The car parts or auto spares business supplies new and used parts to vehicle owners.
Market Need
Many parts on a vehicle get worn down due to wear and tear, some quicker than others while things like accidents or jealous girlfriends also damaged vehicle parts. The aftermarket and used parts market are driven by the INSANE prices charged by local “agents” for genuine parts especially German brands like BMW and other European brands. Another demand in the latter comes from people who want to drive an expensive car and cannot afford to buy from agents.
Business Models
There are three predominant models in this industry:
The supply of genuine new parts
The supply of aftermarket new parts
The secondhand supply of car parts. Often from broken up vehicles
Supply of genuine new parts
The supply of genuine new parts is often out of the reach of small businesses as many carmakers have local “agents” that represent them, with the big brands they are usually wholly-owned subsidiaries, while smaller brands will assign a local service company or network (workshop with an office attached). There are some brands with no agents in SA but that usually means there are few vehicles on our roads to make it a viable business. In such instances, there have been some companies that import and sell genuine parts but specialise in a few different brands (that don’t have agents in SA). Not only do they have a varied product mix but often they specialise in vehicles from the same country, in other words the parts have a similar origin.
Supply of aftermarket new parts
Aftermarket parts are parts made or branded as different from the car manufacturer. They are usually always cheaper than parts from the agent. In this business, the parts are imported into SA and sold in the local market. This is a popular business in SA with existing competition in most popular brands. We also have national brands like Midas which carry aftermarket parts from various brands.
The secondhand supply of car parts
I looked at this business before, the takeaway is to specialise in a brand, the old “scrap yard” model or breaking up a lot of different cars in a big space has been impacted by the aftermarket business, so unless you have popular rare parts, you might find sales few and far between to sustain a large yard of cars standing around. There is another model that is used in SA, that is smaller yards, with a retail component attached, so the car is stripped in the yard and the parts are put on a “shelf” in the store and the rest of the car is sold as scrap once all the valuable parts have been removed making space for the next car to be scrapped.
The aftermarket and secondhand supply of car parts are driven by the high prices charged by the vehicle agents in the country. The money that brands like BMW sell their parts for is not really based on reality, they charge high because they can. Most of their parts last the same as a quality aftermarket part but is at least double the price of the best aftermarket price.
