Rebuilding Damaged Vehicles: Beware

Susan Frissell
Women With Wheels

Buyer Beware!! As with most things we purchase in these times, it’s best to make sure you get what you pay for, and be on the lookout for the loopholes.

Consumer Reports conducted a six-month investigation on the "shadowy" industry of rebuilt vehicles. Those vehicles damaged enough to be classified as "totals" (insurance term for "not worth repairing") are being rebuilt, reregistered and resold to unsuspecting consumers. Although there is some background research a consumer can do before purchasing a used vehicle, damage histories can, and are being removed from the titles of some damaged vehicles.

According to CR, this little known industry of repairing wrecks is fixing up and reselling an estimated 400,000-some vehicles; five or fewer model-years old. While that number represents only three percent of the 13 million used vehicles sold in that model-age group in 2001, it is important because these vehicles are not subject to federal safety standards.

Of the vehicles damaged severely enough to be "totaled" after fatal accidents in the U.S. between 1993-1999, 20 percent were rebuilt, reregistered and offered for sale. According to CR’s study, the titles to these vehicles were "washed" to remove any indication of previous damage. Data provided by the National Highway Traffic Safety Administration was used, along with the 1.6-billion-record database of Carfax, a company that sells vehicle history reports to consumers and businesses.

When a car is declared "totaled" by an insurance carrier it is because the labor and parts required to repair it properly would cost too much relative to the vehicle’s worth. Most consumers assume the vehicle ends up in a scrap yard. This isn’t always the case. Hundreds of these wrecks, found CR’s investigators, return to the road. The reason seems to be because insurance companies (which own the wrecks after they pay off a claim) have realized they can make money by selling these vehicles at auto auctions. It is this practice that has given birth to a little-known industry. Hiding the vehicle’s past from an unsuspecting consumer, this industry makes a profit.

Used-car pricing experts report that the value of a rebuilt car should be significantly lower than that of a legitimate used car. These wrecks, however, are often sold for more than their book value because the history is hidden. Insurers claim to be against this practice of deceptive rebuilding, but agree there isn’t much that can be done once the vehicle is sold at auction to a rebuilder.

CR’s report notes that their efforts to secure key information that could shed more light on the scope of the problem were met with resistance by the Highway Loss Data Institute. Funded partly by the insurance industry, the Highway Loss Data Institute officials said they were not able to release the data due to "confidentiality concerns and contractual prohibitions." By the same token, the government does not release information considered "personally-identifying information."

Among the findings CR was able to secure, include the following:

• Often rebuilt vehicles do go from state to state, receiving new titles that have been "washed" of their "Salvage" or "Rebuilt" disclosure. Thirty percent of vehicles totaled after an accident and then put back on the road with a title disclosing the damage had that disclosure removed from the title.
• Consumers are unable to determine for sure the history of a used vehicle. States have different laws concerning rebuilding practices and damage disclosure; critical oversight is lacking in most states, according to CR’s investigation.
• Experts say that wrecked cars can be rebuilt safely. However, there are no strong financial incentives to cut corners. Therefore, unless a trusted mechanic can confirm that a used vehicle has not been rebuilt, a consumer is taking a risk.

Consumer Reports offers some tips on how not to get caught with a rebuilt vehicle:

1. When shopping for a used vehicle, bring someone knowledgeable with you; someone who knows cars. Look at the whole car, including trunk, undercarriage, tires, engine compartment;

2. Be direct and ask for all available information on the vehicle. Inquire whether the vehicle has been in an accident, flood;

3. Test-drive the vehicle. Take corners at various speeds; try the car out on a straight-away. Is it smooth, is it jerky, does it pull to one side. Is the frame straight?

4. Investigate the VIN. Go on the Web to look up the cars vehicle identification number. Is it listed among those cars that were in floods in recent years?

5. Buy a title history report; Carfax is one Internet provider that offers this service;

6. Try and get a read on the seller. If it’s a car dealer, call the Better Business Bureau; if a private party, scan the auto ads for cars with the same phone number listed. This may be a broker.

Copyright 2002 by Susan Frissell, Women With Wheels. All Rights Reserved.