Tuesday, June 05, 2012

Freer Markets in Ohio for Salvaged Vehicles

There is a very interesting bill (Am. Sub. SB 273) that has resurfaced in the last few weeks in the Ohio General Assembly that deals with the law regulating who may dispose of salvaged vehicles and how. It last surfaced in the Ohio House in the Insurance committee when testimony was offered by interested parties. The committee is reviewing the bill, which has already passed in the Ohio Senate.

Currently, when a vehicle is declared to be a salvage there are a very limited number of business who can purchase the vehicle and dispose of it properly. These business must be licensed “motor vehicle salvage dealers” who are required to have a Buyer Identification Card from the state of Ohio. The sale of these vehicles is strictly regulated and their price is controlled. It should be noted that it has been suggested that Ohio has the most restrictive salvage policy in the nation.

What this new law does is increase the number of businesses who will have access to Ohio’s prolific salvage vehicle market while maintaining all of the safety and environmental inspections. Ohio already has 670 licensed salvage dealers representing 12% of recyclers in the nation, so clearly Ohio is a leading market for this industry. By opening the market, the value of these salvaged vehicle increases thereby permitting the insurance companies (who are the primary source for these vehicles) to recoup more of the cost of the final disposition of these vehicles. This additional revenue would allow these companies to expand or pass savings on to their consumers.

The recyclers are concerned that by increasing the market share, jobs may be lost. There is some risk involved, but with as robust as Ohio’s salvage business is that seems unlikely.

Also in the bill are rule changes for the disposal of junk vehicles by local townships and a rule requiring that the salvage dealers to comply with reporting title information to a national database.