Chain Reactions

While Automotive Industry Slumps, Bogus Suppliers Are Cleaning Up

We hear so much negative news about the automotive industry that it's a bit unusual these days to hear that certain sectors are actually experiencing double-digit growth (sectors other than the sub-sub-compact/alternative energy vehicles, that is). Of course, there always seems to be a catch, and that's certainly the case with this latest market-growth trend.

The good news: The worldwide market for certain types of automotive parts is now estimated at $16 billion, and has been growing at a healthy 9-11% clip over the past five years, with no discernible end in sight to the growth. The bad news: We're talking about counterfeit car parts, and the beneficiaries of this market growth are organized crime syndicates.

The source of the problem, it seems, is China, which probably won't come as a big surprise to many U.S. automakers who have long complained that China turns a blind (or at least half-closed) eye to counterfeiting operations. The most alarming part, according to a recent report issued by Report Buyer, is this disturbing piece of news: "While in the past, counterfeit parts were mainly restricted to auto parts that were not instrumental in maintaining road safety, currently even counterfeit brake pads, brake shoes and steering linkages are flooding the market."

Check out this IndustryWeek article from earlier this year on how Schneider Electric dealt with the problem of counterfeit Chinese circuit breakers. Long story short: Schneider worked with the Chinese government to shut down the whole operation.

TAGS: Supply Chain
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