Controversial software identifies spare parts for which customers are willing to pay more, as opposed to those whose prices are monitored by consumer organisations, and advises carmakers how much extra the traffic will bear.

Paris, France - Carmakers including Renault, Jaguar Land Rover and Peugeot have boosted revenues by more than $1 billion (R12.6 billion) in the past decade by using sophisticated pricing software, according to sales presentations prepared by software supplier Accenture, and other documents filed in a court case.

Accenture told prospective clients, by identifying which spare parts in a manufacturer's range customers would be willing to pay more for, how much to raise prices by and which prices should not be hiked.

Accordng to a court filing by Laurent Boutboul - who wrote the Partneo software - the latter would include, for example, radiators and body parts that were featured in a basket of parts (similar to South Africa's annual Kinsey Report) that measures them for inflation.

Boutboul is claiming €33 million (R486 million) from Accenture over what he says is damage to his reputation because Accenture broke European competition rules, by using confidential information from Renault to help configure the pricing systems it set up for Peugeot Citoen - and possibly other manufacturers as well - between 2009 and 2015.

Jaguar Land Rover is still using the Partneo software but Reuters was unable to determine which other car makers, if any, currently use it.

'Increasing efficiency'

Accenture has rejected Boutboul's claims; it denied its pricing software was unfair to motorists and said its focus was on increasing clients' efficiency.

"Partneo does not share confidential or sensitive data between clients," it said. "Solutions of this type, which enable companies to assess and manage their products, are commonplace across industries. They help companies analyse spare part visibility and availability."

Renault, Jaguar Land Rover and Peugeot said their pricing strategies for spare parts were legal, did not take advantage of car owners and were focused on efficiency and ensuring availability for motorists.

Renault said it "strives to provide its customers with a wide variety of quality spare parts, the price of which is calculated based on parameters that Renault considers fair and equitable". It was unaware of any of its non-public pricing information being shared with other carmakers, it added.

Jaguar Land Rover said it used Partneo to "deliver consistency in pricing across our spare parts range to ensure that we are appropriately priced against our competition".

Peugeot said its parts strategy "consists in offering ranges of spare parts that meet the needs of all customers, regardless of their budget, at the highest level of reliability and safety". It rejected Boutboul's accusations, but did not answer detailed questions about how its software was configured.

France's competition regulator said it had examined the software and did not see a reason to open a full anti-trust investigation, without explaining its thinking.

Widely used

In the past two decades, pricing software has become widely used. University of Pennsylvania associate professor of computer and information science Aaron Roth said using software to try and identify the highest prices people were willing to pay was merely an extension of long-established practice among manufacturers and retailers.

In a 2013 presentation to BMW, Accenture claimed its software had, on average, allowed clients to increase parts prices by 15 percent.

But the recommended increases varied widely from product to product. Accenture recommended in presentations to six clients, including Peugeot, Honda and Volvo, that prices of many replacement parts should be doubled.

An October 2013 presentation to carmaker Volvo said that the software had led to "yearly gains achieved" at seven car and truck makers of a combined $415 million a year.

Volvo said it doesn't use Partneo but wouldn't comment on the presentation, while Peugeot wouldn't say whether or how much it increased prices and Honda didn't reply at all.

'Perceived value' 

Pricing software identifies parts that look expensive to customers, such as gearbox components, and advises car companies to push up the prices of those components.

Accenture said in its presentations that Partneo relies on a "perceived value pricing methodology". While manufacturers often seek a specific margin on parts, the software attempts to identify those parts for which consumers would be happy to pay above the typical mark-up.

Client presentations show it selects these based on a product appearing to a car buyer to be more valuable or expensive to produce. 

Accenture noted in a 2009 presentation to Peugeot that customer perceptions of the intrinsic value of a part are often based on factors such as size, weight, and material of an item such as a shiny brand badge or a cog.

In one presentation to Mitsubishi, it suggested the Japanese carmaker lift the price of a silvery model badge from €14.42 (R212.32) to €87.49 (R1288.18), an increase of 507 percent. Mitsubishi declined to comment on whether it used the software or increased its prices.

Industry analysts say the car parts business has long been highly profitable. While manufacturers struggle to make a profit margin of more than 10 percent when selling a vehicle,  "spare parts gross margin can go up to 90 percent", Accenture said in a presentation for BMW South Africa in 2013. BMW SA said it decided not to use Partneo but declined to elaborate further.

Pricing supervision

Although the market for new cars is highly transparent and competitive, analysts say the market for spare parts is less liquid and transparent, partly because some components can be protected by trademarks or patents, .

Car manufacturers have long been accused by insurers and motoring groups worldwide of charging too much for spare parts. Partneo mainly focuses on increasing parts prices based on their appearance but it also has a feature that tries to avoid potential insurer reaction to price increases of certain items.

The software categorises components as those "with or without third party pricing supervision" - prices monitored by specialist publications or insurers. In France, Securite Reparation Automobile, a group backed by insurers, measures car parts inflation and publishes this in the hope it will help exert downward pressure on parts inflation.

According to Boutboul's complaint, Partneo avoided hiking prices of the specific parts whose price is closely followed by SRA. Accenture declined to comment on whether the software still operated in this way.