Salvage Industry Due for Overhaul by State

Missing air bags. Crooked frames. The front half of one car welded to the back of another. Fire-gutted vehicles superficially patched.

These are some of the documented practices of the salvage auto industry, which takes 145,000 “totaled” vehicles in California every year and puts them back on the highway. One out of every seven vehicles in the state was salvaged from a wrecking lot, according to the Department of Motor Vehicles.

It is a business with a terrible reputation, accused in testimony at a recent state Senate Insurance Committee hearing of selling unsafe and unreliable cars and trucks to motorists who have no idea they are getting former wrecks. Under two bills pending in the Legislature, the industry would face new regulation, though not as strict as many consumer advocates would prefer.

California currently mandates that salvaged vehicles be branded as such on their titles. But repair shops sometimes violate the law.

That’s not the business Arlie Teasley has been in for the last 20 years. Teasley is a repair specialist in San Diego who buys and restores totaled vehicles and sells them directly to the public.

“There are a few salvage shops that give an honest deal,” said Teasley, who specializes in a single model, the Buick LeSabre. “In the old days, there were 25 restorers in San Diego, but now there are hundreds.

“You get a lot of shops that are fronts for operations in Mexico. A lot of these guys don’t tell anybody what they do. They register cars to private parties. The business gets a bad name on things like that.”

It may seem astonishing that anybody would knowingly buy a fixed-up wreck that comes with a title branding it a salvaged vehicle. It means the vehicle will have a permanently diminished value and repairs that might always be called into question.

But salvaged cars and trucks sell at hefty discounts, meaning they appeal to many drivers with low or fixed incomes. With luck, the vehicles provide reliable and inexpensive transportation. (Teasley’s cars come with full disclosure, and he provides a one-year unconditional warranty on the entire vehicle.)

An economic and regulatory squeeze in the industry is hurting honest restorers, Teasley said.

Repair shops once could pick up low-cost salvaged vehicles directly from insurers and restore them properly. But the business has been taken over by large interstate auction houses, which sell wrecks to the highest bidder and add fees that boost the cost.

The system plays to the low-end restoration shops that cut corners and sell vehicles through networks that make it difficult to trace who fixed them.

In January, a state Senate Insurance Committee hearing, chaired by Jackie Speier (D-Hillsborough), uncovered an array of tawdry and illegal practices.

Los Angeles resident Stephen Cody told of buying a BMW for $29,500 and later learning it had been resurrected from a Nevada junkyard, where it had ended up after it was gutted by fire.

Julie Wray of San Francisco testified that she bought a $43,000 Mercedes-Benz but wasn’t told that it consisted of two cars welded together.

California Highway Patrol Cmdr. Adam Cuevas documented missing air bags from salvaged vehicles. In one case, he reported, a passenger in a vehicle with a missing air bag died in a front-end collision.

Meanwhile, the state Bureau of Automotive Repair reported that 43% of collision-damaged vehicles the agency inspected under a special program had fraudulent billing from shops that repaired them.

Teasley understands the legislative push to get cars and trucks properly branded as salvaged when an insurance company deems them totaled, but he believes such consumer protection can be superficial.

“A salvage title means absolutely nothing,” he said. “I can get a car with a clean title that is damaged just as bad as one with a salvage title. You can get a car with no damage that has a salvage title.”

That’s because insurance adjusters deem vehicles totaled based not on whether they can be safely fixed but on what is economically expedient. An older vehicle with minor damage is quickly labeled totaled, whereas a new one with extensive damage might not be.

Teasley says limiting himself to the LeSabre allows him to gain expertise. He also is a big fan of the model.

“The LeSabre gets fantastic mileage,” he said, pointing to its federal fuel-economy rating of 20 miles per gallon in the city and 30 on the highway. “If you look at crash ratings, they are top-rated. They have heavier reinforcement in the doors. They are built better in the front end. You can get six people in a LeSabre.”

Teasley looks for late-model wrecks with low mileage to restore. A 1998 LeSabre he recently restored had only 11,000 miles on the odometer, for example.

But after 20 years, he is thinking of getting out of the business. He used to fix and sell as many as 120 cars a year, but these days he is down to about 25. Competition from low-end shops, he said, combined with the higher prices on wrecks from salvage auction pools, is making it tough to do business.

Business probably will get tougher. Legislation sponsored by Speier would require salvage auction pools to obtain state licenses and salvage vehicle restorers such as Teasley to obtain inspections to verify that air bags are operable and that vehicle ID numbers are legitimate. But the bills would not license rebuilders and would not require broad safety inspections of vehicles, as many consumer advocates had hoped.