When Tier 1 suppliers underinvest in aftermarket, the impact shows up downstream for OEMs, distributors, dealers, and shops
For most of my career, being in parts felt like working in the back room while production got the corner office. All the attention, budget, and headcount went to exceeding the sales plan, meeting the schedule, keeping the OEM’s line running. Over in parts and service, we got what was left over.
That instinct is costing Tier 1 suppliers real money. Ducker Carlisle, the consulting firm, published a case study this year on automotive and heavy equipment suppliers where aftermarket represented just 12% of total revenue but generated more than half of the company’s EBITDA.
I’ve seen the same lopsided math, in some form, at nearly every Tier 1 supplier I work with, most of whom are still running that channel as an afterthought bolted onto a production-first operation.
Show us the money
When people in this industry talk about “aftermarket,” they’re usually picturing the parts and service operations of the big vehicle or machine brands: the OEM’s own service network. But a huge share of what flows through that channel, and through every independent distributor and shop, comes from the same suppliers who are busy hitting Ford’s or Toyota’s production quotas.
That makes this more than a supplier profitability story. When Tier 1 suppliers underinvest in aftermarket, the impact shows up downstream for OEMs, distributors, dealers, and shops: fewer reliable options, weaker availability, inconsistent pricing, and more friction in the channels that depend on those parts.
Take a company that makes brake components and hydraulics, for example. A company in that position may sell enormous volume into heavy-duty truck OEMs for original equipment while also running an independent aftermarket channel with its own sales force, distributor relationships, dealer programs, and brand strategy.
Once dealers or distributors reach enough scale, some will buy directly from the supplier rather than through the OEM channel. Smaller brands may also need direct access to a supplier name customers already recognize.
For a lot of suppliers, that channel is where the profit is. It shouldn’t be treated as a side project run out of a spare desk.
Ducker Carlisle’s diagnosis of that same client is worth repeating, because I see this pattern constantly: OE-first priorities were diluting aftermarket focus and slowing decision-making, fragmented ownership meant no single point of accountability for the channel, and the business had no dedicated investment case of its own.
The brand lines have blurred
Twenty years ago, this was simpler. Ford had Motorcraft. GM had AC Delco. Those brands helped define the aftermarket channel. Then the supply base changed, parts operations spun off or separated, and the lines started to blur.
Now a single Tier 1 supplier might be running three plays at once: a premium name-brand line sold at a markup through the OE channel, a mid-tier brand built for aftermarket distribution with enough name recognition to command its own price, and a value line — sometimes remanufactured, sometimes sourced overseas — aimed at the price-sensitive end of the independent market.
That’s a lot of complexity to manage. It’s also a lot of margin sitting on the table for suppliers who haven’t built the muscle to manage it deliberately.
The downstream cost of getting this wrong
When a Tier 1 supplier under-invests in its aftermarket, the fallout is felt across channels. Availability gaps show up as back-ordered parts. Inconsistent pricing across brand tiers creates confusion for distributors, dealers, and shops. Both erode the trust those channel partners need before they’ll keep stocking one brand over a competitor’s. That shelf space can be hard to win back.
The OEM feels it too. A Tier 1 supplier’s aftermarket problems become the OEM’s warranty and service headaches, because dealers and end customers rarely draw the distinction between “the OEM’s fault” and “the OEM’s supplier’s fault” when a part isn’t on the shelf or doesn’t perform.
Suppliers that treat the aftermarket channel with the same rigor they apply to production with clear brand segmentation, disciplined pricing across tiers, stronger availability, and real investment in the sales and service infrastructure behind it don’t just protect their own margin. They make life easier for every OEM and distributor who depends on them.
The production line will always get a Tier 1 supplier’s first attention, because that relationship keeps the lights on. But the parts and service business sitting behind it isn’t a back-room operation anymore. It’s already producing more than half the profit off a fraction of the revenue.
The suppliers that win will be the ones that give aftermarket its own strategy, ownership, pricing discipline, availability focus, and investment case — not because it is separate from the OE business, but because it plays by different commercial rules.
Ben Groeneveld is Industry Principal for Global Supply Chain Solutions at Syncron, where he works with equipment manufacturers across automotive, construction, agriculture, and trucking on aftermarket strategy and implementation. Previously at Oracle, AGCO, and Navistar, he has 20+ years of experience helping OEMs navigate supply chain disruption and optimize parts operations.
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