By on November 4, 2016

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Federal authorities busted numerous nefarious organizations for selling illicit auto parts at the SEMA show this week.

That, the automotive industry loses Martin Leach, endangering lives has led Takata to mull bankruptcy, and VW’s diesel emissions scandal continues as the company races for the finish line… after the break!

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Parts plagiarism at SEMA

SEMA is the premiere event for those seeking the latest aftermarket parts for the automotive market. It’s also, apparently, a very good spot to locate the most recent knock-off parts to weasel their way onto the scene. Thanks to a hot tip from the Omix-Ada booth, U.S. Marshals entered the south hall and began taking care of business.

Two Chinese companies were served papers in the Las Vegas convention center and FourWheeler manage to snag some video. The subpoenas allege copyright and trademark violations of Omix products. The company is the world’s largest Jeep aftermarket parts manufacturer and wholesaler. Fake Omix-branded products were also seized before U.S. Marshals decided to call it a day.

Government officials also raided six other companies for bunk parts at the Automotive Aftermarket Products Expo after the two Specialty Equipment Market Association takedowns.

Automotive News spoke the vice president of SEMA events, Peter MacGillivray, who said the if accused “are found at fault, they will not be coming back to SEMA.”

Omix says it will definitely be taking legal action against the offending Chinese manufactures.

“This is obviously about our product line and intellectual property because we need to protect our customers and retailers. But it’s not just about Omix and Rugged Ridge, it’s something that is industry-wide and something that has been building up and becoming more and more rampant over the past two to three years,” said Omix-ADA’s Director of Marketing, Henk Van Dongen, in a statement.

“We’ll have to see how far we can legally pursue the companies that we dealt with today and we’re going to be vigilant going forward,” Van Dongen said. “It’s slow going, we’re just getting started with this but you can see we are focused on it. It’s a little like playing whack a mole, and hopefully if we whack them one time too many, then they won’t be coming back.”

District Judge Gloria Navarro issued a preliminary injunction and seizure order on Tuesday. In the documents, the companies were identified as Changzhou Jiulong Auto Lamps Factory, Guangzhou Vcan Electronic Technology Co., Maxgrand Ltd., Sanmak Lighting Co., Shenzen Unisun Technology Co., and Unity 4wd Accessories Co. Navarro has scheduled a preliminary hearing for the matter for November 10.

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Martin Leach, former Ford and Maserati head, dies

Former Maserati and Ford Motor Co. executive Martin Leach has passed away at the age of 59. The death was announced in a Twitter post by NextEV. Motorsport reports he was battling cancer.

Leach joined NextEV to lead the company’s Formula E racing team, winning the first series title for electric vehicles in 2015. His career with Ford lasted 28 years and ended with him serving as president and COO of the automaker’s European division from 2002 to 2003. He also served as managing director of Mazda when Ford still owned a piece of the company.

After Ford, Leach went on to be acting CEO for Maserati before founding and serving as chairman of Magma Holdings Ltd., an auto industry consultancy.

Takata

Takata facing bankruptcy

According to Automotive News, Japan’s Takata Corp. is considering filing for bankruptcy for its U.S. unit. The air bag maker is seeking a sponsor to help pay for liabilities related to its dangerous air-bag inflators, which have have caused numerous injuries and deaths.

Takata has been working to choose a financial backer to help face the staggering costs related to the global recall of millions of potentially faulty inflators. The company has struggled to supply the replacement parts for potentially defective inflators, and a company-appointed committee has retained investment bank Lazard Ltd as an adviser.

The inflators have been linked to at least 16 deaths worldwide, mainly in the United States, sparking the largest automotive recall in history. Globally, roughly 100 million units will have to be replaced.

“Our preference would be to restructure debts through an out-of-court settlement with creditors. This has been our position since the start, and has not changed,” Takata CFO Yoichiro Nomura told reporters at a results briefing. “Aside from that, we’re open to all options.”

VW logo

VW’s diesel crisis, version 3.0

Volkswagen is hoping to reach a settlement with the United States government before a new president takes office in January, as a change in leadership could introduce new troubles for VW as it tries to recover from the diesel scandal.

Automotive News reports:

“Of course we’d wish to have a final decision before the American government — and with it, the authorities — change, so that we can have certainty,” Volkswagen CEO Matthias Mueller said today during a conference in Hamburg. While he’s “disappointed” that the investigations have continued for so long, negotiations with U.S. regulators are “very good,” Mueller said.

VW is still facing criminal charges in the U.S. after getting approval for a $15 billion civil settlement last month with the U.S. Environmental Protection Agency, the California Air Resources Board and disgruntled customers. A court hearing took place in U.S. District Court in San Francisco this morning relating to about 85,000 3-liter diesel engine cars that weren’t included in the previous agreement.

U.S. District Judge Charles Breyer said yesterday that Volkswagen has made “substantial progress” in its discussions with the Justice Department for a 3.0-liter vehicle settlement.

Volkswagen submitted proposed fixes for larger-engined vehicles earlier this year and has been in talks with U.S. and California state regulators. People briefed on the talks told Automotive News that VW might agree to buy back more than 21,000 older Volkswagen Touareg and Audi Q7 diesel vehicles and might repair the 60,000 newest ones if regulators agree to a fix. No final agreements have been reached.

[Images:  SEMA, Magma Group, Takata, VW Group]

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16 Comments on “TTAC News Round-up: U.S. Marshals Raid on SEMA Nabs Parts Plagiarizers...”


  • avatar
    White Shadow

    Hmm…there are Chinese car companies that counterfeit entire cars, right? So why would anyone be surprised that they’d do the same thing with car parts?

  • avatar
    SCE to AUX

    Kudos to the US Marshals for their rapid response.

    It really is like “whack-a-mole”, as Omix said, and I fear the moles may only go into hiding for a while until a more opportune time.

    Ironically, one way to reduce parts plagiarism is to produce your parts in China. This can reduce their cost (and price) to the point that they’re not worth copying, because buyers can’t save much by going with the copy.

    • 0 avatar
      hreardon

      I have a client in manufacturing who has recently moved production from China to Mexico due to a combination of factors: Chinese wages increasing, intellectual property/legal issues, logistics. He told me recently that the move to Mexico resulted in about a 5% increase in dollar costs, but an incalculable reduction in other costs that made the move well worth the energy.

      • 0 avatar
        Fred

        For us it was India that copied our designs and that was 30 years ago. Today if you go on Alibaba you can find copies of our products and in fact many industrial copies. The real problem with them is that while they are cheap they are also low quality and their is little support.

  • avatar
    PrincipalDan

    Hot Rod magazine had an article about counterfeit parts a few months back. IIRC they purchased performance parts from a variety of sources (eBay, brick and mortar stores, etc.) and had engineers from the companies examine the part and the packaging.

    None of the parts the bought from B&M stores were counterfeit but an alarming number from Flea Bay were.

    • 0 avatar
      White Shadow

      My neighbor’s son made a fortune selling counterfeit Nike sneakers on eBay. He was 19 years old, no job, living in the basement and driving a new Range Rover.

      • 0 avatar
        chuckrs

        If you blow out a crap counterfeit pair of Nikes, it won’t kill you. There are probably some counterfeit auto parts that will kill you. Even more true in aerospace, where costs are much higher and sourcing has long lead times for the correct parts.

        My brother’s start-up was badly damaged when said company’s green eye-shade guys sourced a seemingly inconsequential part from China. Upon testing, it appeared that the part was made from compressed yak dung…..

      • 0 avatar
        PeriSoft

        “My neighbor’s son made a fortune selling counterfeit Nike sneakers on eBay. He was 19 years old, no job, living in the basement and driving a new Range Rover.”

        If he got caught, they should have made him drive a Landwind.

  • avatar
    sirwired

    One thing I can’t figure out: Why has Takata not declared BK already? I mean, as soon as the scope of the problems was clear, Takata was obviously going to be on the hook for billions. (Not just lawsuits from the direct victims, but also angry OEM’s want Takata to foot the bill for the recall.) And even if they COULD pay the bill, the number of OEMs that would stay loyal over the long-term to such an outfit is pretty low.

    In what world was BK not inevitable from the start?

    • 0 avatar
      05lgt

      I will readily admit I’m not an expert, but I think BK requires a court approval since it’s basically not paying your bills. They may be being kept just barely viable by both regulators and OEM’s in a transparent and openly acknowledged financial razors edge dance. I’m sure the specifics depend on which chapter etc. but… BK because you’re loosing isn’t supposed to be an option, it’s supposed to be a way to make sure that you don’t preferentially pay some bills and completely stiff others and instead allow the courts to chose who gets what percentage of what’s owed them.

      • 0 avatar
        sirwired

        You don’t even have to have your assets exceed your liabilities to declare BK. All that is needed is that your debts exceed your cash available to pay them. For instance, if you owe creditors $5B, and your only asset is a widget factory with a book value of $8B that you cannot, in fact, find anybody to buy, then you can totally declare BK.

        In this case, Takata could easily make the case that they are on the hook for WELL in excess of their ability to pay, because that is, in fact, the case, and has been for some time. Maybe they haven’t actually been sued by all their (former) customers yet, but it’s certainly inevitable… a many-$B “reserve” (of money they don’t have) would be easily justifiable.

  • avatar
    notapreppie

    > Automotive News spoke the vice president of SEMA events,
    > Peter MacGillivray, who said the if accused “are found
    > at fault, they will not be coming back to SEMA.”

    Until the alleged perps change their name and wash/rinse/repeat.

  • avatar
    MBella

    I am having trouble understanding why a blatant counterfeiter would set up a booth at SEMA. It would be one thing if they were copying the design and selling under their own name, but to sell it branded as the original, at a trade show with the original is absurd.

    • 0 avatar
      dukeisduke

      The FourWheeler article has the best info. Apparently, someone from Omix saw the Unity booth, and noticed parts that looked identical to theirs. In addition to the video, the FW article has some pictures of Unity employees being served with legal papers. So it sounds like they were Unity-branded knockoffs of the Omix parts.

      • 0 avatar
        MBella

        That makes more sense. The article actually made it seem like the knock offs had Omix packaging. Thanks for clarifying.

        The question then becomes, does Omix have any proprietary technology that is patented? If not, do they really have a case? The automotive world, especially aftermarket copy each other all the time.

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