Questions We Get Asked – OEM Parts in Vehicle Repair

Questions we get asked.

Branded vs OEM Parts in vehicle repairs.

In principle in the South African insurance context, an insured party is not prejudiced when an insurance company uses Original Equipment Manufacturer (OEM) parts to repair a vehicle that is out of warranty.

This approach aligns with the principles of indemnity insurance and ensures fairness in the claims process.

The basic starting point is that the car’s parts are Used Parts [UP] at the time of the claims event and an indemnity  (however impractical) would be to source 2^nd hand used parts to replace them.

This would put you in the exact position you were in prior to the accident.

Using new parts would effectively place you in a better position than before.

 Second hand / used parts are not practical for insurers anyway so they move to the next consideration where they could use :

1. Original Branded Parts [OB]
2. Original Equipment Manufacturer Parts [OEM]
3. Aftermarket Parts [AM]
   
   

OB parts are the most expensive and would drive up the costs of repairs ( with premiums following) and vehicles would be written off far quicker.
AM parts would be the cheapest but do not carry the same standards or guarantees of either OB or OEM parts.

Insurers go for OEM as a result.

Here is some general information we’ve gathered around OEM parts.
OEM (Original Equipment Manufacturer) parts are typically made by the same manufacturers who produce the original branded parts for vehicle makers, but not always in the exact same factory or under the same branding conditions.

1. Same Manufacturer, Not Always Same Factory: OEM parts are produced by companies contracted by the vehicle brand to make components for their cars. These manufacturers may use the same designs, materials, and specifications as the original branded parts, ensuring compatibility and quality. However, the parts may not always be produced in the same physical factory as the branded (genuine) parts, especially if the OEM supplies multiple automakers or operates several production facilities
2. Branding and Packaging: OEM parts are often sold without the car maker’s branding or packaging. While the part itself is identical in design and function, it may lack the automaker’s logo or come in a plain box instead of branded packaging
3. Quality and Standards: OEM parts must meet the same quality and compatibility standards as the original branded parts, as they are made to the automaker’s exact specifications. This is why they are generally considered more reliable than aftermarket parts, which may vary in quality and fit.
   
   In essence, OEM parts are usually made by the same companies that produce branded parts, sometimes even in the same factories, but not always. The main difference is the branding and sometimes the packaging, not the quality or specifications.
   
   

How OEM Parts Affect the Resale Value of a Vehicle

Using OEM (Original Equipment Manufacturer) parts has a significant positive impact on a vehicle’s resale value. Here’s how:

Preservation of Value and Brand Integrity

1. OEM parts are manufactured to the exact specifications and quality standards set by the vehicle’s original maker. This ensures that the replacement parts fit perfectly and function as intended, preserving the vehicle’s original performance, safety, and reliability.
2. Maintaining a vehicle with OEM parts helps retain its factory specifications, which is a key selling point for potential buyers and dealerships. Buyers are more confident in vehicles that have been repaired or maintained with OEM parts, as this signals proper care and attention to quality.
   
   

Buyer Perception and Marketability

1. Vehicles with a service history showing the use of OEM parts are generally more attractive to buyers. This is because OEM parts are associated with durability, longevity, and adherence to manufacturer standards, all of which reduce concerns about future breakdowns or compatibility issues.
2. Conversely, the use of aftermarket parts can raise doubts about the quality of repairs and might even void certain warranties, making the vehicle less appealing and potentially lowering its resale value.
   
   

Warranty and Assurance

1. OEM parts often come with a manufacturer’s warranty, providing additional peace of mind to both current owners and prospective buyers. This warranty coverage can be a deciding factor for buyers who want assurance against defects or failures in replacement parts.
   
   

Dealership and Trade-In Value

1. Dealerships and professional evaluators frequently check repair histories. Vehicles maintained with OEM parts are more likely to receive higher trade-in offers because these parts help maintain the vehicle’s structural integrity and brand reputation.