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Bankruptcy and OEM Orders

Order Reprints

Chrysler declared bankruptcy and now GM has too. If the vendors supplying parts do not get paid, how will this affect OEM orders?

The procurement of OEM parts from these two has already been a challenge. Late in the third quarter of 2008, both were reducing orders from vendors and attempting to make lucrative offers to move their sheet metal. As their inventories depleted, their demands for new parts subsided. As the bailouts have occurred, many articles have discussed the roles of the vendors and the need for them to supply parts. However, like the dealerships that were closed as part of the reorganization, the vendors will probably also be handpicked.

We can expect to see more challenges throughout 2009 and into 2010 as vehicle manufacturers watch inventories, which will rely even more on sales-driven data and reporting accuracy similar to what is seen in the Wal-Mart system—although more enhanced.
The challenge we’ll soon face is the implosion of aftermarket parts to fill these voids. The industry has never fully grasped a process of certification, although the Certified Automotive Parts Association has come closest in recent years. The Collision Industry Conference has worked toward creating an “industry standard” for aftermarket parts for years. But even in the current looming crisis, opinions still vary, and progress is slow as we search for the perfect model.

I believe that the industry needs to support a method of validation for aftermarket parts regardless of the red tape involved. If we do not do it now, steering will be the least of our worries within two years.

Ray Fisher is the president of ASA-Michigan. This article represents his opinion and does not reflect the views of ASA-Michigan.

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