by Gary Brooks, CMO, Syncron
The grey market – where a product is bought and sold outside a manufacturer’s authorized trading channels – has long been a thorn in Original Equipment Manufacturers’ (OEMs) sides. “It’s more difficult for manufacturers to control quality – and for consumers to be sure they’re getting parts that are built to work with their vehicles – when they come through the grey market,” according to Josh Dalton, a leader of intellectual property issues at Morgan Lewis. Dalton elaborated, “it’s an easy channel for counterfeit goods to be funneled in as well.”
The legality of grey market parts continues to be blurry. Several court cases in recent years have ruled both in favor and against the OEM, leading to no clear resolutions on how to successfully navigate and fight against the grey market and its negative implications.
The grey market continues to be a quality and safety concern for OEMs and end-consumers alike. The Insurance Information Institute reported that aftermarket parts have saved consumers more than $2.2 billion in repair costs since 2010, but unfortunately the bulk of these parts are not certified for quality or safety.
While many aftermarket companies buy the rights to manufacture parts from the OEM, many do not, and this leads to immediate quality and safety concerns – concerns that could ultimately negatively impact the OEM’s brand reputation. The Certified Automotive Parts Association (CAPA) exists to help mitigate the risks associated with grey market parts, but only about one in five aftermarket parts is CAPA-certified.
Recently, one of Europe’s largest heating technology manufacturers, Vaillant, released a short video highlighting the benefits of genuine spare parts.
Videos like this are a great tactic for all OEMs that combat grey market parts to showcase the importance of genuine, OEM certified replacement parts. Specific benefits highlighted in the video include:
In addition to marketing tactics like simple, informational YouTube videos, manufacturers should also consider the following when competing against grey market part providers:
For many OEMs, after-sales service has long been a sub-optimized area of business. In today’s climate, however, companies that are unable to meet service demands will quickly see customers purchasing parts elsewhere. Manufacturers must consider investing in technologies to make the service experience more seamless for the end-customer, as well as equip (or hire) staff that embrace change and have a desire to innovate.
There is more pressure on manufacturers than ever to enhance the customer experience, and unfortunately the status quo just won’t cut it anymore. The manufacturers that compete and win against grey market part providers will be the ones to invest in both human capital and technology to further enhance their abilities, especially in the case of after-sales service.
About Gary Brooks:
Gary Brooks is chief marketing officer at Syncron. With 20 years of marketing experience, Brooks is a revenue-focused B2B marketing executive who believes in qualitative work with quantitative results to deliver breakthrough revenue performance.
Meet Pete Jadwinski, Vice President of Sales at America in Motion (AIM) a company producing all-in-one materials handling solutions deploying custom-built Automated Guided Vehicles (AGVs). We discuss the history of the company founded by innovator Tommy Hessler and learn how mobile automation is the future of optimizing workflows and improving working conditions.