When you think about it, it makes sense: Car parts are a major source of revenue for automakers, and they’re a big part of their business model.
They’re also relatively cheap.
According to a recent report from the US Government Accountability Office, a company that collects data on the price of a wide range of consumer goods, a $200 car parts kit could be worth about $6,400 to $8,000.
“The car parts business is very resilient, and we don’t see that changing any time soon,” says Tom Knezevich, a partner at law firm Covington & Burling in Washington DC.
It’s a testament to how resilient the industry is that companies are still going to have to worry about changing prices.
That’s because car parts prices are so volatile that it’s impossible to predict exactly how much the industry will recover in the future.
That means the business models that keep car parts makers profitable are set to change too.
But some experts think that’s a good thing.
“You can get away with having a lower level of supply because of the price volatility, but it means that consumers will be more willing to pay for new products,” says Knezevich.
“And because of that, car companies are going to be more aggressive in getting the prices right.”
That’s one reason why Knezes has been advocating for a regulatory shift to make car parts a less expensive product.
“I think that will be a good outcome,” he says.
“It will make it more attractive for companies to invest in product development and marketing.”
And with that, the car industry will finally have a good answer to the question: Is it worth it?