The French Government passed a new law, effective April 1, 2019, that makes it mandatory for garages to offer customers the option of using a recycled or used part that is the equivalent of a new OE part, when repairing or replacing post warranty vehicles. The objective here is to spur consumers to opt for the recycled, rather than the new, part. This is one among several ‘go green’ initiatives that have been implemented by the French government.
The law clearly states that the recycled or used replacement part must meet the same standards required from a new part in terms of quality, durability, and safety. Undamaged used parts that are extracted from totalled vehicles of similar make/model/age as the vehicle that requires repair or replacement are most likely to be able to meet such stipulations.
The French law encourages the installation of used parts and not remanufactured (REMAN) parts as has been the case with the US law that came into effect from Oct 2015 (S. 565, the Federal Vehicle Repair Cost Savings Act of 2015). The US law requires federal agencies to promote the installation of remanufactured parts in federal vehicles during low-cost repairs without compromising on safety. Unlike the US federal law, the law imposed in France does not encourage the use of remanufactured parts.
Used parts in good condition are priced 50% to 60% less than comparable new parts. Attracted by the cost savings promised by used replacement parts, consumers with vehicles five years or older that require repairs are likely to strongly favour this initiative by the French Government. This, however, has the potential to reduce revenues for the aftermarket.
Efforts to promote the use of recycled or used parts during repair will be accompanied by some major challenges. For instance, garages will need to identify used/recycled parts of comparable quality to their new counterparts, ensure their adherence to OE fit, form and function, facilitate their ready availability, and reinforce such offerings with competitive warranty coverage.
Although consumers may not worry too much about the quality of the used part for a five year or older vehicle, nevertheless, finding the right part would be the most important challenge.
Currently, it is difficult to ascertain the potential impact of this law on the aftermarket’s revenues since this law is only three months old. A more realistic assessment of the impact of this law on the aftermarket will only be possible after 1-1.5 years.
OEMs and auto parts suppliers should prepare to promote the usage of remanufactured parts if the right recycled/used part is not available during repair. This is because REMAN parts are green, comparable to new parts in terms of quality, OE fitment, warranty coverage, but are priced 30-40% lower than their new counterparts. This will meet customer preferences in terms of reducing the cost of repairing older vehicles.
