Independent repair shops perform roughly 70 percent of post-warranty service work, and do so largely with non-OE parts. A new paper from MOTOR Information Systems indicates that OEs could move more of their parts through the aftermarket supply chain through proper data coding and other steps.
The paper (“How to Generate More Demand for OE Parts”) explains the importance of leveraging correctly coded parts data.
“There is great opportunity to create additional parts demand from OE manufacturers given the abundance of cars on the road today with sophisticated drive chains and technology,” says Jeff Nosek, executive vice president at MOTOR. “This paper is an opportunity to educate OE manufacturers on how trusted data providers today can amplify this parts demand across the channel.”
While automakers sell parts via mechanical and collision wholesale programs, they are currently missing out on the majority of the estimated $722.8 billion aftermarket parts market. According to MOTOR, there is significant untapped opportunity for OEs and dealers to sell more parts to independent repairers, and this demand can be met with existing programs by partnering with a data provider to code OE parts and make that enhanced information available across channels.
The paper quotes several statistics to show the opportunity gap for OEs and dealerships:
“Fixed operations account for one-half of dealership gross profits, while capturing only one-third of the available market. According to the [National Automobile Dealers Association] Annual Dealer Financial Profile research, fixed operations accounted for 49 percent of dealership gross profits in 2017, yet dealerships currently receive only 33 percent of all service visits in the U.S. according to a recent Cox Automotive Service Industry Study.”
According to MOTOR, most automakers have not made their parts data widely available and coded to ACES (Aftermarket Catalog Enhanced Standard) format. Using ACES, suppliers are able to publish standardized vehicle characteristics and parts classifications, which provides an advantage when selling to aftermarket repair shops.
In part, that is because traditionally there have been some cultural and business obstacles to this type of data sharing. “Automakers have historically been concerned that making their parts information widely available benefits only their competitors,” Nosek says. “With dramatic changes in technology influencing data use and delivery, limiting access to parts information today is counterproductive. For example, the advent of e-commerce has taught customers to shop around for products. If data is not made available on all e-commerce platforms, the owner of the data will not even be in consideration.”
Getting OEs to trust these channels requires confidence in data governance and controls over where the data is distributed and who can see it. “Trusted data providers today have key relationships with tight contracts that control how companies can and can’t use the OEM data – similar to the way Apple controls how music is downloaded with royalties paid back to the artist, which in this case is the OEM,” Nosek says. “For continued confidence in the control of their data, an automaker needs transparency into the use of that data. Today’s technology enables precise tracking of massive amounts of data, and this transparency can provide new insights into parts demand.”
ACES formatting not only makes it easier for buyers to find the correct parts, but also helps improve communications across the supply chain during these transactions. Standardization also makes it easier to execute e-commerce strategies.
“Trusted data providers today can help automakers create and execute on a comprehensive data strategy, to best determine where the data goes, prioritize opportunities while casting a wide net, and ensuring that it will be protected,” Nosek says. “They can help OEMs determine which data assets should be made available, including an inventory of data that’s currently not utilized or underutilized. Lastly, the right data partner can help determine use cases for maximum value and can add value to the data to allow downstream customers to append other data, and make it commercially available with industry standards, link parts, services and images.”
