Changes amongst the Big Three means changes for the aftermarket

A couple of stories in recent weeks suggest big changes to the North American automotive market, and consequently for Canadian independent service shops. The first bit of news, and probably most known, is how auto sales amongst two of the Big Three automakers were upset by Toyota and Honda. According to reports, these two Japanese-based giants jumped ahead of Chrysler and Ford, with General Motors still retaining top spot. Quick on the heels of that news, Chrysler announced its inventory woes would continue as it struggles to convince dealers to take on more of the company’s unsold vehicles. The problem is dealers are balking at taking the extra cars, as they are having problems moving the ones they already have on the lots.

These trends, along with other well-reported troubles the North American car makers are having, will likely mean a shakeout in the independent service market in the next few years.

The reason, as Dennis DesRosiers told me during CarFix World, is the major North American automakers are moving to a manufacturing and sales model pioneered by the Japanese and other foreign car makers. For a long time, a service shop could run a profitable business on just repairing the Big Three’s cars. The reason is the underlying design technology, even in the newest cars, was often nearly a decade or more in age. So a technician working on a Ford car could learn how to repair it and know that even if the outward appearance of that Ford model changed over time, the underlying engineering would remain relatively the same. Not so with Japanese vehicles. The Japanese, according to DesRosiers, change their engineering very quickly; with no car being sold that has technology that is over a decade old. For example, the new Honda Accord is a very different vehicle from the Honda Accord that came out only five years ago. A shop and its technicians have to get new diagnostic equipment and training if they want to service these new Honda Accords. And now, the Big Three are moving to adopt this approach to capture buyers, so shops that work on North American cars will have to invest in new diagnostic equipment and tools, and upgrading those tools and skills much more often, in order to remain profitable.

In this kind of business environment, it will be important for shops to move away from competing on price and move to competing on the skills and knowledge of the technicians employed, and to building relationships with customers. These relationships will build the business and make the new investments in tools and training to stay on top of the changes in vehicles pay for themselves very quickly.