Idle Parts: Market-Making Services and Products

Franchised dealerships purchase OEM service parts from vehicle manufacturers (and, in some cases, from Ship-Direct suppliers or other dealerships). Parts are purchased either for immediate use or for inventory. Every parts purchase by a dealership represents a balancing of risks – particularly purchases for inventory. If a part is not in stock when needed, the dealership may lose a service repair (parts and labor) or a wholesale parts order if the customer cannot or will not wait (or come back another day in the case of a service operation) or pay a premium to have the part delivered on an expedited basis. If the part is stocked, the dealership faces the risk that the part will not be sold in the ordinary course of business in which case the part may or may not be returnable to the manufacturer. Even if the part is returnable to the vehicle manufacturer there will, nearly always, be some cost to the dealer (such as a decrement to the aggregate return allowance which could otherwise be converted to cash or a restocking fee).  An important exception should be noted: manufacturers utilizing RIM allow parts ordered in compliance with RIM stocking and replenishment policies to be returned for a full refund – with ‘time value of money’ as the only cost borne by the dealership.

Before the first idle parts market making service emerged in the late 1990’s, dealers would sell parts to wholesale parts middlemen who paid between 10 and 25 cents on the dollar (of dealer cost). Idle parts market-making services increased the liquidity of idle parts and partially disintermediated the middlemen. Sellers of idle saw their net increase to 50% of dealer cost (less selling commissions and shipping).

Idle Parts Market-Making
Supplier ADP Bottom Line
Dealer		 Dealermine Dealer Parts Trader eBay Motors  OEC PartsFisher Skyparts
Bulk Sales [B] CDP [A]
@ 50% dlr cost		 Yes
Seller sets discount % [B]		 Yes
@ 50% dlr cost		 @ 50% dlr cost No D2D Plus [C]
DPH [D]
Seller sets discount % [B]		 Yes Possible w/ DMP - Craigslist type posting of 'string of parts'
Unit Sales
(Dlr-2-Dlr)		 PartsVoice Yes Yes   D2DLink   Yes
Unit Sales
(Open)		 PartsVoice No No No Yes DPH No Yes
Parts Class
(Policy)		 OEM OEM OEM OEM
 Mixed (OE/AM/Used) OEM OEM Mixed (OE/AM)
Broker Services Yes
 Fixed Ops Consultant No (Buyer uses DM tools) No (buyer uses DPT tools) No Optional   No
Google / Bing No
 No No No
 Yes DPH only No Yes
Online Ordering   E-mail orders E-Mail orders E-Mail orders/offers Full e-commerce E-commerce
(excl. DPH)		   E-Commerce
Claims 1st Locator
1st Idle Tools		   Great Bulk-Buying Tools   High volume    
Volume
   Dealers
   Transactions
   Inventory		 Market Leader
N / A
N / A
N / A



Market Leader
> 1500 dealers


  Market Leader




Parts Inventory DMI pull Push upload Push (e-mail)
Pull (own tools)		 Pull (own tools)
Push 		Upload & define applicaiton Pull or ftp push   DMI pull daily;
ftp push;
Commercial
Model		 Commission
(Seller & Buyer)		 Mo. Fee – Seller ($99) Commission
(Seller & Buyer)		 Commission
(Seller & Buyer)		 Commission (Seller) Monthly Fee paid by Dealer   Mo. Fee – Seller ($79) - No commision
Comments
 supports backorders; physical inventory; consulting     This column includes providers that use eBay such as Driverside   Affiliated products include physical inventory - TDS Car, truck, ...
Global focus

 Notes:

Open/Closed Access

Like parts locators (which are often affiliated with an idle parts market-making service/solution), idle parts services can be either “Closed” or “Open”. Closed idle parts solutions typically limit access to franchised dealerships and are either focused on bulk sales between dealerships or are linked to a vehicle makers’ official national parts locator. Open solutions allow any potential buyer to participate (after registration).

Market Segmentation

Most idle parts market-making services and products are all-makes though most are focused on GM, Ford and Chrysler (Mopar) parts. None of the services in this chart are captive (to a manufacturer).

Nearly all idle parts services/solutions are by policy set to enable only new OE parts sales – the effectiveness varies and in some cases, a small volume of AM parts sales may occur. A few services such as Skyparts facilitate the sale of both OEM and AM parts (and listed as “Mixed” for Parts Class. Most (and for some services, all) sellers are franchised dealerships.

Buyers are either bulk buyers (buying a large number of parts for stock speculatively) or single part buyers (buying one or a few parts for an immediate known need). Bulk buyers are dealers and (for open services) independent wholesale parts operations/brokers that arbitrage the idle parts market. Single part buyers are dealers, IRFs/fleets and consumers.

The idle parts market is largely dealer-to-dealer trade. No idle parts service includes an OE EPC – the buyer must know the exact OE part numbers that they are interested in buying. Most OE EPCs (the best tool to accurately identify OE part numbers) are limited to franchised dealership personnel (though this is changing as a result of manufacturer supported parts e-commerce). Skyparts and eBay Motors enable idle parts sellers to reach any buyer – but the risk is that the buyer will purchase the wrong part.

Inclusion / Exclusion

Automaker (and other vehicle maker) parts buy-back programs, even those that target idle parts, are excluded from this chart because they are not market-making services or applications. Automaker sales of distressed (idle or blemished) parts such as GM’s and Ford’s programs are excluded too.

Wholesale buyers and independent brokers are also excluded from this chart as they are viewed as participants of the services and applications described in the chart.

Additional Idle Parts Market-Making

Physical inventory companies as well as RMI companies while not overtly providing idle parts services, often identify and assist their customers in selling or trading idle parts. As described in the NADA 2011 Report, PartsEdge uses a “Parts Netting” solution to propose inventory trades of idle stock between its dealership customers.

Enabling Sellers

Several idle parts services companies provide sellers (and buyers) with powerful BI (business intelligence) and reporting tools to identify idle parts appropriate for sale at discount (RIM parts are excluded, for example). Companies that provide tools to guide inventory stocking may include features to aid in idle stock analysis and identification – an example of which is PartsEdge’s Playbook (described in the NADA 2011 Report).