Auto dealers and repair shops have been feeling an economic squeeze, with pressure mounting on multiple fronts. First, revenues have been suppressed by insurance companies as we previously shared. Second, auto part costs are high – maybe too high. In response, a group of auto dealers have sued KYB, an international manufacturer of shock absorbers, in Michigan for alleged price fixing.
This suit isn’t KYB’s first time in the legal spotlight. The company pled guilty to price-fixing charges brought by the U.S. Department of Justice in 2015. In its plea, KYB admitted that it conspired with other parts manufacturers to learn how much various automakers were willing to pay for parts and then coordinated price adjustments accordingly. KYB agreed to help the U.S. government in its ongoing investigation into price fixing in the auto parts industry. That investigation resulted in 37 companies being charged with more than $2.6 billion in criminal fines, according to the Department of Justice.
Litigation in the auto dealers’ Michigan case is heating up. KYB is attempting to delay discovery over the dealers’ objection. While an ultimate resolution may be far away, and it is difficult to predict the ultimate impact this will have on the industry, it could result in more competitive (and lower) costs for parts for dealers.
* Adam Steele contributed to this post.