What Does OEM Mean and How Does It Affect the Car Industry?

Ever heard the acronymic term ‘OEM’What does OEM mean exactly? What does OEM stand for and why is it so relevant for the automotive industry? Are there several uses for this term or can we simply use OEMs to define original equipment manufacturers for the car industry and nothing else? In the following, we explain the origins of this abbreviation, its use in the automotive industry and its relevance for car tuning. We also take a brief look at the difference between OEM parts and aftermarket parts.

What is OEM?

As per the Wikipedia definition, OEM stands for ‘original equipment manufacturers’. It refers to companies that produce elements, parts or subsystems, which go on to be used in a byproduct, manufactured by an entirely different company. There are several ways to speak of OEMs, as follows:

  1. An OEM is a company that makes a part of a product sold and promoted by another company. Usually, the first company only contributes with an element, part, or component of a product that is produced by the maker of subassemblies. For instance, the OEM is the company that made the LED headlights on the car and then sold them to the final assembler of the end product (i.e., your car).
  2. An OEM can also be reseller that adds value to the end product; such companies are also referred to as second manufacturers. Going along with the above example, Acme Inc., who made the LED headlights on your car, is the OEM for Audi, who is the final manufacturer.
  3. OEMs are also all the manufacturers, enterprises, businesses, companies, and part makers involved in the production of an end product in its original final assembly. They are the producers that contribute to the original equipment of the car.

Aftermarket parts

Building on the third usage of the term OEM above, we must also refer to aftermarket parts, in contrast with OEM parts. OEM parts are all installed on your car before it leaves the automotive plant: for instance the Bosch fuel injectors, the Audi engine blocks, the Acme Inc. LED lights, and so on. Any component that is added to the car after it has been originally equipped is called an aftermarket part.

This is relevant for the world of auto tuning, as it is for car part collectors, and restorers of vehicles, since they all ascribe different values to OEM parts versus aftermarket parts. It’s interesting to note that one and the same part can be OEM for one car or car model, but can stand as an aftermarket part for another vehicle – if it was later added through tuning, modding, or restoring.

The term OEM is relevant for the automotive industry (as it is for the IT hardware industry), since auto vehicles usually require many different parts. By purchasing them in bulk from OEMs, car manufacturers can lower their production costs. This is because, of course, OEMs allows the final car manufacturer to benefit from the reduce expenses of economies of scale. It also allows carmakers to get access to the components and subsystems their product require, without producing them in-house, in a factory or plant of their own.

For you as a car tuning enthusiast, or as a simple vehicle owner, it’s important to be aware that OEM parts have to be marked with their respective symbol. Bear in mind, though, that car part sellers who sell their products in bulk (such as NAPA, Advance Auto Parts, Autobacs and the like) will follow the OEM marking with some fine print, which reads along the lines of ‘meets OEM standards’. This, of course, means that the parts in question are not really OEM. They may meet the exact same standards as the OEM parts themselves, but if they were not part of the vehicle’s original equipment, they cannot logically be considered OEM.

OEM parts vs Aftermarket parts: How to choose?

Nobody really plans for their vehicle to break down, require maintenance or be in need of repairs. However, there’s no way to avoid such situations. Sooner or later, irrespective of whether or not you’re interested in tuning, your car is going to need some fixing by having a car part, element, or component, replaced with a new one. Now, as any car owner knows, nowadays it’s difficult enough to find a trustworthy car repair shop. To have to decide between OEM parts and aftermarket parts only makes the situation all the more complex.

Generally speaking, aftermarket parts make up the bulk of components used in independent car repair shops. Some eighty per cent of such businesses will opt for aftermarket parts, because they are more affordable. Meanwhile, official dealerships will only use official parts, made by the same brand that the automotive company which produced your car used for the original equipment.

It’s important to choose wisely between OEM parts and aftermarket parts, because using the wrong ones from the latter category can render your car repair warranty null and void. To this end, always make sure that any independent car repair shop you go to will be using aftermarket parts that meet the requisite standards.

Though this doesn’t always apply, it’s true that, in general, aftermarket parts will be cheaper than OEMs. This fact in itself, as well as the amount of money you actually get to save, depends on each specific car part brand. Also, it’s important to have a little perspective when opting for aftermarket car parts. Poor quality parts will only end up costing you more money on further repairs in the long run. At the same time, it would be absurd not to acknowledge the fact that the aftermarket parts come in a wider range, which makes them more largely available.

This can be both a blessing and a curse for the average consumer: too wide a range of choices can be confusing. That’s why, bottom line, the most important thing when deciding between OEM parts and aftermarket parts is that you have a car repair shop that you trust and can work with in selecting the best option for your budget.

Scroll to Top