Service Parts - Stakeholders

The number, complexity and interoperability of service parts operations systems/services (and the stakeholders providing these systems and services) continues to grow.  Below the key stakeholders in service parts operations improvement and automation are described. 

Automakers

In the OEM service parts space, automakers are the starting point. Automakers purchase parts from parts manufacturers for vehicle assembly (“upstream”) and for vehicle repair and maintenance (“downstream”). Downstream parts are shipped to PDCs. Automakers also purchase parts from Ship-Direct suppliers when the parts are shipped (directly) from the supplier to dealerships (without being stocked at a PDC). Automakers may also license select parts to be manufactured and sold by Ship-Direct suppliers.

With few exceptions, automakers distribute all downstream parts via their franchised dealership channel. (The near exclusivity of franchised dealerships is a consequence of franchise laws and contracts including the franchise agreements. The few exceptions apply primarily to the Detroit-3. Both ACDelco (General Motors) and Motorcraft (Ford) sell to mass merchandisers (such as Walmart) and to their own franchised WDs (Warehouse Distributors). Chrysler’s Mopar unit uses WDs on a more limited basis (for example, remanufactured power train parts).

Automakers other than the Detroit-3 – with a few exceptions – have a single importer and sales company for vehicles and parts. The exceptions are explained in Dealership and Franchise Counts.

Franchised dealerships

Franchised dealerships have the freedom to choose any source when purchasing replacement parts. Loyalty metrics measure dealerships’ purchases of OEM parts versus AM and salvage parts. Excluding own-dealership Service Department repair of vehicle makes not sold by the dealership and insurer requirements for to use of other than new OEM parts (for collision repairs at dealership captive body shops), franchised dealerships nearly exclusively purchase OEM parts (from automakers or Ship-Direct suppliers designated by the automaker or from other same-franchise dealerships to fill a same-day need) achieving loyalty metrics that for some franchises approach 100%.

Captive dealership Service Departments and Body Shops consume just over half of the OEM parts purchased by franchised dealerships. A percent or two are sold to retail to consumers. Just under half are sold wholesale by dealerships to IRFs, fleets and independent body shops.
Dealerships are often multi-franchise – that is, on a single campus, more than one franchise is represented by the dealership. Also, many dealerships are part of groups – a single owner of multiple dealerships that (to some extent) cooperate and share resources.

Warehouse Distributors

Warehouse Distributors are significant factor for General Motors and Ford and their dealerships; a minor factor for Chrysler (Mopar) and its dealerships; and immaterial for all other automakers and their dealerships.

WDs that carry Motorcraft (known as FADs – Factory Authorized Distributors), supply Ford and Lincoln dealerships with “fast moving” parts – often on a same day basis (a delivery schedule that would be impractical for Ford’s PDCs). In a comparable way, Chevrolet, Buick, Cadillac and GMC dealerships may turn to ACDelco WDs to fill urgent same-day parts needs. WDs may source parts from multiple (competitive) sources. Also, WDs compete against dealerships for IRF business – at least for relatively fast moving parts.

Ship-Direct Suppliers

Parts that are not unique to a vehicle maker or that combine low velocity with high cube and/or weight, or that are subject to special storage requirements or regulations are increasingly likely to reach a franchised dealership from a Ship Direct supplier’s warehouse. Examples include tires, accessories, batteries, bulk oil and lubricants, glass and vintage parts. Ship-Direct suppliers sell to dealerships according to the terms of a “program” negotiated between the automaker and supplier. The mechanics of ordering and financial settlement can vary. In some cases dealers order via the automaker, in others they place orders directly on the supplier. In some cases the supplier invoices the automaker who in turn invoices the dealer.

Wholesale Buyers

The major types of wholesale buyers are IRFs, fleets and collision shops. IRFs choose between AM and OEM parts based on availability, delivery (timing and certainty), administrative policies (payment and returns) as well as price. Fleets (that to their own maintenance and repair) make parts purchase-decisions by weighing the same factors as IRFs do.

Collision repair parts purchases are fundamentally different. Well over 90% of collisions in the U.S. are covered by insurance. Each insurance company set rules what they will and will not reimburse – typically, insurance companies will cover the cost of new OEM parts for the first two or three years; then they will cover the cost of AM parts for the next several years; as the car ages further pressure grows to find salvage parts. There are many exceptions and growing complexity to the collision parts purchase process.

Systems / Services Providers

Over 100 firms provide systems and/or services for service parts operations at the dealership, automaker or WD. Providers can be categorized as DSPs (Dealer System/Service Providers), system providers to the automakers and consulting firms.

System providers to wholesale parts buyers are also important stakeholders including collision estimating systems, shop business management (and parts ordering) systems, IRF repair order applications and fleet management systems.

Organizations

Standards setting organizations such a CIECA and STAR as well as organizations that represent communities of stakeholders such as NADA are stakeholders that impact service parts systems and services progress.