Economy Hurting A/M Parts Suppliers As Well As OEMs - BodyShop Business

Economy Hurting A/M Parts Suppliers As Well As OEMs

Considering the financial troubles the Detroit Three are having, dealership closings and reports of parts delays from collision repairers, one might assume that aftermarket crash parts suppliers are trying to seize the opportunity and increase market share. But it appears as though the poor economy has impacted them, too, and any benefit from the OEM crisis they might have received has not been felt.

“Business has been soft all over, and there’s a general malaise within the industry due to the economy moreso than what’s taking place with the OEMs,” said Stan Rodman, executive director of the Auto Body Parts Association (ABPA). “Collision repairers, I’m sure, aren’t running where they were last year, and the economy is masking positive signs we otherwise might see.”

Some industry insiders feel that due to poor new vehicle sales, OEMs will concentrate more on their parts business, which might counter any effort aftermarket suppliers might make to fill any potential voids.

“It’s not beyond the realm of capability that OEs will try to replace or augment one profit center with money they’re losing off [new car sales],” said Rodman.

Rob Wagman, vice president of operations for LKQ Corporation, said his company has increased its crash parts inventory by 20 percent “just in case” but so far hasn’t experienced any jump in business.

“I talk to insurers every day, and not one carrier has said there has been an OEM supply chain disruption,” Wagman said. “So, short of increasing our inventory, we haven’t done anything else. If it never comes to fruition, we’ll just work the inventory down. If it gets to be the case that you can’t buy hoods or fenders anymore, we’ll be ready, but that hasn’t happened yet.”

While LKQ hasn’t felt any uptick in business due to the OEM crisis, Wagman says the company has been negatively impacted by decreasing miles driven. At the same time, he says the current economic conditions play into its hand.

“In a poor economy like this, everyone’s looking for cheaper alternatives to keep costs down,” he said. “People are hanging on to their cars longer and opting to repair them.”

Also refuting claims of parts delays is Steve Nantau, Collision Repairs Engineering Supervisor for Ford, who said, “Chrysler is up and running, GM is out of bankruptcy, and we haven’t missed a beat.” The repairers he has talked to say they haven’t experienced any delays yet but are still concerned about the possibility.

“The big concern is the tier two and three suppliers,” said Nantau, referring to the 50 percent of Ford suppliers that are under financial stress. “Unfortunately for repairers, those parts might be a pillar trim cover or air bag fastener or dash cover or something unique like that.”

Nantau said he believes that parts distributors or dealers closing will have no impact on shops, citing the fact that Ford has 4,000 dealers, almost 400 of which are wholesaling dealers that handle 80 percent of the demand from shops.

“You don’t need a whole lot of dealers to service shops,” Nantau said. “And our dealers everywhere get overnight parts delivery.”

Nantau added that Ford stocks over 100,000 crash parts and only faces competition for 2,000 of them. That means that 98,000 come from a single source – Ford.

“You’re not going to see Keystone getting into the door panel business anytime soon,” he said. “You would need three colors for each vehicle and you would only sell 10 of each each year. But we have to make them.”

Eileen Sottile, executive director of the Quality Parts Coalition (QPC), believes that, if anything, the OEM crisis has made the patent infringement issue aftermarket crash parts suppliers face more relevant.

“We have to realize that if the car companies are able to continue to secure patents on parts and exercise those patents and ban the import of competitive parts, there will be no parts available unless there are recycled parts to be found,” Sottile said. “These 14-year patents are a monopoly on parts. They create one source for parts, but if [the OEMs] can’t distribute them then no one can and thus the parts will become unavailable.”

You May Also Like

Cruise Postpones Release of Driverless Taxi Service

Cruise, a GM subsidiary, recently announced that it will miss its goal of launching a large-scale self-driving taxi service in 2019.

Cruise, a GM subsidiary, recently announced that it will miss its goal of launching a large-scale self-driving taxi service in 2019. Cruise CEO Dan Ammann said the company plans to dramatically increase the number of its autonomous test vehicles on the road in San Francisco, but will not be offering rides to regular people this year, according to an article from The Verge.

Cutting Edge Automotive Solutions Partners with Andretti Rallycross

Andretti Rallycross announced that Cutting Edge Automotive Solutions will serve as technical partner on Cabot Bigham’s No. 02 OINK Clothing Beetle for the remainder of the 2019 Americas Rallycross season, showcasing their SP Tools USA brand.

Ford, Volkswagen Expand Collaboration to Include Autonomous, Electric Vehicles

Ford Motor Company and Volkswagen AG announced they are expanding their global alliance to include electric vehicles – and will collaborate with Argo AI to introduce autonomous vehicle technology in the U.S. and Europe.

CCAR Updates Website with More OSHA Alliance Resources

CCAR (Coordinating Committee For Automotive Repair) has announced the addition of new Occupational Safety and Health Administration (OSHA) Alliance content on its main website, www.ccar-greenlink.org.

CARSTAR McLaren Lake Forest and CARSTAR McLaren Irvine Open in California

Owned by husband-and-wife team James and Mary Davis, CARSTAR McLaren Lake Forest and CARSTAR McLaren Irvine are a family business.

Other Posts

CIECA to Offer Webinar on What Businesses Need to Know to Implement CIECA Standards

CIECA will hold its next CIECAst webinar, “Implementing CIECA Standards: Implementation Guide and Appendix C – BMS, Code Lists and Shema Components,” on Tuesday, Dec. 11, 2018 at 11 a.m. CST.

CARSTAR Urges Customers to Stay Winter Ready

Cold weather can create some of the harshest driving conditions of the year. The months between October and February top the list for accidents, vehicle damage and injuries.

CIECA Adds Broadly as Corporate Member

The Collision Industry Electronic Commerce Association (CIECA) announced that Broadly has joined CIECA as a corporate member.

NABR Launches BillableGenie Online Searchable Database of Insurer-Paid Not-Included Procedures

National AutoBody Research (NABR) has announced the launch of its BillableGenie online service, an independent, centralized source of actual data on insurer paid not-included procedures and operations, labor rates, labor rate concessions and other manually entered estimate line items.