The Science Behind OEM vs. Aftermarket Parts

You may know from experience, that in this industry your stuck with only two options when looking for replacement parts…OEM or aftermarket. We have all heard of the die hard OEM radicals of whom swear that OEM parts are above any aftermarket counter parts. These of course come hand in hand with their horror stories of when they bough some part from NAPA that didn’t quite fit right or failed straight away. But, we are here to give you the truth.

OEM Parts Analysis:

The term OEM stands for Original Equipment Manufacturer. This tells us that the parts are directly made by the engine manufacturer in their facilities as opposed to a third party manufacturer.
PROS:

• Possible Quality Assurance: The OEM part is the exact replacement to what was originally in the engine. The fit is 100% guaranteed to be flawless and there is the absence of any worry or threat the part will not fit as you expected.
• Simple Selection Process: There is no guess work to determine what part matches the one needed. One process, one parts software selection system and one simplified sales process. Again, leaving the absence of any worry but probably comes at a price.
• OE Manufacturer Warranty: OEM parts usually come with an unlimited miles 1-3 year warranty which is usually passed on by repair facilities. We know your seeing a pattern here…yep, you guessed it, THE ABSENCE OF ANY WORRY.

CONS:

• Very Expensive: OEM parts are about 65% more expensive than any Aftermarket parts. The Dealership model has always made more money by charging a premium on warranties, service and parts. In fact the dealer model the past 10 years or so has encouraged its dealers to sell more parts and preventative maintenance services. A lot of the new machines come equipped with pricey computers and sensors which monitor the health of the system, but these are more prone to breaking down meaning more repairs are needed which means more money for the company.
• Limited Places to Purchase: OEM parts can be purchased on the secondary market from platforms such as eBay, Craigslist, or through salvage or reman facilities. Although, the majority of consumers go to the dealer to purchase OEM parts due to availability. Machine shops and mechanics can purchase OEM parts but the process includes a substantial markup and additional time to order the parts.
• Questions of Superior Quality: The only reason to buy OEM parts is the peace of mind you get from receiving a part that is guaranteed to fit 100% of the time. Yes we know, we keep referring to this absence of any worry, but people do pay for this. However, many studies (you will see later in this article) have concluded that the quality of the OEM vs. Aftermarket parts is minimal to none. A lot of aftermarket suppliers have also enhanced the original OEM designs to produce a better quality product. So, your opinion could very well be built on stigma which turns out to be pretty false in some cases.

Aftermarket Parts Analysis:

Aftermarket parts are defined by parts that come from a third party, that have nothing to do with the original manufacturer.

PROS:

• Cost Savings: The amount you could save on a certain part does vary, but an average of 65% cost reduction has been worked out to be the average. We guess its really down to common knowledge, you pay for what you get, there is no such thing as extremely cheap and cheerful. The prominent aftermarket manufacturers are ISO 9001 level facilities and have existed for 70+ years. Its worth doing your research than off the cuff buying something randomly from internet.
• Equal or Great Quality Than OEM: Again, the quality does vary, but over the past decade it seems the quality of aftermarket parts has come on leaps and bounds. There are a ton of aftermarket part companies and the big players tend to reverse-engineer the OEM design. More cases than many, these companies will in fact expand on the original design to make the part more efficient, tougher and a better fit.
• Much Greater Selection: Due to the fact there are loads of suppliers, you can find many different vendors who have made different variations of the respective product, so you have a range of prices and products.

CONS:

• Quality and Design Variations: Again, due to the existence of many aftermarket suppliers, your going to come across some good ones and some pretty terrible ones. So do your research, look at reviews ect as you don’t want to waste your money on a flawed part.
• Limited Parts Warranties: Depending on the aftermarket company some may not come with a warranty to avoid losing money. Others might offer limited short term warranties subject to their requirements. However, all of the big name companies tend to offer at least a 1 year warranty so there’s the piece of mind factor again.
• Overwhelming Selection: Again, the vast majority of parts might lead to some sort of sensory overload, making the decision process pretty tricky. With OEM you know the part number and you get an exact replacement. So far, you may be thinking that paying that little bit extra means an easier ride, trust me we’re thinking the same thing.

Legal Research and Court Cases

Is it really that big of a deal whether or not you’re using one or the other? Will it affect the appraised value of the car or piece of equipment? The answer is as simple as yes and no? A vehicle subject to an accident is valued less that one never damaged, especially if the structural integrity is compromised. With that in mind, the parts used to make the repairs to the vehicle or engine will not have any impact on the resale value. There are two prominent court cases from IIHS (Insurance Institute for Highway Safety) regarding OEM vs. Aftermarket Parts.

State Farm Ruling
Insurance companies as well as a lot of other sectors in the industry go of the basis that OEM parts are equal to aftermarket. The largest auto insurer State Farm, states that Non-OEM parts (Aftermarket) are equal to OEM parts. This saves them money when replacing vehicle replacement parts. They also refer to tests carried out by by the IIHS in which Non-OEM parts were found to perform equally or better than OEM parts.

State Farm also carried out blind tests to discover if repair shops nationwide would spot a difference between OEM and Aftermarket parts. According to the study a significant amount of them couldn’t tell any difference between the two. This test involved a visual inspection as well as a post installation inspection. This resulted in State Farm and a lot of other companies creating the Certified Automotive Parts Association (CAPA) as a non-biased organization to test the quality of Aftermarket Parts for the automotive industry. CAPA now supports millions of reviews, pricing and quality assurance information for the consumer on aftermarket auto parts. (this could prove useful if you are still undecided of which part to go for.)

IIHS Studies
The OEM and aftermarket conundrum was first formally discussed by the big player of the industry in the early 80’s. The Insurance Institute for Highway Safety (IIHS) is first and foremost concerned with the Front Crash Test with consumer safety and is not associated with any automotive manufacturer. In 1987 the IIHS carried out their very first tests on Aftermarket Parts to ascertain the safety of Non-OEM parts. They performed two major aftermarket parts tests: the first test compared an OEM and Aftermarket hood in a crash at 30mph with a head on frontal barricade. (you can see these on youtube, they are pretty cool) The conclusion of the tests established that the Aftermarket Hood met all safety standards and reacted just like the OEM hood did.

The second test took place in 1999 which aimed to compare two off-set frontal crashes at 40 miles per hour. An off-set crash is basically two cars “clipping” each other where the front driver side hits head on with another car’s front drivers side.( again, check these out on youtube). The study looked at both OEM and Aftermarket hoods and front bumpers. The results of the study concluded that there was no major difference between the OEM and Aftermarket models.

NAII Studies
The National Association of Independent Insurers (NAII) has also looked at the OEM vs. Aftermarket issue since 1995. This was the first year multiple state legislators created bills forcing requirements, on to insurers, with regard to Aftermarket parts. This lead to 25 state bills introduced in 1999, 18 in 2000 and 18 in 2001. Not a single one of the bills that was introduced was confirmed into law and legislation. When considered on a federal level, the United States Department of Transportation has not discovered any safety hazards relating to the structural integrity of aftermarket parts. In there have been no national recalls on Non-OEM parts in this country’s history. Im not saying there have not been recalls of aftermarket parts but more none have been so structurally hazardous to warrant any sort of national emergency. All parts, whether OEM or Aftermarket, must meet the standards of The National Traffic and Motor Vehicle Safety Act which was sanctioned in 1966 by President Lyndon Johnson.

Illinois Court Ruling
Throughout recent history there have been a number of legal disputed over the issue of after market and OEM parts. There has also been a lot of cases about the quality of of recycled, refurbished or used parts. However, the law is less enforcing due to the assumption that the buyer is fully aware when entering the transaction that the “automotive part or used diesel engine” is not brand new.

The two most prominent cases are the Illinois and Texas Court Decisions. The most famous of the two was Avery et al v State Farm in 2001 and ended in 2005. The class action lawsuit involved the Policyholders of State Farm vs. State Farm Corporation disputing the quality of Aftermarket Parts in replacement vehicles. Policyholders contended that Non-OEM parts are inferior to OEM parts meaning they are unable to return a damaged vehicle to pre-accident condition as stated by State Farm’s auto policy. The plaintiff presented evidence from body shops and those in the auto parts industry stating that Aftermarket Parts are inferior to OEM Parts in shape, corrosion resistance, finish and quality. Attorneys argued that albeit Aftermarket Parts might be of similar structural integrity to OEM Parts, they are not galvanized properly to stand up to long-term corrosion which could lead to future safety concerns.

The State Farm’s attorneys maintained a stance that Aftermarket Parts are in no way inferior to OEM Parts stating IIHS studies, with a track record of no national safety recalls and overall policyholder satisfaction numbers.

The original ruling was in favor of the policyholders for $1.05 billion judgement. Although, in 2005 the ruling was annulled at the Illinois State Supreme Court. The $600 million in punitive damages as well as the $457 million award was reversed in favor of State Farm citing that corrosive evidence was anecdotal in nature and not widespread across the Aftermarket Parts industry as a whole.

Texas Court Ruling
The other prominent OEM vs. Aftermarket case was carried out in the State of Texas. The 2000 case Berry v State Farm Mutual Automobile Insurance stated that the insurer actually breached the Texas Insurance Code by refusing to cover the costs of OEM parts replacement. State Farm claimed that Aftermarket Parts are basically the same parts, restored the vehicle to OEM condition and were not in breach of any insurance code (mainly 5.07.1). The main argument the courts saw was that the Aftermarket Parts are manufactured to slightly different specification and did not perfectly fit the vehicles they were intended for. They also claimed that aftermarket parts are more prone to rust due to inadequate priming protection and that Non-OEM parts can actually null and void any warranty which then reduces the resale value.

The defense team countered the prosecution’s claims citing a 1996 memo from the Texas Department of Insurance (Governing Body of Insurance Related Matters in Texas) concerning the issue. The Texas Department of Insurance interpreted article 5.07.1of the Texas Insurance Code as not having to “enforce extreme circumstances”. Simply, the Texas Department of Insurance does not believe in forcing insurers to provide OEM parts nor allowing the insurer to specify the types of parts the consumer has to choose in a replacement vehicle. The Texas Department of Insurance stated that the use of aftermarket parts actually benefits the consumer by saving them millions of dollars each year in lower insurance premiums. The Texas appellate court was sensitive to the concerns of the policyholder but decided it to be pretty illogical to require OEM parts in every auto insurance claim regardless of age or working condition of the vehicle. This would mean it would be expensive for the insurer and policyholders in the long run. In the end, the court decided that state farm won this dispute due to finding that no contractual violation of article 5.07.1 had occurred. Nevertheless, the court did not make a judgment whether or not Aftermarket Parts were any different to OEM parts in terms of quality, corrosiveness resistance or compatible size allowing it to remain a bit of a grey area.

International Standards Organization: (ISO Certification of Factories)

Today, in 2019, things have come a long way. With the majority of aftermarket parts being manufactured overseas brings some of the notion that they are not as good a US made parts. In fact, most of these foreign parts are produced in facilities that could easily compete with those in the United States. Factories are ISO-9001 level production facilities. International Standards Organization (ISO 9000 level) of certification was first established in 1987 and is based on the BS 5750 series of production standards which were first recommended in 1979. However, production standards and certifications can be tracked back to 1959 with the establishment of MIL-Q-9858 standards with the United States Department of Defense. The international community created the ISO to assist with the leveling of the playing field for companies worldwide interested in becoming the best at manufacturing and streamlining processes.

ISO 9001 certification is not something you get in a cereal box. The sheer amount of paperwork and analysis over procedures is quite detailed and arduous. ISO Certification can take a long time to finally get. ISO Certification is a method of improving results such as production time, safety standards, design and engineering, vendor management, employee satisfaction, cycle time reduction and inventory reduction within a production environment. The international organization concentrates on 8 values: Customer Focus, Leadership, Involvement of People, Process Approach, System Approach to Management, Continual Improvement, Factual Approach to Decision Making and Mutually Beneficial Supplier Relationships. All of the major aftermarket companies require their manufactures overseas to be ISO 9001 certified which may change your perception of these players.

The fact is that OEM Parts and Aftermarket Parts are all made by the same ISO facilities overseas. A lot of buyers are under the impression that buying a genuine OEM part means that the manufacturer personally makes the part in U.S. factories. But realistically, that just isn’t the case. The same suppliers overseas make the exact same parts for the OEM and the Aftermarket companies. The only actual difference is the box they go in and the price which as we know can heavily influence the majority. We’re not saying that no parts are made in the US, because some are, but the bigger picture will tell you that the vast amount of engine parts are made overseas and is a lot more that are not.

So, after reading the above we hope we have given you enough information for you to make a well-informed decision, with confidence. The areas we covered like the pros and cons of Aftermarket vs. OEM parts, presented court cases and industry analysis’ and telling you the origin of these parts should be enough for you to come to a conclusion if you haven’t already. So, we’ll leave it up to you; you can either buy aftermarket or OEM, but we might be slightly disappointed as within the first page we established the only thing your paying extra for is that peace of mind, but that’s one less thing to worry about!

* Citation: Clifford, John. “OEM vs. Aftermarket Parts: Are They Really Better?” OEM vs. Aftermarket Parts: Are They Really Better? – Capital Reman Exchange, Denver, CO, www.capitalremanexchange.com/oem-vs-aftermarket-parts/.