In Ohio, only 1,097 valid buyer identification card holders can access the pool. And only salvage dealers licensed in Ohio and 21 other states can apply for the card.
Efforts to scrap the buyer card have circulated the Statehouse for years but failed because of the tug of war between insurance agencies and auctioneers seeking higher sales and salvage dealers afraid of losing business.
State Sen. Keith Faber, R-Celina, reintroduced the issue this year with Senate Bill 273.
Faber said the bill would update Ohio’s “onerous” salvage laws to open the Ohio market to individuals and out-of-state buyers.
“More competition tends to lead to increased prices and a better value of the items you’re trying to dispose of,” Faber said.
Many salvage dealers say the law benefits Ohioans by ensuring junk cars are dismantled safely in licensed facilities instead of backyards and driveways. Insurance agents say the law protects a monopoly and drives down sale price — a cost that is passed on to insured drivers.
Weeks of testimony and attempts at compromise led to changes in the bill including a state database to track salvaged vehicles and a specific warning to salvage vehicle titles. The bill also limits how many vehicles nonlicensed buyers can purchase each year: seven for businesses and five for individuals. Despite increased consumer protections, salvage dealers refused to back the bill.
The Senate passed the revised bill 30-3 last week.
Only three senators voted against the Ohio bill: Democrats Michael Skindell of Lakewood, Charleta Tavares of Columbus and Lou Gentile of Steubenville.
Gentile told the Dayton Daily News he voted against the bill after hearing concerns from “mom and pop” auto recyclers in his district that an open market would bring unfair competition to Ohio small businesses.
“We have jobs here in eastern Ohio that are really important to these auto recyclers and I wanted to make sure we did everything we could to preserve them,” Gentile said.
There are currently 616 valid salvage dealers in Ohio, according to the Bureau of Motor Vehicles. Some are branches of national recycler LKQ Corp., which lobbies hard against such bills. Many are small businesses such as Walt’s Auto in Springfield.
In October 2011, Walt’s paid $12,900 plus fees for a 2007 red Corvette through an online auction in Indiana. The auction listing indicated missing keys and a front bumper and a busted dashboard, but when the car arrived at Walt’s, shop owner Gene Wyen knew the car had bigger problems.
The VIN plate looked as if it had been tampered with and the doors were from another car.
“Cosmetically, it looks fine, but put it up on a rack and you can see it’s whopperjawed,” Wyen said.
Wyen said an investigation by the National Insurance Crime Bureau in Ohio revealed the car was actually a 2006 Corvette, and the VIN plate and doors belonged to a different car. He said the case shows how the Internet has given more power and money to the auction websites, which sell vehicles “as is” without guarantees about the condition of the vehicle.
Salvage dealers say the protected market keeps junk cars in junk yards and out of people’s driveways and backyards. The Ohio Environmental Council opposed Faber’s bill because it may increase the risk that oil, antifreeze and other toxic materials aren’t disposed of properly.
Wyen said he’s also concerned local and state coffers will lose tax revenue from in-state sales.
“It seems like they had things under control and they’ve opened up a box that will set things out of control,” Wyen said.
Wyen said if he has to pay more for vehicles, he might have to lay off workers — some have worked at Walt’s for more than 30 years.
The bill’s supporters called the fears “scare tactics” meant to protect Ohio’s gated market. Shawn Yadon, vice president of corporate affairs for online auction company Copart, told lawmakers Ohio dealers already buy vehicles from other states, which they can turn around and sell to anyone in any state.
Seven states have removed or significantly reduced salvage buyer restrictions since 2006, and Yadon said dealers’ fears have not materialized there.
The Ohio State Sheriffs’ Association and Highway Patrol each sent letters indicating no concerns about the bill, which must pass the House before the governor signs it into law.
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