News | December 13, 1999

New Alliance Study Shows Car Company Parts Cost Consumers a Bundle

New Alliance Study Shows Car Company Parts Cost Consumers a Bundle

A new study by the Alliance of American Insurers demonstrates that original equipment manufacturer (OEM) parts cost an average of 60 percent more than identical certified aftermarket parts. The new study is a follow-up to the Alliance's annual cost study of replacement parts, which has repeatedly identified the excessive cost of OEM parts by estimating the cost of rebuilding a car with these parts. This figure is typically triple the original manufacturer's suggested retail price. In 1999, the subject of the Alliance study was a new Toyota Camry LE. The manufacturer's suggested retail price was $23,263. However, if rebuilt with OEM parts, it was found that the car would cost $101,335.55--more than four times the original retail value.

Special interest groups with a vested interest in maintaining the OEM's virtual monopoly on replacement parts have attempted to dismiss the Alliance study by suggesting that the cost of OEM parts are competitive. At one legislative hearing where restrictions on aftermarket parts were being considered, a car company lobbyist was asked whether Detroit would increase prices if its monopoly was restored. The lobbyist swore: "No, we wouldn't do that."

"The car companies expect the country's trust. But on what basis should this trust be given?" asks Kirk Hansen, Alliance director of claims. "It certainly can't be based upon their track record. Before the general availability of aftermarket parts, car companies marked up their replacement parts by as much as 800 percent!

"We don't even have to look to the past to see the present intentions of the OEMs. If automakers were granted their wish of a total monopoly, there would be no defense for American consumers," he notes. To prove this, the Alliance commissioned a new study that clearly shows the OEMs charging 60 percent more than distributors selling identical certified aftermarket parts. The new Alliance study examined current prices of several representative automobile crash parts (see table below).

"Incredibly, the OEMs expect consumers to pay 60 percent more just for the 'privilege' of buying a part with their label on it," Hansen says. "The car companies don't even manufacture replacement parts themselves. They subcontract out their replacement parts to independent manufacturers, in the United States and abroad--many of which are the very same manufacturers producing aftermarket parts. How can Detroit slander the quality of aftermarket parts when they buy parts from the same sources and stick a 'Genuine Part' label on them?"

He notes that "certified replacement parts are examined by an independent agency. OEM parts are not. Consumers have no assurance of the quality of OEM parts. Automakers have no such mechanism in place to remove substandard parts from the marketplace."

The results of the Alliance new price study follow:
Current Prices - OEM vs. Certified Aftermarket

NOTE: Certified aftermarket part price quoted by North Star Automotive Group. OEM prices taken from the most current Mitchell Collision Estimating Guides.