Brake Sales: Jobbers Face Import Challenges

The proliferation of foreign-nameplate vehicles over the past two decades has been a double-edged sword for jobbers. While the rapid model expansion in this segment has provided a steady influx of new business, it has also created a stocking nightmare as SKUs continue to expand unabated. Import vehicles now represent 40% of the North American market.

It wasn’t all that long ago that if you owned an import vehicle, you had to either deal with the dealership or scout out a specialty import supplier for replacement parts. Both jobbers and aftermarket parts manufacturers recognized this growth sector early on, and began adding to their import product lines. The steady expansion of this sector is now to the point where most import vehicle owners have as many component options as domestic vehicle owners.

Today, upwards of 50% of a jobber’s business involves brake components, and based on current North American aftermarket sales figures, it’s clear the brake business will continue to grow.

According to recently released retail sales figures for May by Statistics Canada, new cars and aftermarket parts sales are leading the retail sales comeback.

Considering the fact that import vehicles are now a mainstream staple for jobbers and no longer a “specialty product,” the 1.76 million vehicles expected to be sold this year mean jobbers can expect continued growth in their biggest market segment.

“Today it really doesn’t matter if a vehicle is an import or a domestic model; they all basically use the same brake technology,” explains Kevin Fleury, sales director for Transbec. “There was a day when ABS was new and used only on imports, but today it’s all standard stuff. Even if you look at the very high-end European vehicles that have advanced radar systems, this technology does not affect the choice of brake components.”

“The market has become very convoluted, and we have reached a point now where many import makes are not considered imports anymore, simply because most of the lines are built in North America,” explains Dale Devlin of Halton Automotive.

“As the import market has grown and evolved, our mindset has also evolved, and we now look at it from a broader, global manufacturing perspective. We treat a Toyota the same as a Chevrolet as far as our stocking influence goes,” adds Devlin.

“Import vehicle proliferation means more SKUs on the jobber’s shelves, and most customers require at least two levels of ‘good’ and ‘best,’ which means two sets of pads and rotors for a much expanded SKU base,” explains Dean Weber of ProForce Automotive.

“All brake manufacturers make brake components for all makes now. It’s no longer like it was many years ago when if you wanted something non-domestic you would have to go to Altrom, Worldpac, or Auto-Camping for parts. In today’s marketplace, everyone sells everything. It’s now one big market,” says Devlin.

One thing that hasn’t changed is the ongoing issue of parts proliferation. With shelf space at a premium, strategic parts management is a daily task. With vehicle owners becoming more proactive now and showing a positive attitude towards regular maintenance to extend the life of their vehicle, having a good selection of quality brake parts on hand is paramount in today’s competitive marketplace.

“Because of the increase in demand and the growing number of SKU’S required for late model vehicles in the past few years, the jobber has little choice but to increase his inventory, especially coverage-wise, in order to properly service his customer base,” says Ernie Fields, marketing manager for Promax Auto Parts Depot.

“We look at the big picture: in essence, North America,” explains Jim Marsh, technical trainer for Raybestos. “We look at the cross-section of vehicles being purchased and our inventory planners look for trends. Our inventory is constantly under the microscope, because inventory is looked at as money sitting on the shelf so you don’t want a huge amount of inventory sitting idle. But without a doubt, you never lose sight of the fact that if you don’t have it you can’t sell it,” adds Marsh.

“Keeping on top of the new models is difficult with the amount of SKUs out there now,” adds Wayne Hoskins, owner of Pacific Parts in Vancouver, a Uni-Select shareholder. “One trend we are seeing is the move towards replacement more than repair, especially with the younger technicians. Disc brake rotors are rarely turned anymore. And with some of the designs of new rotors on some import vehicles, and the age of the disc brake rotor machines out there in the shops, some of the rotors that do get turned end up in worse shape than the rotor that came off the car,” adds Hoskins.

“We sell a lot of rotors for foreign cars in many different flavours, because that’s what our customers are looking for. We also have a multitude of brands of brake pads to satisfy customer requests. The demand for ceramic pads has declined somewhat out here. At one point, there was talk that we need ceramic brake pads to cut down on the dusting on Mercedes, BMW, Audi, and some other imports that had problems with the rims getting coated in black dust. But it turned out that the black dust was coming from the high carbon content of the rotors that these high-end vehicles were equipped with, not the brake pads,” explains Hoskins. (The high carbon content provides better dampening and a smoother braking experience.)

As well as managing crowded shelves of brake parts, jobbers need to take the time to ensure their customers are fully aware of premium lines of brake products and the benefits that come with that level of purchase, such as a lifetime warranty. They should also be prepared to offer a second-line quality brake pad or rotor at a lower price point to avoid losing a sale. Many jobbers now carry private-label lines that are just as good if not better than OE at a much more competitive price point.

“To help manage proliferation of brake pads and rotors that continues to grow with every model year, jobbers need to be aware of what’s in their backyard, and probably one of the best resources out there is the DesRosiers Automotive Report,” adds Fleury.

“Another thing jobbers should look out for is what new high-end import vehicles are coming off lease. For example, three years after the Porsche Cayenne came out, we could not keep brake pads and rotors on the shelf. The reason was very simple. People bringing them back off lease are obligated to do the brakes, and the price to have it done at the Porsche dealer is insanely high, so most Cayenne drivers turned to their local auto repair shop to find a lower cost, quality aftermarket brand to install before returning the vehicle,” adds Fleury.

In response to the ongoing parts proliferation issue facing jobbers, Transbec has opened up multiple depots in strategic markets just for short order pickup. “About 80% of orders for pickup are not stock orders but short orders, and when we look at the numbers at the end of the year it’s significant,” says Fleury.

“Upwards of 50% of a jobber business is now dependent on brakes. It is critical that this market is reached with coverage and quality brands to fill the demand. Pricing is still an important purchasing factor, so the true economy pad is now being replaced by a mid- and high-end tier pad that addresses noise suppression and competitive pricing needs,” explains Proforce’s Weber.

“Brakes are still the most popular item we sell, but we don’t see as many customers specifying the same brakes the car came with as much as we used to,” adds Devlin. “The quality of the private labels, which a lot of jobbers have now, has gotten to the point where there is a confidence level in it. This goes back to the point that if the technician has confidence in the product he gets from his distributor, and his distributor in turn has confidence in certain brands, it becomes a continuous process,” explains Devlin.

Out at Pacific Parts in Vancouver, Hoskins has the opposite situation to Ontario-based Halton Automotive. He deals with a large import-heavy marketplace that demands a wide range of name brands. “Our customers are specifying they want what came on the car, time and time again. Plus OEs like Mercedes, BMW, and Ford are running expensive radio campaigns advising owners of their vehicles to put the same pad that it came with back on the vehicle,” explains Hoskins.

When it comes to brand preference, there is no true consensus. Like most consumer purchase patterns, it really is affected by the geographic and demographic makeup of the area a particular jobber is located in.

“In a market that is predominantly populated with baby boomers, you have customers that are very familiar with aftermarket brand names and have the cash to have their vehicle fixed. But now we also have a younger generation of consumers who were raised in the computer age, and who typically aren’t as familiar with many of the brand names out there. So while brand awareness is very strong amongst the baby boomer generation, this younger generation of customers is much less brand-aware. They also tend to spend a lot of time online in chat rooms to find out what everyone else is using before making a purchase,” explains Fleury.

The importance of educating this new generation of consumers on the value of premium brands as well as the benefits of lower-cost private-label or second-line brake pads and rotors is growing every day.

“Everyone, including us, has our economy part viewpoint. Number one, it has to meet all the specific guidelines and it has to be dimensionally accurate. So after all this is met, how different is the economy part from the premium part?” asks Marsh.

“It has to be the same thickness, same diameter, have a certain amount of metallurgy. When you are talking rotors, this is a method of dampening by using more and bigger carbon particles in the rotor. That being said, the economy rotor meets all the standards; it just doesn’t have the bigger chunks of carbon in it, so there is the possibility it may be a little noisier than the premium rotor that has the large chunks of carbon,” he adds.

“We often have customers who call in and are adamant that they are not going to buy anything from offshore. Well, if that is their buying guideline, they aren’t going to be getting anything,” adds Marsh. “What they don’t know is that we own the facility in China. We own the blueprints, the chemical analysis on the metal in the rotors, and the standards and specifications. A scenario like that is a lot different from a ‘run-and-gun’ entity that is buying parts from five different providers to fill one part order.”

“Without a doubt, our premium parts have to participate in every desirable aspect that OE had, and our engineers have the ability to understand some of the weaknesses of the OE component and augment those, often making it better than OE in many cases,” explains Marsh.

“For 90% of the industry, a good brake pad is one that makes no noise and no dust. Surprisingly, stopping distance isn’t as much an issue with customers as you would think,” adds Fleury. “When it comes to the end user, they just want something that is quiet and won’t mess up their rims.”

Weber agrees. “We deal with technicians all the time, and they are adamant that they are looking for a brand that will eliminate noise. The consumer is not making the purchase decision; it is the technician and they buy based on a brand that will eliminate issues, with their number-one concern being noise.”

“There are a lot of buying groups that had gone to application-specific pads when the industry was looking to replace asbestos. But these application-specific pads are now being phased out,” explains Fleury. “When you look at platform sharing, you can have a pad that could go on several models. But when it’s application-specific, one vehicle might call for semi-metallic and one might call for ceramic. Jobbers can now find a supplier with a very good formula that can do everything, so they are no longer obliged to carry dual inventory for those pads.”

With vehicle sales coming back to pre-recession levels, jobbers can look forward to continued growth in their largest segment. The challenge will continue to be shelf space as parts proliferation continues unabated. Working closely with suppliers to find efficiencies will continue to be a prime objective.