Cover Story: Hot Stuff

In the automotive aftermarket, everybody does exhaust. Love it or hate it, the pipes represent a high-volume service that has great upsell potential for greater customer satisfaction as well as a healthier bottom line. So why do so many shops race to the bottom on price and quality?

The answer to that question is most often fear of losing the job to a mass-merchant or specialty chain, as well as customer demographics. The reality however, is that there is a difference in product, a difference which the consumer as well as the installer needs to keep in mind.

Rick Brown, senior product manager, ArvinMeritor light vehicle aftermarket North America, exhaust (Maremont, Arvin) relates: “With direct fit, it can become an oxymoron when we’re talking about the low end or entry level. The OE would be roughly the same size and length of muffler body as the OE original and would have all the brackets and flanges as needed. Basically whatever is required to fit up in place of the OE.

We use three steps. When you get into the entry level, it may not have the same can size; it will be shorter in length as a rule. It will still attenuate the sound, maybe not quite as well, and won’t come with brackets and flanges. They’re less of a direct fit item, and more of a consolidated product.”

Differences are more than cosmetic, agrees Mark Boyle, director of exhaust product marketing for Tenneco Automotive (Walker, Dynomax). “The entry-level will be made of carbon steel while the premium will be made of aluminized steel. There would be a lot more tuning involved in the premium product, where they typically have a three-tube tuning chamber versus a two or one tube chamber in an entry level product.”

Performance and durability are the primary aspects of consumer satisfaction in this segment, and while design considerations are mainly responsible for sound attenuation, longevity is about materials and construction.

“Different materials are used inside the top end versus the entry level, says ArvinMeritor’s Brown, adding, “when you’re getting into the premium and the top end, pretty much everybody in the aftermarket is using fully aluminized material. When you get down into the entry level, there’s some aluminized material, some companies used “galvanneal” or coated cold-rolled steel and others use straight cold rolled steel on the internals.”

The life span of a muffler or pipe is directly related to metals and cost. Mark Boyle describes what is basically a three-tiered pecking order: “It would go low carbon steel, aluminized would be in the middle, with stainless as the most expensive material. It’s going to be the same with life expectancy. The lower end is mostly universal product with cheaper internals and less expensive materials.”

“Low end” isn’t a term to describe modern original equipment exhaust systems. With stainless steel everywhere knocking aftermarket numbers down while the industry waits for those vehicles to age, will there be a recovery?

“There will, but vehicles overall are lasting longer”, states Rick Brown. “Where you used to have an average life span on a vehicle of eight to nine years, going back ten or twelve years ago, you normally had replaced the exhaust system on that vehicle in its lifetime three or four times. Today, vehicles are driven from fifteen to eighteen years, and we’re not getting the first shot at them for seven to ten years in terms of the first exhaust system replacement. As a result, in the vehicle lifetime, you’ll get two turns instead of four.”

Those fewer turns have resulted in overall declines in aftermarket exhaust sales. According to Tenneco’s Mark Boyle, “I think in the next two years we’re going to bottom out on that. The market’s declined significantly; about six points a year over the last five years.”

Direct fit vs. entry level: Which saves labour?

Like much in this segment of the aftermarket, which way an installer goes depends on many factors, including the labour component of the job. Bending pipe does take longer, but O.E.-fit components are more expensive. What’s the answer?

According to Ken Bush, vice president and general manager for ArvinMeritor light vehicle exhaust, “there’s really no rule of thumb. We see it regionally in North America. Some chains try to promote specialized custom installations. The labour, however is much more expensive and difficult to obtain. For the business owner it’s what’s available in the marketplace and what the consumer is willing to pay. In some cases the pricing pressures are not as severe; they may go to direct fit and be able to get paid for it. In others, the cost of the product may be a significant portion of the total and depending on how they run their shop, labour may not be as important an issue. There’s really no rule of thumb. It’s purely economics.”

For the consumer, the economics of exhaust replacement really hit home if they’re replacing complex stainless systems. At a high-end shop or dealer, labour rates may make direct fit cost competitive with universal product, but at a shop with tiered rates or a lower door rate, bending pipe is still a viable option.

In Rick Brown’s opinion, it depends where you go to have it installed. “If you’re going to a dealership for installation, that’s very true. But at a muffler shop, these guys proceed accordingly. There’s quite a process difference between the two types of mufflers and their labour rates aren’t quite the same as going into a seventy-dollar dealership. They know how long it takes to install it. I’d say that there is still a saving going with entry level.”

Selling quality

For most independents, selling quality for better margins is a truism that’s as old as the aftermarket, but it’s wisdom that’s often ignored. The race to the bottom is still prevalent as dealers battle with chains and the perceived need to avoid “sticker shock” when dealing with the owner of that ten-year-old Cavalier. The trouble with going cheap is that the customer gets parts that are…cheap.

Tenneco’s Mark Boyle explains: It’s an option out there for the person that doesn’t want a quality product. It’s a ‘sales saver’ type product. Does it muddy up the waters? It depends. If somebody puts on a ten-dollar muffler and has to come back nine months later and do it again, they’ll only do that a couple of times before they realize that they’ll get what they pay for.”

“The majority of shops want to sell a good quality product”, declares ArvinMeritor’s Rick Brown. “There is another group of shops, and they are small in number, that would like to give a great price but have the customer come back more often. It comes down to talking to their customer. If they drive in with a Cavalier you can expect that they’re not going to want to be upsold, but if they’re coming in with a higher-priced car, you can sell them on the features and benefits of a better product.”

In exhaust more than many other aftermarket segments, “You get what you pay for” is self-evident to everybody but the consumer. Whether you fit entry-level or the more profitable premium pipe, the name of the game is to offer the upsell option, and make sure that customers know what they’re buying. Mark Boyle says it simply: “Everybody wants to sell on price, but you’re going to make a lot more margin selling the premium product, plus the consumer’s going to be a lot happier.”