Service News -- Week of January 27th, 2008

There are several, recent service-related developments of interest to talk about here.

California Emissions Regulations

California continues to set its own course with regard to regulatory oversight of their statewide auto industry and has recently implemented new regulation concerning tailpipe emissions. An April Supreme Court ruling allows the EPA to govern vehicle emissions under the Clean Air Act, the same Act that allow CA to have its own emissions rules.

The entity that “deals” with manufacturers on emission-related recalls and campaigns is the California Air Resources Board and their tool-box just got a bit heftier as the new rules allow the board to much easier force OEMs to fix problem parts (even in the absence of a recall) as well as extend vehicle warranties.

This decision may lead to considerable warranty extensions (not to mention millions of dollars to OEMs) as some 20 million vehicles have been the source of emissions recalls in the past decade, 2.1 million alone during the first 9 months of 2007.

So, if you are in CA and are having emissions-related, be sure to check with your dealer if you are still covered. We can only guess what this might mean for the trickle effect and other states that tend to adopt CA’s rules.

An Argument Against Aftermarket Service Contracts

Service contract provider Ultimate Warranty, based in Ohio, stopped answering their phones back in December, which in the industry can be considered code for several things including, “game over.” While circling the drain, Ultimate racked up some $44 million in claims, that are now the responsibility of the South Carolina Department of Insurance, which is pulling apart the books of the company’s underwriter, Capital Assurance Risk Retention Group.

At the heart of the investigation is a claim that the company had a loss reserve fund of $48 million smackers, when, in fact, there was about $15K. Ouch. So, the good news, if you have a claim for service work on your contract with the now defunct Ultimate Warranty, you may see some of your promised money. The bad news, under the DOI plan, claims will be paid out over the next 10 years.

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