New Year, New Options: The Benefits of Third Party Parts Sourcing for Claims Administrators

As we quickly approach the end of another year, it’s time for those of us in the Vehicle Service Contract (VSC) industry to embrace the idea of getting “out with the old, and in with the new.” While this phrase can mean many different things to many different people, there is a clear way we can apply the idea of “newness” within our industry—by embracing third party parts distributors. Why limit your claims department to only purchasing auto parts from dealerships, when there are numerous options for purchasing various types of automotive parts (both OEM and Aftermarket) that are available to your customers via a third party parts distributor?

Currently, many claims administrators are only purchasing engines and transmissions from parts distributors and buying all other parts directly from dealerships. While this practice may have been the old standard within the industry 10 years ago, it’s time to start getting the most bang for your buck by taking advantage of new options. These options are created by incorporating parts purchasing from third party companies, like Meridian Auto Parts, into your claims routine. Not only can parts purchased from parts distributors cost substantially less than those purchased directly from the dealership, but you can positively impact your cost-per-claim bottom line.

As veterans in the automotive industry, we have a lot of experience working with claims administrators to help fill their needs for quality automotive parts. Recently, we spoke with a group of administrators, and asked them to provide us with an estimation of how much they were spending on parts purchased strictly from dealerships. While we can’t share any of the hard numbers with you, we can tell you that claims filled solely with parts purchased from dealerships generally cost up to 30 percent more than purchasing from parts procured from our company. We understand that there is a large amount of work that goes into opening and closing each VSC claim. We also understand that your time is valuable. As administrators, it’s often easy to lose sight of the big picture— to increase profit without sacrificing the quality of customer service. With 30 percent or more of savings available, sourcing and purchasing from a parts distributor is well worth a quick phone call.

Today, auto manufacturers are integrating advanced automotive parts into the production of their vehicles. It is predicted that the cost of these parts will increase in the future. Fortunately, there are alternatives to purchasing parts directly from dealerships. While dealerships typically offer only new OEM parts, part distributors can offer a tier of part options. Many can provide you with: new OEM, OEM remanufactured, new aftermarket and aftermarket remanufactured parts. Each individual claim may require a certain level of quality part; this is why it is important to remember that purchasing parts solely from dealerships is not your only option.

From electronically controlled air suspension components, to integrated navigation or information units, one can see that there can be a high cost associated with incorporating technology into automotive part production. Below is a comparison of some of the parts that administrators are consistently purchasing for four popular vehicles.

From the example provided, it is obvious that claims can quickly become very expensive. To keep costs manageable, administrators should source more parts from parts distributors. The old idea of sourcing only engines and transmissions from parts distributors is outdated.

Whether it’s the dealerships raising their prices on parts or auto manufactures incorporating technologically advanced parts into their vehicle production, there is a need for more variety when sourcing parts. The way of the future is sourcing quality parts at a lower cost. It’s time to stop “partying like its 1999” and adhering to the old standards of parts sourcing. It’s time to start making the best decisions for your company in 2012. You can increase your profit and positively affect your bottom line by sourcing parts from parts distributors. So when you’re making those New Year resolutions this year, don’t forget to resolve to make changes both professionally and personally. Start setting the new standard within your organization by sourcing your automotive parts from third party parts distributors.