Buy Chrysler Service Contract Cheap

							Tuesday, October 21, 2003




                                                                                                      General Motors Corp.

In North America, examples of diverted parts are bumper fascia, windshields and sheet metal used by
auto body shops to repair crash damage. These bootlegged bumper fascias were found in Michigan.


Diverted auto parts raise big concerns
Automakers take steps to intercept bootlegged supplier replacements

By Tim Moran / Special to The Detroit News
   Psst! Buddy! Wanna buy cheap crash parts that'll fit your car just like the original components?
   Of course they fit like original parts -- they were made by the same supplier, using the same tools. All that's missing is
the brand name because they've been diverted from the normal auto supply chain.
   It's a scam automakers say is happening all too often and at too high a price. Automakers lose sales of profitable
replacement parts. Demand dries up for parts made by smaller suppliers who need orders from big parts makers to survive.
And consumers unknowingly end up buying parts that may have been rejected by automakers for quality problems.
   Diversion is not new, but automakers just waking up to the scope of the problem are surprising suppliers by taking
action.
   "We look at diversion as being as big, if not a little bit bigger, than counterfeit problems," said Michelle Frank, General
Motors Corp.'s global brand protection manager.
   Cristianna Chojnacki, spokeswoman for GM's Service Parts Organization, said counterfeit parts cost the automaker
about $1 billion last year in lost sales. She declined to provide a figure for diverted parts.
   Diverted parts can come from a variety of sources:
   * A supplier making parts under contract runs "extra" parts.
   * Parts rejected by automakers for quality problems are sold instead of scrapped.
   * Stolen parts are shipped out of an automaker's or supplier's warehouse.
   * Pirated parts are taken from a shipment in transit, perhaps by a supplier employee.
   * Reverse-engineered parts are modeled from an original part but made to less-demanding standards.
   Most of the people buying diverted parts are go-betweens who feed the components into legitimate replacement parts
distribution channels. The parts are resold at cut-rate prices, but consumers who buy them may be setting themselves up for
later trouble.
   "The consumer, at the end of the day, if he gets his car fixed, is not going to know it's a diverted part," Frank said.
"(He's) not going to know the hood they put on (his) car was rejected until the paint begins to peel."
   Southfield-based Federal-Mogul Corp. is one supplier taking steps to avoid diversion. Earlier this year, a Federal-Mogul
customer diverted part of a shipment intended for an Asian supplier that later turned up in the more profitable U.S. market.
Often parts are sold at a special price for use in a particular market, somewhat like the situation with prescription drug
prices, which are lower in Canada than in the United States.
   "We had spoken to him last year about this, and gotten assurances," said Augie Sorrentino, Federal-Mogul's director of
international sales. "Lo and behold, global security did some things to be able to identify the product and found some" in
the United States.
   Investigators who follow diversion cases often face a difficult trail of evidence. Diverted parts are usually shipped in
bulk and may not have clear labeling or a brand identity on them.
   When diversion is proved, an embarrassed supplier will agree often agree to a settlement to avoid litigation. Most such
settlements have been kept very quiet.
   Some suppliers confronted with diverted parts mount internal investigations and uncover pilferage from a warehouse or
other unexpected trouble within their own operations. Others seek forgiveness for past mistakes.
   Said GM's Frank: "We've had some suppliers who have said, You know what, I did do this, this is what I've done, this is
the extent of it. What do we need to do to fix it?"
   Tim Moran is a Metro Detroit free-lance writer.