Dealerships can sell more factory parts by improving industry coding in their database

Automotive service and the sale of original equipment-branded parts are increasingly lucrative businesses for automakers and their franchised dealerships. As new-vehicle sales slip, manufacturers and dealers must continue to identify additional profit channels.

Creating more demand for original equipment parts would benefit automakers and retailers while helping to capture service revenue that many dealerships are losing. The most recent Cox Automotive Service Industry Study concludes that new-vehicle dealerships forfeit as much as $266 billion a year in service revenue — $15.9 million for the average dealership — because they fall short on keeping customers. According to the Cox study, 70 percent of customers who bought or leased a vehicle from a franchised dealership did not return for service in the past year.

As vehicles age, drivers often have them serviced at independent shops. Yet even these shops need to source the right parts, with the option of buying original equipment parts from a franchised dealership. Before this can happen, though, these parts must be available in a dealership's database.

Independent shops, which perform more than 70 percent of post-warranty service and repairs, typically buy most of their parts from nonoriginal equipment sources that often don't offer factory-branded parts. There is significant untapped opportunity for automakers and dealers to sell more of their parts to independent repairers by coding original equipment parts more effectively and making that enhanced information available to everyone who buys parts.

Automakers have historically been concerned that making their parts information widely available would benefit only their competitors. But with dramatic changes in technology affecting data use and delivery, limiting access to parts information today is counterproductive.

The advent of e-commerce has taught customers to shop around. If data is unavailable on all e-commerce platforms, the owner of such data will not even be in consideration.

Identifying the correct part is harder in an aftermarket setting than in a dealership. With a VIN, a dealership can identify the exact part needed for a repair. An independent repairer, however, needs to supply a vehicle's year, make and model, along with part type and characteristics, to be given a choice of parts. Only properly coded parts are presented to the decision-maker.

The Aftermarket Catalog Enhanced Standard, or ACES, is the North American industry standard for management and exchange of automotive parts data. With ACES, suppliers can publish data using standardized vehicle characteristics, parts classifications and qualifier statements, giving properly coded parts an advantage.

Most automakers have not made their parts data widely available and coded to ACES standards. They are missing out on the opportunity to have their parts available to the 160,000 U.S. automotive service and repair locations that need high-quality parts. Making properly coded original equipment data more widely available will generate more demand for factory parts.

Automakers can have confidence about making their data available with the right governance: Who is allowed to distribute the data? Where is it going? How will it be used? Tight contracts can control how companies use automakers' data, similar to the way that Apple controls how music is downloaded, with royalties paid to the artist.

To maintain control of their data, automakers need transparency in the use of that data. Today's technology enables precise tracking of massive amounts of data, which can provide new insights into parts demand.

With help from data experts, automakers can create and execute a comprehensive data strategy to determine where their data is going, prioritize opportunities while casting a wide net, and ensure that data will be protected. They can determine which data assets should be made available, including an inventory of data that's not used enough or at all. They can achieve maximum value by allowing downstream customers to append other data, and make it commercially available with industry standards.

Slowing auto sales and a more competitive landscape for vehicle service are adding pressure on margins for dealers and manufacturers. Making original equipment parts more visible to the independent repair and collision shops that service millions of aging vehicles can create more demand for mechanical and collision wholesale parts programs.