White Paper Analysis of North American Automotive Components Counterfeiting and Gray Market

Abstract

Increased presence of counterfeit and gray market automotive components in North American is undermining the brand value of genuine parts and revenue potential of parts sales.

Counterfeit and gray market automotive products are sold for prices 40 to 80 percent less than the genuine products. The manufacturers of counterfeit products can do so because they have made virtually no investment in product development or the underlying technology are capitalizing on the brand image and value developed by the genuine manufacturer.

This study provides the reader with a clear understanding of the long-term risks counterfeit and gray market competitors bring to the industry and provides them with tools to build a strategic defense.

Counterfeiting and gray market practices are very prevalent in other industries such as personal care products, cigarettes, and fashion accessories but only in the last 5 to10 years have these types of competitors appeared in the automotive market. Counterfeiters and gray marketers have applied their learning from other industries and in 2005 it is estimated that counterfeit and gray market automotive components represent as much as 3.2 percent of all global counterfeit trade. This type of competitor was allowed to grow because they operated in peripheral markets that did not directly impact units, pricing, or margins in the core markets of North America, Europe, and Asia. Those markets are now being affected and this has caught many participants off-guard and un-prepared. Genuine component manufacturers are now seeing the direct impact of counterfeit parts through declining unit shipments, prices, and revenues. The industry is only now recognizing the gravity of the long-term situation should counterfeiters be able to penetrate legitimate distribution channels, and undermine the companys brand image and perceived product quality position. This study provides readers with an understanding of the size, scope, and long term risk counterfeit and gray market participants bring to their industry and provides the reader with tools and direction to combat further deterioration of their market share.

The automotive industry is extremely important to North Americas economy. The goal of this research service is provide participants with a framework of knowledge to formulate a strategic action plan to deter and deal with counterfeit and gray market competitors.

The goal of this research service is make the reader aware of counterfeit and gray market competition and prepare these organizations to recognize the early warning signs and protect the business they have worked so hard to develop.