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OEM vs. Aftermarket Parts: Building Trust in Your Customer Part by Part

OEM vs. Aftermarket Parts: Building Trust in Your Customer Part by Part

(This magazine article appeared in The Ontario Dealer, in the November 2013 issue.)

The used car industry is on the rise in Canada. IBIS World’s February 2013 report titled Used Car Dealers in Canada: Market Research Report stated that the used car business is a $7 billion industry in Canada.

Yet car dealerships, both new and used, still have a bad media reputation. Aside from the stereotypical, sleazy used car salesman in a Hollywood movie, potential customers can now find various “experts” offering their “expert” opinions on how your dealership operates.

Take for example an article in DailyFinance, a website published by AOL: “Nowhere will you find more upselling than at a car dealership. Cars are generally sold with a bevy of optional features that can raise the price by thousands of dollars, and you’d better believe the dealer will try to sell you on all of them.”

All of this bad publicity can clearly cause a lack of trust between potential customers and your dealership. As customers conduct more and more of their own research before coming through your doors, they may actually find themselves more and more confused. Even just researching aftermarket vs OEM parts on Google can lead to differing statements about car parts. For example: “OEM is an abbreviation for Original Equipment Manufacturer. It means the parts are made directly by the car manufacturer, not a third party.” “All car makers use independent companies to design and manufacture most parts used in their cars.”

A car buyer coming across these two resources can become utterly confused: Is it better to buy a cheaper used vehicle repaired with aftermarket parts that are not manufactured by the car company? Or is a more expensive used vehicle with only OEM parts the way to go?

Further online research may not be very helpful. Online automotive resource states, for example, that aftermarket parts can be superior to OEM parts because they are back-engineered, i.e., aftermarket parts improve upon the OEM parts.

Furthermore, Consumer Automotive Research introduces a difference between Genuine and OEM parts. Genuine parts, according to its website, come in a box with the car brand’s logo on it so the consumer will think the brand made the part. An OEM part, according to its website, will come from the actual part manufacturer who made the original part the consumer is trying to replace. Consumer Automotive Research advises that drivers looking to repair a vehicle older than three or four years should use aftermarket parts. They write, “These parts are made to fit and perform as well as, and in some cases better than the original.”

The key to overcoming all this confusion in your potential customers is by becoming a trusted advisor to your customers. For some, a car reconditioned with OEM parts is the better option. For others, one with aftermarket parts is more suitable. As a used car dealer, you can help them decide.

The Auto Parts Makers’ Association, which represents members who produce only for OEM manufacturers, believes that back-engineered parts may have been superior “a number of years ago, but we don’t believe it’s true nowadays because the OEM spends so much time testing and verifying,” according to Steve Rodgers, president of the APMA.

“We also recognize that special aftermarket parts are encouraged by OEM and dealers,” says Rodgers. Some examples he cites are floor mats, security systems, and special alloy rims for mounting winter tires.

OEM marketing campaigns aimed at used car buyers emphasize the “feel good” aspect of buying used from a trusted name with trusted parts. Pre-owned certified vehicles are meant to build trust in the consumer by emphasizing the benefits of used cars with OEM parts. BMW, for example, advertises on their website that their pre-owned certified cars are “fully equipped with peace of mind.” Honda advertises a similar message: “The decision to buy a certified used vehicle is clear: peace of mind and reliability at a used vehicle price.” GM’s advertising also focuses on the customer’s peace of mind.

There are two problems for the dealership, though:

  1. OEM-certified used vehicles need to have OEM parts. These can sometimes cost up to twice as much as equivalent aftermarket parts.
  2. Used cars sold in good repair but with non-OEM parts don’t have the advertising clout of brand-name certification programs. Dealers then have extra work to do to familiarize potential customers with their work.

There’s clearly a lot of misinformation out there, and trying to convince buyers that your dealership is worthy of their trust and that your used cars are indeed safe, meet or exceed industry and government standards, and have all required paperwork with them can be tricky. For car dealers reconditioning vehicles outside of OEM certification programs, aftermarket parts come into play.

Most consumers know they’re not going to luck out with finding Transformer Bumble Bee on a used car dealer’s lot. Still, they want to know what they’re buying. Following government regulations is necessary, to be sure, and consumers in the market should also be informed of these regulations. Not only can this help dissuade potential customers from purchasing privately, but it can also help them steer clear of curbsiders.

Dealers use various techniques to increase the customer’s trust in them before even setting foot on the lot. Some, such as Frank Gies Automotive in Waterloo and Wilson’s in Guelph, post customer testimonials on their website. Others, like Forbes Automotive in Waterloo and Highland Ford Sales in Sault Ste. Marie, emphasize their longevity. Tilbury Auto Mall in Chatham-Kent and Ontario Chrysler in Mississauga use photos of their employees instead of models, and Haldimand Motors in Cayuga draws on the owners’ strong Christian faith. Many dealerships may certainly use more than one of these techniques.

Not all consumers, of course, want to pay for OEM parts. While certified pre-owned vehicles can build trust in potential buyers, other buyers prioritize price above name and will prefer used vehicles reconditioned with aftermarket parts. In addition, not all franchise car dealerships sell only certified used vehicles and do use aftermarket parts to recondition some of their pre-owned inventory

However, not all aftermarket parts are created equal. Rodgers says, “We’ve seen some aftermarket brake pads that have high asbestos content that puts the workers at risk when installing these brake pads.” Body parts are also more suitable from an OEM than aftermarket manufacturer, Rodgers believes.

“Aftermarket sometimes doesn’t use two-sided galvanized steel and won’t provide the same security,” he says.

Robert Duncan, regional vice-president for NAPA Auto Parts, agrees that not all aftermarket parts are created equal. The greater Toronto area (GTA) “seems to be at times a dumping ground for product from all over the world that may or may not meet OE specifications,” he says.

“A lot of this product can be manufactured in China or Taiwan or in different places where their standards can be much lower,” says Duncan. “Foundries with dirt floors, for example. You don’t know what you’re getting in the box much of the time if it’s an offshore product. We see that. That’s nothing new.”

That doesn’t mean that all parts from China are cheap, according to Duncan. “We do buy lots of product that’s manufactured in North America and in China, as do many auto parts distributors in North America. Everybody buys out of China.”

However, just like used car dealers, NAPA knows that trust is key. “We have a brand to protect,” says Duncan. “We won’t put sub-standard product in a box with the NAPA brand on it.” Moreover, by having NAPA offices in China, NAPA is in direct partnership with a select few foundries and can ensure the quality of its parts.

In the end, though, the most crucial factor may simply be trust in the dealer, at least according to consumer Alex Short, a resident of Milton: “I don’t think the parts are what would make the ‘Ford-certified’ valuable to me. A warranty I think is the key here. It would have to be a reputable dealer so I have the feeling that it will actually be there when a repair is needed.”

Whatever solutions used car dealers use, it simply needs to build trust in the customer. In the end, transparency is key.  Even if used car dealers not operating under a trademark name offer clear standards that they adhere to and tell customers where they purchase their parts, customers should receive the peace of mind they’re looking for.

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