Automotive Industry: Driving away Counterfeit Parts
Like many product markets, the automotive industry is no stranger to the dark underworld of counterfeiting.
Step on the brakes to counter fakes
Counterfeit automotive parts pose a grave threat to a vehicle’s performance, costing the auto industry billions in lost profits and liability and harming brand image and consumer safety.
A 2018 report by the European Office of Intellectual Property (EUIPO) estimated that €2.2 billion is lost every year by the legitimate auto parts industry due to counterfeit tyre sales and €180 million each year due to counterfeit battery sales in the EU marketplace. In addition, more than 8,000 jobs are lost in both sectors while the government experiences an annual total loss of €340 million in revenues.
Yet this represents only one part of the problem. The World Trademark Review specifies other automotive parts that are frequently counterfeited in huge volumes:
- Airbags, which help slow passenger movement and protect passengers in the event of a collision are critical and must meet exacting specifications, to which counterfeits do not comply.
- Engine and drivetrain components (eg, spark plugs, oil filters and air filters) can contribute to engine failure and pose a fire risk if they are fake.
- Brake pads have been found to be made of sawdust and compressed grass or asbestos, which negatively affect stopping ability as they smoke and disintegrate under pressure.
- Fake automotive body parts may not align with optimal crumple zones, an area of a vehicle (usually located in the front and rear) that's designed to crumple or crush when hit with significant force. They may fail to protect and instead become the cause of injury in the event of an accident.
- Electrical components that are fake, including lights, can lead to electrical failure and fire risk.
- Wheels are made to withstand speed and poor road surfaces. However, counterfeit parts have shown that integrity can be compromised quickly.
- Fake windscreens can shatter or displace, injuring or failing to provide any protective barrier to passengers.
Counterfeit auto parts are not only a problem in the EU zone, they’re driving pressure worldwide. Around 20% of accidents on Indian roads are caused by counterfeit automobile parts. According to the Automotive Aftermarket Suppliers Association (AASA), the US auto parts industry loses around US$3 billion annually as a result of service parts counterfeiters. The AASA estimates the global industry loss to be around US $12 billion.
The key to secured ignition against counterfeits
A number of efforts and success stories include the following:
- The UK government recently joined forces with the automotive industry and trading platforms to launch a consumer-awareness campaign on the dangers of fake automotive parts. Subsequently, the UK Intellectual Property Office issued guidance on how consumers can avoid buying counterfeit automotive parts.
- To control the huge problem of fake automotive parts in United Arab Emirates (UAE) markets, the Emirates Authority for Standardisation and Metrology (ESMA) implemented a system to ensure that automotive parts without an ESMA quality mark cannot enter the UAE market from October 2018. Traders have been given a year to remove non-complying parts available in the market. A database containing information about all the spare parts manufactured or imported in the country will also be developed as part of the new system.
- Online platforms, such as Amazon and eBay, have issued guidance on buying aftermarket vehicle parts. Alibaba introduced an automotive parts policy and announced a ban on listings offering airbag and related components on its platforms.
Moreover, formed in 2015, the Automotive Anti-Counterfeiting Council (A2C2), is an automotive association composed of representatives from North American vehicle manufacturers. It seeks to:
- Promote consumer awareness of safety and other concerns surrounding counterfeit automotive components
- Promote consumer satisfaction with genuine automotive components
- Encourage active participation by all stakeholders
- Foster open communication
In addition to existing efforts by all stakeholders, brand protection and product authentication measures are crucial considerations for those in the automotive industry wanting to protect their brand name, reputation and the quality and integrity of their products.