Salvaged auto auction legislation advances in Oklahoma

Journal Record, The (Oklahoma City), Apr 20, 2007 by Spencer Gainey

Two bills that would make the salvaged auto auction market wide open for buyers are working their way toward becoming laws.

House Bill 2118 and Senate Bill 577 both change existing regulations for buyers at salvaged auto auctions.

Under current laws, a person must possess a buyer's identification card as well as an automobile dismantler's license or re-builder's certificate issued by the Oklahoma Used Motor Vehicle and Parts Commission.

They must also be a resident of Oklahoma to buy salvaged cars at auction.

If the bills become law, any resident of the state, as well as buyers who are licensed in their home state or country, could purchase cars at salvage auctions.

State Rep. Shane Jett, R-Tecumseh, who authored House Bill 2118, said there were too many regulations put in place on auto salvage auctions in Oklahoma. To get as close as possible to a free market atmosphere, he said, it was necessary to get rid of those regulations.

"If the general public has access to the market, this moves the industry closer to a free market," Jett said.

Opening the market to more buyers will boost the price of cars sold at auction and will allow insurance companies to recoup more money from cars that have been totaled, Jett said.

The bill would require auto dismantlers and recyclers who repair the salvaged cars - or just sell the parts from them - to be licensed by the state. That would mean that although anyone in the state would be able to buy a salvaged car, only those with a license could dismantle and recycle them.

"What is the point of selling something to someone if legally they can't do anything with it?" said Mike Phillips, owner of Capitol Auto Parts.

Supporters of the bill argue that because the insurance companies will get more money for their cars, they will be able to lower premiums.

"If we are able to get a higher return, that will offset the claims cost for policyholders," said Kim Decker, government affairs representative for Farmers Insurance.

CMA Strategies has been lobbying for the passage of the bills on behalf of Copart, an auction group based in California. Copart has auction sites across North America, selling nearly one million vehicles per year.

Jason Nelson, director of government relations for CMA, echoed Jett's belief that markets should be more open to the public.

"It's a global economy, especially when anything can be bought on the Internet," Nelson said. "You have a false economy in place when the government is controlling the returns someone can get for a car."

Opponents believe passage of the bill will lead to an unsafe marketplace for consumers because there would be no registration required for buyers.

State Rep. Wallace Collins, D-Norman, said he has worked in the auto salvage industry for many years. He spoke out against SB 577 in a recent committee meeting.

Buyers of repaired salvage cars have some chance of recourse should something go wrong because the sellers have to be registered with the state, Collins said. But if the bills pass, it would be easier for unlicensed people to buy cars and sell them illegally to unsuspecting buyers.

"It's a consumer protection issue to me," Collins said.

House Bill 2118 has passed both legislative houses, and is now on its way to the governor's desk. Senate Bill 577 passed out of the House Economic Development and Financial Services Committee and its next stop is the House floor.