DEARBORN – The proliferation of counterfeit auto parts is a multibillion dollar problem – one Ford is combatting with teamwork and vigilance. To help prevent imitation Ford parts from reaching consumers, the company has a global team that works with customs officials, dealers and others around the world.
The value of the counterfeiting industry is estimated by to be roughly $3 billion in the United States alone and $12 billion globally. A Brand Owners Protection Group study estimated that in the United Arab Emirates, counterfeiters controlled more than 12 percent of the U.S.$3.8 billion automobile spare parts market as far back as 2005. This spring, U.A.E. officials seized more than 100,000 counterfeit auto parts in a single raid.
While counterfeiting results in reduced sales and profits for legitimate manufacturers, the concern over the impact of counterfeit parts extends beyond lost revenue. “Customs officials in Saudi Arabia attribute half of the traffic fatalities there to substandard, counterfeit parts,” says Ken Feldman, Ford Global Brand Protection manager. He says nearly half of the U.S.$8 billion parts imported in Saudi Arabia in 2010 were counterfeit.
“We’re doing our best to train customs agents to spot illegitimate parts and seize them before they make it into the marketplace,” Feldman says. To do so, the company has partnered with a number of others to instruct port employees on what to look for. Most of the suspect parts are shipped from China, so authorities pay attention to point of origin as well as to whether the parts are being shipped to a Ford-authorized distributor. Ford has also produced a brochure for customs agents showing what genuine labels and packaging look like and how a counterfeit item might appear.
Feldman says there are teams in the Americas, Europe and Asia-Pacific putting the foundation in place to protect future business.
He says the problem is industrywide. “Everyone faces the same challenge, and we try to cooperate with one another whenever possible, both manufacturers and suppliers.”
One collaborative success story cited by Feldman is glass. “Glass manufacturers are able to counterfeit multiple OEMs very easily by simply changing silk screens. Over the last two years, authorities in China have conducted 40 raids, seized 200,000 pieces of counterfeit glass across various brands, and made close to 30 arrests with half of those successfully prosecuted serving jail time.” Feldman says the series of raids has had a significant impact on the production and distribution of counterfeit glass in China.
With more counterfeiters caught every year, it would appear Ford and its partners (which include customs officials and investigative and law enforcement agencies) are succeeding in their efforts to address the problem. But Feldman says the question remains: Are they getting better at connecting the dots, or is more counterfeiting occurring?
The Ford team works closely with multiple government agencies to conduct enforcement actions and seize counterfeit material. In February the company joined other OEMs and the FBI in one of the largest multiple-target warehouse raid actions in the New York/New Jersey metro area. A substantial volume of counterfeit parts and packaging were seized and the business owners arrested and charged with trafficking in counterfeit goods. Some of the seized parts were destined for the Middle East.
Feldman praised Al Jazirah Vehicles, Ford’s dealer in Saudi Arabia, for its dedication and cooperation in the fight against the counterfeiting industry. In addition to providing ongoing intelligence on the aftermarket, the dealership co-sponsored the third Arab Forum for Intellectual Property Rights in March to help raise awareness with the authorities and consumers.
Today’s technologies enable counterfeiters to be increasingly proficient at replicating parts and packaging. The traditional fast-moving maintenance commodities such as filters and spark plugs have expanded to just about any functional part, including major safety parts such as airbags and sophisticated diagnostic equipment. In addition, Feldman says, Ford’s global platforms are an asset to counterfeiters. “With parts being interchangeable, counterfeiters also have a global market. It creates a challenge for us – as sales grow, so does the risk of counterfeiting.”
Counterfeit airbags in particular pose a significant safety risk, however consumers who purchased their vehicles new and have not had their airbags replaced or who had them replaced at an authorized dealership are likely not at risk. “A safety advisory issued by the National Highway Traffic Safety Administration in October was a real eye-opener,” Feldman says. “Although the warning was issued in the United States, consumers in the Middle East and other markets are also at risk.”
Feldman says consumers who are not the original owners and those who had their airbags replaced at a repair shop that is not part of a new car dealership are among those most at risk. He says this is particularly true for consumers who purchased replacement airbags from non-certified sources, particularly if they were purchased at an unusually low price. “Not only do these counterfeit airbags place drivers and passengers at risk, insurance claims could be jeopardized if an OEM part is not used.”
Feldman says consumers and business owners can take steps to protect themselves. “The best way to protect your business, your vehicle and yourself is to purchase from reputable vendors. If the price seems to be too good to be true, it probably is.”
Ford has established a web site, fordbrandprotection.com, at which anyone interested can obtain more information or submit inquiries.