'Alt-OE' controversy, lack of common definition hamper automakers

November 21, 2016 12:00 AM

A General Motors label indicates this door is sold through a special channel for “imperfect,” as-is parts.

Whatchamacallit?

A sales channel that competes with franchised dealerships to market supposedly new, genuine original-equipment parts used in collision repair goes by several names. Among them:

Alt-OE
Opt-OE
Surplus-OE

Editor's note: An earlier version of this story misquoted Hyundai's Tiffany Stroupe in a reference to a brand of parts. She was referring to Hyundai-brand parts.

"Alt-OE" is the most common label applied to supposedly genuine, new factory parts sold by distributors other than automakers through their franchised dealerships. Auto insurers and other advocates say alt-OE parts, used mostly by independent body shops, can provide high-quality collision repairs at a lower cost.

A few automakers, notably General Motors, use limited alt-OE channels -- which still rely on their dealer networks -- to sell surplus new parts. Other manufacturers assail the use of alt-OE parts, which they say lack warranties and can even be recycled from crash or weather-damaged vehicles, counterfeit or factory-rejected -- and potentially dangerous. But they concede that the use of alt-OE parts is growing.

A big problem is that the industry lacks a standard definition of alt-OE. A committee of auto and insurance executives and collision repair providers is working on drafting a set of common terms.

With that backdrop, we asked automakers' collision managers and dealership fixed-ops directors:

What do you think of the use, generally by independent shops, of "alt-OE" parts in collision repair?

Here are their answers:

"We do not have any programs that support this part type. If you want a genuine Toyota part, you buy it from a genuine Toyota dealer. It's all about our customers. If we can't explain in less than 10 seconds what a parts category is, how can we expect our customers to understand what parts are going on their vehicles?"

Jeff Hilton, Wholesale parts and collision manager, Toyota Motor Sales U.S.A.

"For us, it's a small amount of inventory. We want to control the distribution. We don't sell [excess parts] directly to any other entity than our dealers. It helps keep the product out of the gray market. They may need to be touched up. But we don't sell used parts."

John Eck, Collision manager, wholesale dealer channel, General Motors

"We were in [GM's alt-OE program] for about six months. We weren't making money off it, so we bailed."

Dave Wright, Fixed operations director, Shaheen Chevrolet, Lansing, Mich.

"The jury is still out. However, we are seeing opportunities that we were not seeing before."

Roger Ramirez, Fixed operations director, Weld County Garage, Greeley, Colo.

"Hyundai parts are only available to Hyundai dealers through Hyundai’s parts distributor, Mobis Parts America. We have no other sales channels.”

Tiffany Stroupe, Senior manager, parts sales, Hyundai Motor America

"The customer needs to know if they're getting used parts put on their vehicle. Alt-OE is a catchall; you can't tell what the sourcing is. It's whatever is in the bin, and it's not consistent -- it's often something of dubious quality. Because it says OE, it looks better than it is. These parts are represented as legitimate, but there's no determination, no warranty. These are lost sales for the dealership."

Mark Mandl, Collision marketing manager, customer service division, Ford Motor Co.