Automotive Aftermarket Outperforming OE, Still Facing Challenges

The automotive aftermarket may be the fair-haired boy of the automotive industry on Wall Street right now, but that is not to say that the challenges have lessened for the industry.
The automotive aftermarket has recently outperformed its OE brethren in the automotive industry.
“I know that you know that GM’s market share is down to a 25 year low,” Automotive Industries Association of Canada president Kathleen Schmatz told the 1,200 Town Hall Breakfast attendees at the AAPEX event in Las Vegas, Nev. “The aftermarket is, ironically, having a good year.”
At the recent financial forum organized by the association, Wall Street analysts made it clear that the aftermarket is outperforming the rest of the automotive industry as well as some stock indices.
One of the key reasons for the growth is shifting demographics.
“Demographics are not what they were 25 years ago,” says Michael Coppola, president and COO of the Advance Auto Parts chain. He says too that the rise in other ethnic groups and women should be reflected in the demographics of the companies that serve them, and that Advance is working hard to ensure that its workforce reflects that changing reality.
And, he says, it is also important to have parts available for those segments of the marketplace that are “financially challenged,” meaning, of course, that value lines are important for them in the marketplace.
Van D. Kirk, president of Auto Tech Service, says he has found benefits in gaining the trust of the female customers. “Once you get the ladies on your side, you have customers for life.” It is, he says, about gaining their trust by delivering on the promise of repair their vehicles correctly and efficiently.
While Advance has a strong DIY component to its business, as well as an important installer business, one thing that remains the same is that the aftermarket only benefits when the part is sold.
“Before we can service this changing demographic,” says Schmatz, “the aftermarket needs to be [brutally honest] about its capabilities.”
One of the barriers identified with the ability of shops to effect repairs efficiently is the lack of management skill in the shops. Without sufficient profit, they can’t afford the tools or the training to keep pace.
“There is no doubt about it,” says Chris “Chubby” Frederick, president and CEO of the Automotive Training Institute, “we have to make sure that those shops are good businessmen.”
He says that his experience with the hundreds of profit and loss statements he has seen, most have nowhere near the profit required to keep pace today, never mind prepare for the future.
“Most know what they have to do. They just don’t know how to do it.”
Kirk says that too few shops are able to plan ahead to take the training they need.
“I had to raise myself above what is wrong with the car.”
Using the AAPEX event and himself as an example, he says that more shop owners should be like him, able to take a few days away from the shop.
“They should be able to come here on a Tuesday or a Wednesday, take a few days to come to an event like this, and learn 20 things that will help their business. If they can’t do this, they are working hard, not smart. They are working in the business, not on the business.”