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White Paper on Parts ProgrammesOctober 12, 2013
Lower-priced, second – tier parts programmes may not be the answer for every vehicle manufacturer and may even damage brand value, according to a report from leading international business specialists, Impetus Automotive.
With growing pressure on vehicle sales and profit margins, parts can offer a steady, high-margin income stream and, in an attempt to claim market share, has resulted in the introduction of lower-priced offers aimed at owners of older vehicles to boost revenue.
But the report, published this month as an industry white paper, challenges the value of such programmes and highlights the benefits and opportunities of maximising the core brand through a review of current parts usage and making price adjustments.
Entitled “All-Makes Parts and Second-Tier Parts Programmes – the case for and against’, the paper from Impetus Automotive is the result of research undertaken with a range of automotive brands, which revealed almost 100% of IMTs would prefer to fit genuine parts, provided price and availability were right.
It argues that introducing such programmes is costly and labour-intensive and can raise questions in the minds of dealers and customers about the manufacturer’s pricing policy and ethics.
Andy Mills, Operations Director from Impetus Automotive, said: “Our research showed that what began as a strategy to reverse declining parts sales, might actually accelerate the process – and damage brand identity at the same time.
“As global automotive specialist consultants, we believe the risks outweigh the benefits and that rather than adopting these types of schemes, investment should be made closer to home in releasing the far greater revenue and margin opportunity with the core OEM band.
“If sales processes, price, communication and network are right, sales will follow – and with it the protection of profits and brand reputation, as our paper shows.”