WITH no reliable public transportation system to rely on, people in the Kingdom use cars as their main mode of transportation. New or used, sellers of car spare parts say demand is as strong as ever. In recent years, insurance companies have contributed to the number of used spare parts in the market as they often sell damaged vehicles to vendors of car parts. Abdulaziz Alsaleh, a specialist in the insurance sector, said insurance companies sell around 15 to 20 percent of damaged vehicles. However, the insurance company does not make a profit by doing so. “If a damaged car that is sold returns a profit after the cost of repairing the car and the compensation money given to the client has been deducted, then the amount is added to the client's account and may be used in the future when needed. But if the sale price resulted in a loss, the client is obliged to compensate for the loss the second time an insurance claim is made,” he said. Another insurance specialist claimed that when insurance companies sell damaged cars instead of repairing them, the economy is negatively affected because they then import additional cars from abroad in order to compensate for the damaged cars that were sold. “Concerned parties should interfere and put a limit to this practice,” he said. According to Adham Jad, an insurance specialist, the problem with customers in the Kingdom is that they are not fully away of the process of compensation in an insurance company nor the spare parts market. “Insurance companies are not directly involved in selling car parts. All what insurance companies do is sell cars that would be costly to repair. Damaged cars are sold as junk with a lower price than the original one. Insurance companies provide two types of compensation: complete compensation and partial compensation. Only under complete compensation do insurance companies sell an entire car when it is damaged,” he said. Essa Bin Mubarak Albarak, was a car parts seller for over 40 years. He said many sellers commit fraud by selling fake car parts at cheap prices while claiming that they are original parts. Albarak added that when buying a damaged car, he makes sure that all of the pieces installed in the car, from the gear to the engine, are original and in functional condition. “In such a business you face fraud from the seller and the buyer. This is extremely costly and unprofitable for the honest one among the two,” he said. – SG
