is a step back for Steve and the salvage guys,” Lee said.

Holland said he appreciates that Lee did his best to fashion a compromise, but he still wants Scott to veto the measure.

“I’d be surprised if the governor vetoes it,” Lee said.

Since 1992, a vehicle in Florida was considered damaged beyond repair if an insurance company declared damage was 80 percent or more of a car’s Blue Book value. Insurance companies claimed the car and recouped some of their money by selling it to salvage companies.

Lee said that put drivers with older cars at a disadvantage.

He told of having a 2004 Ford Expedition with more than 200,000 miles on it. Lee said he took great care of the vehicle before finally trading it in for about $2,500 on a newer model. All the while, though, the resale value of his Expedition was going down.

“So, what if I had a little fender-bender and the damage was more than $2,500?” he said. “Maybe I would have wanted to just get it repaired so I could keep driving it, but the law said I would have had to sell it over to salvage.

“Now, there might have been a little nod-nod, wink-wink going on between insurance companies and car owners about how they appraised the damage so owners could keep cars like that. That’s not how the law was written, though. And it’s a shame to be forced to send a car like that to salvage if you don’t mind driving an older vehicle.”

Point taken.

Salvage advocates, though, have been circulating a flier showing two cars that are obviously damaged beyond any reasonable attempt to repair. They charge that changing the law would allow auction houses to fix those cars and sell them.

“Yes, and the other side can bring you pictures of a car in a minor fender-bender that had to go to salvage,” Lee said. “How do you draft a law that can match up with every single vehicle out there? We got about halfway there.”

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