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Above and beyond these criteria, additional facility requirements are specified in a contract between the AAA and the approved facility.

For example, the contract specifies that:

Written estimates must be offered to members identifying themselves to the approved facility;

Replaced parts must be returned to the member;

The shop must offer, as a minimum, a 90-day/4,000-mile warranty on parts and labor;

New parts must be used unless otherwise authorized or requested by the customer;

And, most importantly, approved facilities must agree to cooperate in our investigation of complaints and agree to abide by our decision in the event of disputes.

That our criteria work and that approved facilities are doing the job is evidenced by the most important yardstick of all, and that's satisfied customers. Here in Houston we have been tracking member satisfaction with a self-addressed rating card that is actually available in the facility that is sent back to us; 93 percent of those members who have returned the card report satisfaction with the repair

Further, 93 percent also indicate that they would return to the same facility for further repairs.

But why is our program working when others, including both government and industry, have sometimes failed?

The answer will become clear as I relate some of the weaknesses we have found in other programs before we developed our own.

First, most programs were limited in scope. For example, they concentrated on truth-in-repair or mechanic licensing laws and failed to set actual performance standards.

Second, regardless of whether they were industry or government, they all suffered from an after-the-fact approach to the problem. That is, they did very little to prevent problems from occurring in the first instance.

Third, we found lawyers, law students, and publicity people dealing with technical matters. We found very few technically qualified people actually investigating complaints.

Fourth, we found built-in delays manifested by a clutter of complaint forms and general redtape. These delays in complaint-handling mechanisms were nearly as painful as the repairs themselves.

So, we took a new approach, one which attacks the problem from as many angles as possible and eliminates major weaknesses found in other programs.

Our program is effective for a number of reasons:

First, as noted, our criteria eliminates complaints at the source by selecting quality shops;

Second, our contractual agreement with approved shops requires them to abide by our decision in the event of disputes;

Third, and finally, AAA's effectiveness has been enhanced by a fast, fair complaint handling system which concentrates not on paperwork but rather on getting the motorist back on the road.

Complaints inevitably occur in even the best shops and, when they do, we require our specialists, all certified mechanics, to become involved quickly and work closely with the garage and member to resolve the dispute as quickly as possible. We get back to the member within 1 day of his complaint and resolve all complaints within an average of 6 working days.

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So, the program is working, nationally and here in Texas. We currently have 30 approved facilities in the Greater Houston metropolitan area. The degrees of satisfaction with these facilities, as noted previously, has been over 90 percent.

In 1979 we anticipate expanding the program into other parts of Texas, including San Antonio, Austin, Fort Worth, Waco, and Beaumont. And, of course, looking further into the future, the possibility exists for strengthening the program by introducing our own diagnostic centers.

We at Triple A take seriously our responsibility to our members and to the motorists in general. We are pleased with the success of our program and look forward to expanding it to more areas in Texas and the United States.

We believe that our program is providing a real public service, by locating honest, competent repair facilities who will stand behind the work they perform. It is our hope that continued program success will dispell the belief that satisfactory auto repair service is impossible to obtain.

This concludes our prepared statement, Mr. Chairman. We would be happy to answer any questions that you may have.

Mr. ECKHARDT. How many disputes have you settled in the Houston program in the last year?

Mr. JAMES. Let me get my fact sheet, sir, and I will give you that.

We have had about 160 complaints in the past year?

Mr. ECKHARDT. And have all of these been disposed of during this year?

Mr. JAMES. One way or the other; yes, sir.

We have determined that about 40 percent of those were unjustified complaints and about 60 percent were justified complaints.

Mr. ECKHARDT. Of those 60 percent, since you had a prior agreement, did you get a satisfactory settlement?

Mr. JAMES. Some sort of-a complaint may be as simple as, "They left grease on my steering wheel,” which can only bring forth an apology or a free car wash, up to a major problem.

Mr. ECKHARDT. But, of course, your program would have to be limited to those shops that are willing to come into the program.

Mr. JAMES. Absolutely; yes, sir.

Mr. ECKHARDT. And presently, how many do you have in the Houston area?

Mr. James. There are 32 as of today, sir.

Mr. ECKHARDT. You have 32 repair facilities that have been approved. Now, is that small number because of a reluctance to give up the element of self-determination concerning a dispute by the shops, or is it as a result of the extremely high qualifications which you may place on shops that are approved by the AAA?

Mr. JAMES. It is a combination of both, actually, sir. Some shops have actually applied that did not meet our criteria and have been turned down and others, as you state, don't want to give up their independence and abide by our constitution.

Mr. ECKHARDT. Is it possible that your requirements may be a bit too high to be realistic?

Mr. James. We don't feel so, sir. We have small shops, from very small shops up to large dealers in the program, not only here but in other parts of the country.

Mr. ECKHARDT. What is the standard involved as to the shop having certain equipment?

Mr. James. There is a published list of equipment that is the same list that is used throughout the United States and we feel that it is the minimum list where you can get adequate repairs. And we are aiming at repairs that cover what we think is about 80 percent of a carowner's repairs that a carowner may require throughout the ownership of a car.

For example, a shop does not have to offer major engine overhaul to get into our program.

Mr. ECKHARDT. Well, how much would the aggregate cost of such equipment be?

Mr. James. I would be afraid to guess that at today's prices. You know, that can range-

Mr. ECKHARDT. But you say, even a small, but well-equipped shop would be expected to have that amount of capital investment?

Mr. James. Yes, sir.

Many of them do. We have shops with three or four employees that are in the program.

Mr. ECKHARDT. Could you estimate for us how much it costs AAA to run such a program in a city the size of Houston?

Mr. James. Probably around $60,000 to $70,000 a year.
Mr. ECKHARDT. Well, that seems rather cost effective.

If you had to get into the diagnostic service, would we be talking about a much higher cost than that?

Mr. JAMES. Tremendously more; yes, sir.

Mr. ECKHARDT. Would it be your judgment that it would be best for an agency like yours to get into the diagnostic field, or would it be better if it were able in some manner to afford some kind of mechanism, either by private, independent entrepeneurs or by something connected with local government and State government, to establish diagnostic centers?

Mr. JAMES. I don't feel an agency such as Triple A could ever afford enough diagnostic centers to meet the requirements of the general public in a city the size of Houston. I don't believe private entrepeneurs will get into the program for the basic reason you don't see them in the program today. It won't pay for itself.

Mr. ECKHARDT. Well now, before the Motor Vehicle Information Cost Savings Act was granted, I looked into this fairly intensively, including some investigation of the operations in Europe. I think it was Belgium that had a program by which the Government contracted for inspection stations that were fairly sophisticated compared to our inspection operations. With a little more reach, it would be conceivable that a combination of governmentally required inspections could embrace a reasonably low cost diagnostic system, particularly in view of the fact that we are going to have to inspect the operations of the engines in more detail when we get into inspection concerning pollution control.

Belgium did not try to make this system pay as it went. It actually contracted for it and in that way the Government ran it on the basis of a combination of fees and Government cost, and perhaps where it is required you could make it pretty well selfsustaining.

What do you think about such an approach?

Mr. JAMES. Well, it would have to be run, of course, on a national basis to make it fair between the States.

Mr. ECKHARDT. Do you think it would have to be on a national basis?

Mr. JAMES. Yes, sir.

If you didn't have it then there would be great disparity between rural and urban areas, between States, between different State's interpretations. I think you would create a lot of hard feelings and maybe some real problems if you didn't have national standards.

Mr. ECKHARDT. In Britain, the program for inspection of trucks was simply a national program conducted by the Government. With respect to automobile inspections, this was done by private facilities on a fee basis. Then, of course, there's a question of whether or not you should permit repairs in the same place as you permit inspections. Do

you have any comments on that type of system? Mr. JAMES. Of course, the inspection done in a local private garage is basically what we have here in Texas, approved shop and, of course, the inspections that we have here are generally, quite frankly, superficial compared to the ones they have in Europe, and it doesn't create a problem here as we do it now.

But I think if you went into the extensive inspections as they do in Europe by shops that do repairs, then you are going to create a lot of questions in the consumer's mind as to whether the repair was actually needed or not.

Mr. ECKHARDT. Of course, it seems to me, if you are going to make it a requirement, you have got to bring it down to a cost that is small enough so that a person can afford to have an inspection made before and after repair without too greatly burdening the consumer. Otherwise, if it is compulsory, it probably would justify the complaint of having that imposed upon him, or if it were voluntary, it simply would price him out of the market. So, there are a lot of problems involved in this approach.

You feel, though, that diagnostic clinics which attempt to operate purely as a business proposition probably would not make it?

Mr. James. I don't think they are feasible, sir. If it was feasible we would have them on the market today. If you will drive around the city of Houston you don't see them.

Mr. ECKHARDT. Another thing that impresses me, which I have mentioned to other witnesses, is the program that is conducted in Washington, D.C.; which puts out this publication checkbook. It really doesn't purport to examine the specific operations, but it depends on reports of satisfaction by consumers.

I suppose, though, some of those are among the 40 percent of the cases that were dismissed and some are among the 60 percent of the cases that were justified. As a comparison between shops, the result may be reasonably accurate. Do you think that is a justifiable conclusion?

Mr. James. I believe so, sir. I have seen this publication that you are talking about and I think they have made a remarkable effort, based on what I have seen here, unbiased.

Mr. ECKHARDT. And, it doesn't appear to be rather cost effective. Of course, they complain that, to a large extent, they have to be sort of a public service operation because they maintain that their book is passed around widely, and it is used by many persons who don't pay

the fee for it. So, it strikes me that an operation like that would be worth some funding

Mr. JAMES. I agree, but, here again, if we are going to do it on a national basis, I would think that would be a tremendous undertaking. Where are we going to cut it off? Are we going to cut it off at cities of 25,000 or above? There are so many cities involved.

It would have to be kind of a local thing, again, with maybe some assistance from the Federal Government.

Mr. ECKHARDT. The estimate we had on this in testimony the other day is that it would cost under $5 million to provide it to over half the population of the country.

Mr. JAMES. That would probably be a bargain at those prices.
Mr. ECKHARDT. Well, I certainly thank you for your testimony.
Mr. James. Thank you, sir.
Mr. ECKHARDT. Mr. Allen S. Persley.

STATEMENT OF ALLEN S. PERSLEY, HOUSTON TEX. Mr. PERSLEY. Good afternoon.

I have a prepared statement. I would just like to say that I don't represent anyone-

Mr. ECKHARDT. Will you identify yourself for the record and state whether you are appearing on your own behalf.

Mr. PERSLEY. My name is Allen Persley and I am appearing in my own behalf. I don't represent anybody except myself and friends of mine.

I support Mr. Ditlow in his contention that meaningful action is necessary now to protect the consumer from the abuses that we suffer at the hands of the auto repair industry.

The existing consumer fraud and protection laws are, by their own nature, deceptive. Practically, they are unenforceable.

In rare cases of conviction the courts are too lenient in administering punishment.

From the legal aspect there are evidentiary and proof problems.

How many consumers do you know that can afford to lose the services of their car for a period of 6 to 9 months in order to preserve the evidence in a criminal case?

To illustrate these problems I want to recall the Sears Roebuck case which received a great deal of publicity in Houston. A guilty plea to a two-count misdemeanor information charging deceptive business practices was obtained. Sears was fined $250 on each count.

In reference to the present inspection system in Texas, I differ with Mr. Markatellie's assessment. An auto is generally tied up for a whole day just to get an inspection. Since the fee is nominal, the mechanic loses valuable time and money in performing this service.

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