Resurrected Wrecks Are a Hazard on the Highway

Rolling wrecks--cars repaired after being so badly damaged in accidents that they were deemed total losses--are ubiquitous on Southern California roadways, thanks to a dysfunctional regulatory system and a lucrative underground economy.

More than 7% of all registered vehicles in the state have salvage titles, the legal designation for an automobile “totaled” by an insurer, sold through a so-called salvage pool and then resurrected by the auto body industry.

Under current state law, salvage cars must pass only a rudimentary brake and lamp inspection required by the Bureau of Automotive Repair. There is no rigorous safety inspection of the actual crash repairs, suspension system or other vital components.

Critics are demanding that these vehicles be subjected to vastly more thorough inspections to protect unsuspecting buyers and the public at large. But some insurers oppose tougher inspections and other reforms because it would potentially raise their costs.

“They don’t want government regulation,” says state Sen. Jackie Speier, chairwoman of the Senate Insurance Committee. The Bay Area Democrat has been pushing for tighter oversight.

Salvage industry experts say many more than the official Department of Motor Vehicle estimate of 7% of the state’s vehicles are prior wrecks, because California does not legally require insurers to brand titles as salvage when they total a vehicle. Because they do so voluntarily, there are many gaps in the system.

Not every totaled vehicle is a hazard. In some cases, salvage vehicles are declared total losses because they were stolen and stripped of valuable parts. After proper repairs, they function no differently than other cars of the same make and model, according to the insurance industry.

But a majority of the 145,000 totaled vehicles put back on the state’s roads every year have sustained major damage in traffic accidents, state investigators say.

After insurance carriers tell owners that repairing the cars is uneconomical, the vehicles are sold into a secondary market where they often are restored to tragically low standards.

“A lot of these cars have significant secondary, hidden damage that you can’t see unless you tear them down,” said Ken Zion, owner of Automobile Collision Consultants, an accident investigation firm. “If a vehicle has had severe structural damage [and] been deemed a total loss by the insurance carrier, I would generally say that it should not be put back on the road. It should be crushed.”

The Bureau of Automotive Repair, a state regulatory agency, has found many instances of improper repairs, according to Allen Wood, the bureau’s manager for consumer protection.

The bureau found one salvage car, for example, that had three disc brakes and one drum brake, meaning that one axle had a mix of disc and drum. This Rube Goldberg setup would cause grossly uneven braking and could throw a vehicle into a spin.

Oddly enough, when state investigators informed the vehicle’s buyers of the improper repair, “the buyers didn’t want to get out of the deal,” Wood said. “It was strange.”

But in some respects, it wasn’t.

The whole underground economy of improperly repaired cars functions on perceived expediency. Insurers hold down their costs, substandard auto body shops rake in profits and low-income drivers get access to cheap cars.

What’s wrong with this picture is the risk to public safety posed by these vehicles. Nobody knows exactly how big a risk that is, because these cars are not systematically inspected.

Zion said he has documented cases in which improper repairs caused subsequent accidents and, in one case, resulted in a death.

Indeed, an auto body repairman, operating in his own backyard garage, can buy a salvage vehicle, repair it as best he can (in one case a frame was pulled straight while the vehicle was chained to a tree) and then sell it through the classified ads.

It’s not hard to spot these cars on the road. Although they often sport a glossy new paint job, they sometimes “dog walk”--meaning the frame or wheels are so out of alignment that the car travels forward slightly sideways.

Mandatory inspection of all salvage vehicles was included in legislation introduced by Speier as part of the Anti-Auto Theft and Insurance Fraud Act of 2000. But it later was dropped amid insurance industry opposition.

Jerry Davies, spokesman for the Personal Insurance Federation, which represents five major car insurers in California, said the industry is concerned about costs under state reforms and worried that the responsibility for inspections would fall on insurers.

Dave Hurst, a State Farm spokesman, said his company supports the concept of inspections and tighter regulation of the salvage industry.

But the economics of the existing salvage trade are good for the short-term interests of many businesses.

When an insurer totals a car, it usually then turns around and sells the damaged vehicle for its salvage value.

Say a car has a market value of $10,000 and sustains $8,000 in accident damage. If the insurer can sell the car for salvage for more than the $2,000 difference, it is economically better off totaling the car rather than having it repaired, as each dollar in excess of $2,000 is profit for the insurer.

A body shop then buys the car out of the salvage pool for $2,000. Rather than doing the $8,000 in repairs, it cuts corners, earning a tidy profit if it can sell the car for something close to its $10,000 market value.

A rigorous inspection system would end the system as it now exists. As a result, the bottom would drop out of the salvage vehicle market, because body shops would have to spend more on proper repairs.

Another dimension of the problem is low wages and poor training in the auto body industry. A 1994 state investigation found that only 50% of body shops had equipment to do proper repairs and that training was all but nonexistent.

“The bottom line on this is that we pay these body shop guys grunt wages,” Zion said. “The going [labor rate] payment is $26 to $30 per hour, and [the technicians] get 40% to 50% of that. It’s a hard industry to make a living in.”

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Ralph Vartabedian cannot answer mail personally but responds in this column to automotive questions of general interest. Please do not telephone. Write to Your Wheels, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. E-mail: ralph.vartabedian@latimes.com.