The market in counterfeit auto parts has to be in the tens of millions. Mercedes parent Daimler said it alone has seized 1.6 million fake parts for its automobiles last year.
Daimler said the counterfeit parts have three major effects. The first of these is safety. Fake parts do not meet manufacturers’ standards and could easily be defective. The second is job loss. Counterfeit parts dig into the market share of legitimate ones. People who make the “real parts” can lose jobs as the market for these components is pressured. Finally, counterfeit parts hurt Daimler’s profitability as the money it would make on parts it manufactures is drained. Thus, shareholders can suffer as margins deteriorate.
Daimler said it is aggressively attacking the counterfeit parts market and the companies that make them. In its 2016 Daimler Sustainability Report, management said it has a unit to address the problem:
The Brand Protection team has an international presence and cooperates closely with customs and local authorities. The brand protection strategy is based on the three pillars of “detecting, attacking and preventing”. The brand protectors inspect suspicious products on online platforms or at trade fairs around the world in an effort to detect counterfeiters. Typical warning signs are a lower price than for the genuine part, differences in trademark and sale through dubious online sources. Worldwide raid actions in collaboration with local authorities are targeted at the large counterfeiter networks as well as at breaking up their production and distribution structures. Other measures include criminal proceedings or actions for injunctions and damages.
What Daimler did not say is whether the approach is successful.