A California shop owner is concerned about his ability to continue to obtain OE parts.
Question
How will the decline in the number of new-car dealerships, and possible bankruptcy of several of the new-car manufacturers, affect my ability to obtain OE replacement parts?
OE replacement parts
The question is a difficult one for which there is no simple answer. The chain of demand for parts produced by OE suppliers first looks to the vehicle manufacturing process, then to supplying the franchise dealer network enabling them to maintain warranty service as well as to provide ongoing service and repairs for their customers. Also, new-car dealer parts departments distribute OE parts wholesale to the independent aftermarket service provider segment of the industry.
Continuing with the thought of a possible shortage of OE replacement parts, also take into consideration the current economic conditions that are prompting OE franchise dealers to rethink their parts wholesaling strategies. With new-car sales at all-time lows, dealers are competing more aggressively for more of the service and repair business previously enjoyed by other segments of the repair and service industry. Having OE parts available in many instances provides them with a competitive advantage, especially if the parts are captive.
Recent news releases have indicated that the federal government is considering guaranteeing payment to suppliers to the vehicle manufacturers to ensure that they continue to supply parts for manufacturing and distribution. If this guarantee takes place, it could lessen the fears of OE parts becoming scarce.
Aftermarket options
Additionally, most OE parts are also available through aftermarket sources. Several of the OE parts suppliers supply the aftermarket parts distribution companies, many through private labeling. OE suppliers also supply the aftermarket service and repair industry through distribution networks and private branded product. Look for private branding to become an increasingly hot topic this year.
When considering replacement parts, repair shops may want to consider the option of the upgrading of systems for performance or durability. Those parts often are more readily available from performance aftermarket parts manufacturers and suppliers.
Rebuilt/remanufactured components and parts
Another source for the repair shops is rebuilt/remanufactured components and parts, which in many cases carry a similar warranty to new parts provided by the OE and aftermarket distribution channels. This option may also provide repair shops with a more competitive pricing capability.
Rebuilding and remanufacturing companies have improved their quality, availability, and warranties significantly over the years, and the industry has responded positively by including this source as a viable or preferred option.
Salvage or recycled parts
The option of using recycled parts has not been used anywhere near as much as it could be. Recyclers have become very sophisticated businesses that have invested heavily in their industry. In most instances, vehicles are totally dismantled and the parts cleaned, tested, catalogued, and stored in a similar manner as parts distribution warehouses and parts stores.
Having implemented technology to network, recyclers provide a huge international resource of quality parts with a great deal of life left in them. Parts are often graded based on wear and condition, and priced accordingly. Many recyclers offer excellent warranties. Use of recycled parts is also an excellent alternative to OE captive parts.
Conclusion
The current economic climate is generating a much stronger competition among the many segments of the service and repair industry. Many of our sources are indicating that a significant number of their customers are declining repairs because they feel they just cannot afford them.
While OE parts may be desirable and in many instances available, I believe that rather than losing a job and perhaps a customer, shop owners will consider all of their options when competing for business in this volatile market.
Robert “Bob” O’Connor is president of R. L. O’Connor & Associates Inc., a Seattle-based automotive operations and management training and consulting firm. He is best known globally for his automotive business management workshops, continuous improvement Bottom-Line Impact Groups, and his sales training division, the Service Advisor Academy. O’Connor is an instructor approved by the Automotive Management Institute (AMI) and an AMI EXCEL “Guarantor.”
