Brand protection strategies to safeguard automotive brands from counterfeiting

The automotive sector continues to be impacted most heavily from counterfeiting. Here are some brand protection strategies that can help the automotive brands to safeguard themselves from counterfeiting.

Over the last decade, the Indian business landscape witnessed an incredible expansion of e-commerce, a steep rise in international transactions, and increasingly global supply chains leading to a surge in the magnitude of products across geographies. Unfortunately, in this scenario, the un-monitored supply chain has allowed new forms of counterfeiting to grow and flourish. This has required organizations to look at brand protection as a strategic business focus area. This approach gained wider prominence following the onset of the pandemic last year. According to estimates, the economic value of global counterfeiting and piracy is expected to reach US$2.3 trillion by 2022.

Within the economic landscape, the automotive sector continues to be impacted most heavily from counterfeiting primarily because the product portfolio within this segment is expansive. As a result, it provides counterfeiters a range of opportunities to meet consumer demand for branded and generic automotive consumables and replacements, upgrading and repairing parts within the black market, and infiltrating the legitimate supply chain.

According to The European Office of Intellectual Property (EUIPO), the annual global sales of counterfeit tires and batteries are valued at €2.2 billion and €180 million, respectively. According to the Authentication Solution Providers’ Association, counterfeit auto parts in 2019-20 accounted for ~40% of the overall after-market components in retail outlets in India. This is just a part of the larger picture, with all categories of automotive parts being counterfeited.

Deepak Bhawnani (left) Founder & CEO along with Peter Harvey (right) Senior Advisor – Anti-Counterfeiting, Alea Consulting

It is challenging for a consumer to spot a fake from a legitimate automotive part by simply looking at a product. There is an element where the consumer is actively seeking the lowest possible price for the parts. It sometimes leads to poor purchasing decisions, particularly when related to items that directly impact safety. For example, two-wheeler owners not taking their vehicle to authorized service centers may have clutch friction disks, brake cables, cam chains, oil seals, bearings, and other counterfeit components installed without their knowledge. Such substandard products can endanger safety and be catastrophic. 

Genuine-looking counterfeit products do not meet regulatory standards as they are manufactured to work in tandem with other vehicle parts. Hence, they cannot be relied upon to tackle challenges of speed, temperature, and varying road surfaces, particularly the uniquely challenging conditions faced on Indian roads. A FICCI report estimated that counterfeit auto parts caused 20% of road accidents in 2019-20 in India.

It is thus imperative for automotive players to focus on brand protection strategies to safeguard their brand’s reputation and maintain the industry standards of its products.  Brands should consider implementing an internal early warning system and map data about the increase in counterfeit cases involving their products as a base level to drive and inform a strategic brand protection program.

Automotive organizations should focus on streamlining their engagements with multiple printing and packaging suppliers; this ideally should be coupled with the protection of their Intellectual Property when they submit it to vetted and empaneled printers. For example, they can leverage a centralized print design management service to provide multiple vendors with consistent and uniform brand identity design elements, including unique colors/shades and logos. Such a step will ensure that all suppliers render identical standards of design. Moreover, it would safeguard automotive manufacturers from risking their Intellectual Property protocols, which could be misused if brands engage with multiple packaging and printing vendors through commercial sharing platforms or any other unsecured modes of communication.

Automotive brands engage with varied partners operating in a complex and diversified sourcing arena. It is thus critical for them to have a clear overview of the production and distribution of packing security labels. This can be achieved if they focus on monitoring the flow of goods – for example, a thorough inspection of product identification and validation should be conducted every time a new consignment of product arrives. 

Leveraging brand protection technologies in the most optimized manner is a keystone of the tactics to maintain and develop a coherent brand protection strategy. Brands in this segment should seek to ensure that stakeholders like suppliers, procurement agencies, design and creative agencies, etc. comply with every strategic approach dictated. In addition, adhering to processes and protocols, monitoring structure, data loss prevention, and employee management should be given consistent and constant attention. 

The automotive landscape is dynamic in nature. Therefore, brands should aim to adopt proven technologies that could further strengthen processes and add value to new products. Furthermore, to stay ahead of the market, brands must maintain an overview of the spurious market, monitor their risk, understand the latest brand protection developments, and evaluate how best to apply them to address their specific needs. 

Brand protection strategies and corresponding solutions are a part of long-term strategic planning to preserve the brand, protect the consumer, and ensure that it remains known as one with such core values. Therefore, the defined strategic roadmap should be relevant for the times ahead.  A short-term approach will not help mitigate counterfeit risks, and in the extreme, lead to brand erosion, loss of consumer confidence, and market share. 

Author: Deepak Bhawnani, Founder & CEO along with Peter Harvey, Senior Advisor – Anti-Counterfeiting, Brand Protection, Fraud & Supply Chain investigations, Alea Consulting.

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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