Broadening Your Approach

While there has always been a push-pull dynamic between original equipment service and the aftermarket, two product categories that have remained resilient for jobbers are brakes and chassis parts. But that doesn’t mean the market hasn’t changed dramatically.

One change is obvious: the longer consumers hold on to their vehicles, the more likely they are to break down; and the more that cars break down, the more parts jobbers will need to supply to their technician customers. Simply put, the aftermarket thrives on this older-vehicle demand, which represents broader opportunities for distributors, jobbers, and sellers. But it’s not just older vehicles driving demand; newer applications are arriving at an unprecedented rate. In today’s market, it is not so much demand that can be the limiting factor as supply.

“Availability is the number-one issue more than anything else. I had an example yesterday of a guy wanting two lower control arms for a 2006 Ford Freestar. Not a soul had them [in the aftermarket],” says Chris Dempster, general manager of Dempster Automotive Ltd. in Barrie, Ont. He was forced to go to the local Ford dealer for them.

“I think jobbers have to look at the business as a program rather than commodity-based,” says Ian Braunstein of Satisfied Brake Products Inc. “What that means is [jobbers] need to really look at full-line coverage, differentiation, and offering a good selection of responsible products that are benchmarked to OE in terms of form, fit, and function.

“Coverage is key, because as a program supplier you make yourself the first call to your technician customer. As a commodity player, you’re just on a list of calls benchmarked for lower market opportunities. Make yourself the destination that the technician wants to turn to. A program approach will typically yield a higher success than some of the commoditized trends we see in our industry.”

Parts proliferation further complicates issues.

“Information is very vague. For example, it’s very difficult when you talk about Ford applications with pick-up trucks,” says Eduardo Gabarro, owner of West End Supply in Toronto. “They have eight different rotors for one application, so having to ask a customer to measure a rotor which has already deteriorated is very difficult when there are only millimetres of difference on the height. You’ve got to send the guy six rotors to see which one will fit the vehicle, because by application you can’t tell.”

In the last decade, many new vehicle makes and models have hit North American roads, and with them more parts numbers for jobbers to deal with. As a result, many small-to mid-sized jobber stores are struggling to keep up with the proliferation.

“From 1950 to 1992, there was only a maximum of 500 brake systems in North America in terms of applications. From 1993 to the present we’re up to 1,400. We do see a variety of car manufacturers in Canada on our roads, which has definitely increased the amount,” says Ramzi Yako, president of Promax Automotive Parts Depot. “The best advice I can give is to keep your coverage wide enough and not so deep.”

It is also worth mentioning that you must consider not only brake pads but also rotors, shoes, and drums–many of the auxiliary parts that make up brake systems. Instances where you have the front pads but don’t have the rear ones, or you have the front pads but don’t have the rotors or drums, could lead to a lost sale down the line.

“Store stocks should be monitored annually at the very least. While forecasting can be troublesome, it also helps the distributor and manufacturer to be more effective in their inventory planning. Jobber and distributor collaboration aid the process and assist the supply chain,” says Kim Plante, Federal-Mogul’s product manager for chassis.

There was a time when the same ball joint could fit on a Chevrolet Oldsmobile, a Buick, and a pickup truck, and last for more than ten years before replacement. Most steering component manufacturers would agree that that’s simply not the case today. Every one to three years, OEMs enter a cycle whereby vehicles are once again off to the drawing boards to be redesigned, which usually means more parts numbers to hit the market aren’t soon far behind. However, there are opportunities in chassis parts, if jobbers know where to look.

“OEMs’ increased use of integral components is driving the need to carry a range of assemblies. However, one common mistake is to carry too many serviceable control arm assemblies, which represents an additional inventory investment since the ball joint is already stocked,” says Plante. “Control arms are generally different for the right and left sides of the vehicle, whereas the ball joint fits both sides. Thus, twice as many control arms would be needed, which takes up a lot of shelf space. Also, the use of suspension components for the rear axle is growing. Jobbers will continue to face inventory challenges as new fuel consumption regulations are introduced beginning with the 2011 model year.”

Canadian companies can take a page out of their U.S. counterparts, says Dave Kondra, strategic account manager for ABS Friction.

“If you are a jobber in the U.S. you can simply contact R.L. Polk and get the actual registrations in your particular area or region,” he says. “Manufacturer reps who call on jobbers in the U.S. do this service for their accounts now. Actual VIN number registrations are the foolproof action.

“If I was assessing my inventory, I as a jobber would take a close look at the used car dealers in my area together with a general overview of Auto Trader, to get an idea of what might be the applications I am not currently carrying.”

“One thing that was an issue maybe five or six years ago was import cars (e. g., Hondas, Toyotas) that once went to the dealership [for repair], that are now being repaired by everybody,” says John Thody, president of XRF Inc. “Now the jobber has those parts to contend with as well, so he has up to six brands of vehicles that he has to stock that he didn’t have to concern himself with as much in the past. Imports have also become larger and heavier, and [therefore] steering and suspension parts, just by the laws of physics, wear faster.”

“Ford has recognized that a pickup truck is a tool, and last month the number-one-selling vehicle in Canada was the Ford pickup truck. Right now they’ve got such a leg up on GM and Chrysler as far as North American vehicles,” continues Thody. “They’ve sold 30,000 Tauruses this year alone. One bit of advice is the jobber may have to look at his inventories and [go heavier] on Ford a little, because I think there’s going to be a far denser population of Ford vehicles on the roads than there will anything else.”

Even in the face of challenges presented by parts proliferation, an aging vehicle population, rising demand for some newer applications, and the ever-growing inventory investment, the brake and chassis markets are maintaining their position at the top of the priority list for jobbers.

And with the average age of vehicles on the road rising, there are no signs that they won’t continue to warrant the attention of jobbers for some time to come.

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North American Vehicles in Operation Getting Older

According to several studies conducted within the last year, not only is the average age of cars driven in North America increasing, but higher gas prices and declining new vehicle sales are affecting consumer behaviour as well.

“The current economic environment, coupled with high gas prices last spring and summer, have resulted in consumers delaying purchases of vehicles because their discretionary income has fallen,” says Dave Goebel, solutions consultant for R.L. Polk & Co.’s aftermarket team. “Based on the uncertainty of what the future holds, consumers are trying to keep their current vehicles running longer until their confidence improves.”

Traditionally, the U.S. automotive market has seen a 3:1 ratio of used-to-new vehicle sales,
meaning that three pre-owned cars or trucks sell for every one new vehicle. However, in Q1 2009, that ratio rose to 5:1.

As a result, used vehicles make up a growing percentage of total light vehicle sales. From Q1 2008 to Q1 2009 (again in the U.S.), the share of used vehicles out of all new and used light vehicle sales rose seven percentage points, from 77.6% to 83.6%.

It should also be noted that just because the average age of vehicles on our roads is increasing, it doesn’t mean people are driving more. When gas prices spiked to all-time highs, it actually caused the total number of miles driven to decrease for the first time in history. This decline sustained itself even when gas prices fell during the fourth quarter of 2008.