Government: "OEM Parts Available for Repairs Upon Vehicle Owner's Request Instead of Certified Replacement Parts"

A Step Back in Consideration of Consumer Opinions

The government has decided to give consumers the option to repair their vehicles with original equipment manufacturer (OEM) parts produced by automakers if they wish, in response to controversy over revisions to insurance terms regarding the replacement of certified automotive parts. This decision was made in consideration of strong consumer backlash, as many questioned whether it was reasonable to replace parts with cheaper alternatives instead of OEM parts while paying the same insurance premiums. The revised terms will go into effect as scheduled on August 16.

On August 5, the Financial Services Commission, the Ministry of Land, Infrastructure and Transport, and the Financial Supervisory Service announced that they would proceed with the scheduled revision of the standard automobile insurance terms on August 16, but would further improve the system by expanding consumer choice.

First, if a consumer requests it, a special agreement will allow repairs to be made using only OEM parts.

For new vehicles within five years of release, only OEM parts will be used. This is because vehicle owners are particularly sensitive about new car parts, and there are significant concerns about a decrease in vehicle value.

For major parts that are closely related to vehicle operation, such as brakes, wheels, and steering systems, the use of certified replacement parts will be restricted. Certified replacement parts will only be used for exterior parts that are less relevant to vehicle operation, such as bumpers, hoods, and fenders.

In addition, the current special clause for the use of certified replacement parts under own damage coverage, which provides a 25% refund of the OEM part price, will be improved. If the vehicle owner chooses to repair with certified replacement parts, 25% of the OEM part's listed price will be paid separately. This is intended to encourage the use of certified replacement parts.

The government has announced that, starting August 16, it will implement the revised standard automobile insurance terms that encourage the use of certified replacement parts first when replacing automotive parts. However, faced with strong consumer opposition, the government has decided to expand consumer choice and gradually encourage the use of certified replacement parts.

A government official stated, "Going forward, policy authorities will create conditions that promote the use of certified replacement parts while considering consumers' right to choose automotive parts," and added, "We will also strengthen the management and supervision of certification procedures and methods for certified replacement parts."