Fake parts reportedly cost Ford $1B
Figure detailed for U.S. Chamber study the first time an automaker has put a price tag on burgeoning problem.
January 22 2007: 8:35 AM EST
NEW YORK (CNNMoney.com) -- Counterfeit auto parts are costing Ford Motor Co. $1 billion a year, according to a published report.
The Detroit News said that Ford (Charts) will report that figure Wednesday as part of a U.S. Chamber of Commerce study on the problem of counterfeit goods for U.S. businesses. The paper says that it is the first time an automaker has released a cost estimate for the extent of the problem.
Counterfeits get more realistic
The paper also reports that counterfeit auto parts have become a $12 billion problem worldwide, with $3 billion in phony auto parts sales in the United States.
The paper says Ford not only loses money on sales of legitimate parts, but counterfeit parts also cost the company money through warranty repairs when it has to replace faulty parts that make it onto their vehicles.
"That ($1 billion) figure is probably light," Joe Wiegand, Ford's global brand protection manager, told the paper.
The News reports that the Chamber of Commerce study will also look at counterfeiting problems for office equipment maker Xerox (Charts), drugmaker Merck (Charts), privately held athletic shoe maker New Balance and Bendix, an auto supplier.
Ford competitor General Motors (Charts) did not put a cost estimate on the extent of the problem for that company. The paper reports that GM has seized more than $250 million in counterfeit auto parts in the past two decades, shutting down hundreds of counterfeiting operations.
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