Wednesday, August 25, 2010

Just What Is a Genuine Part?

David Carlisle

Over the past few decades I have been asked to be an expert witness in several situations. Undoubtedly the most interesting subject that I have testified on was what it means for a part to be “genuine.” It really got to the heart of my lifelong passion for this industry.

So, what is a genuine part?
Genuine is all about quality; the kind of quality that companies guarantee to their customers. Individual genuine parts work with other genuine parts to form a completed vehicle that is warranted to work for an ungodly long period of time. Ungodly is indeed the correct adjective. You go out and buy a big flat screen TV for $5,000 that has almost no moving parts; you bolt it to a wall where it never moves, watch it for about 1,000 hours during the year, and it is warranted for 12 months … and that’s just fine with everybody. Compare this to a car or truck and where you have thousands of parts; hundreds of them moving, for over 1,200 hours over 3 years, travelling over an incredible diversity of uncontrolled road and climatic conditions … and we all expect pretty much flawless performance. JD Power measures microscopic differences in defect rates (all of which are covered by warranties) and brand images are made or broken by tiny fractions important to enormous factions.

And yet, in the midst of all this we sometimes get confused by what a “Genuine Part” really is. Sometimes I think that we just need to think about all this backwards – Genuine Parts must:
  • Be identical in performance to the original part, so that
  • It can deliver flawless product quality, that
  • Can ensure perfect systemic performance with all the other parts, for
  • Over 1,200 hours of use,
  • Within a three year vehicle lifespan, or
  • The distributor of the “Genuine Part” will pay for all labor and parts needed to warranty this vehicle lifespan.
This puts a different spin on “Genuine.” Genuine is not so much about the individual part, but is about how that part works with a system of parts that are covered by a contract called a vehicle warranty.

In the auto sector many players -- Honda, VW, GM, Chrysler and others – are getting increasingly aggressive in appropriately defending their turf. Honda’s policy statement shown above makes it clear to consumers why and how non-genuine parts can decrement the performance of the systems that the OEs spend years and millions of dollars developing. VW clearly excludes from their warranty damage to other parts of their vehicles that are caused by use of several classes of non-new/non-genuine parts to repair their vehicles. GM has some excellent consumer information relating to the real differences between genuine and non-genuine parts (e.g. number of welds used in genuine versus aftermarket hoods). Chrysler has printable PDFs for consumers defining terms like “OEM Parts”, “Aftermarket Parts” and “Salvage Parts”, and includes a form letter that the car owner can sign to request that their insurance adjuster/repair facility use genuine parts in repairing their vehicle. These – and there are other examples – are appropriate efforts to be sure the consumer really understands the tradeoffs of quality versus cost for parts.

We need to do more of this. Lord knows the aftermarket isn’t shy about making their case. They bombard consumers with marketing efforts to show their parts are “just as good” – and in extreme cases claiming aftermarket parts “might even be better since it has been modified/improved” relative to what the OE developed.

So what exactly is it that these efforts are trying to combat? Here’s a plausible situation. Car or truck has a horrific crash at 70 mph, airbags go off, engine busts out of mounts, people killed. The crumpled hulk then sits in a junk car lot for a bunch of days. A company like LKQ/Keystone buys the hulk and strips out the parts that aren’t really banged up – after all, they look OK to some guy with a wrench and dirty pants. What used to be “junk car parts” are now “rebranded” as “alternative parts” or “recycled parts” or “new parts sourced from alternatives to the OEMs” Wow! No wonder our customers are confused!

Now, someone else has a fender bender and goes to a body shop to get it fixed. The insurance company specifies one of those “rebranded” parts (remember, they aren’t “junk parts” anymore) that comes from the crash I just talked about. Is the vehicle repaired with that part really the same as it was before the crash? Is it really reasonable to still hold that vehicle manufacturer responsible for a warranty contract on that vehicle when the “system” has been infected with crappy junk car parts? That just seems silly, no let’s just call it stupid, to me.

So how do we fight this? The examples cited above are a good start. I could even imagine an industry marketing campaign. Imagine the potential impact of a well executed TV ad based around the “life-cycle” of a part as described above. Giving consumers a visual, vivid illustration of where those parts have been/where they come from might really give them pause when they came to do their next repair.

Bottom line: it is very important to fully understand “Genuine” as part of a brand management strategy. It is critical to distance yourself from non-genuine.

This is a critical issue. We have seen some auto examples of what auto is doing. What is happening in heavy truck, heavy equipment, construction, agriculture? Let us hear from you!

This is so important that I want to keep this thread going. Next week I will talk about non-genuine non-collision parts. Depending on what we hear back maybe more in future weeks.

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