Commitment Leads To Success In The Exhaust Market

Despite the challenges wrought by the increased longevity of original equipment exhaust systems, the replacement exhaust market has remained relatively stable over the last few years. And yet many jobbers have taken themselves out of the game, leaving the opportunities to others willing to put forth the effort.

“There’s still a big market out there,” says Jim Fox, national sales manager for Maremont. “We’re still producing and selling a lot of mufflers, pipes, and so on. [The market has], over the last few years, felt the impact of the increased quality of original stainless exhausts on most new vehicles,” he says, “but there seems to be a good market. People who have focused on it have actually shown growth. There are certain areas like performance and catalytic converters that are growth items.”

This is not to say there aren’t challenges. Fox adds that improved OE quality and current economic conditions have their effect on all parts categories.

For the exhaust market specifically, though, the use of stainless steel original equipment parts and the resulting replacement rates of eight to 12 years, along with the trend toward direct-fit replacements, have led many jobbers to stop selling them due to their space-heavy attributes.

However, a recent positive development has been a consolidation of systems across multiple model years, easing inventory burdens.

“With the diesel exhaust systems we sell, they’re designing them now where they’ll fit more year models,” says Jim

Cartwright, national sales manager for Jones Exhaust Systems, Inc. “A few years ago you were seeing kits that would fit ’01-’04 models. Now they’re designing kits that fit vehicles from ’01-’08 models. So they cover a wider range. Many companies are moving towards a one-piece-fits-all kind of thing.”

So where is the market for exhaust systems and parts?

In fact, there are several areas where the jobber can compete. The first is in the front pipes. While a stainless steel exhaust system is very resilient to corrosion, it doesn’t mean it won’t bend or crack. This is the case on some vehicles where there is a lot of vibration, but insufficient flex.

Bosal North America, a manufacturer that specializes in both OE and aftermarket exhaust systems for import model cars, is one manufacturer that looks to improve on OE where necessary.

“We like to go with what the OEMs use to replace the existing piece. We don’t want to go against the OEM piece,” says Joe Mercanti, director of sales for Bosal North America. “In a lot of cases, though, what we do is we find pieces that are breaking from the OEM and [supply] something that’s good or better to replace it.”

Keeping within earshot of repeated failures from your installer customers on certain cars coming out of OE is important. All the lab testing in the world cannot prepare auto manufacturers for long-term, real-world conditions. While a new vehicle model is manufactured from the ground up, often the same exhaust system is carried over from the previous model, with a few modifications added to conform to the new vehicle design.

“There’s been a very steady [demand] in the muffler and exhaust pipe business simply because it’s under the car. Corrosion is a factor, there is heat from the engine, and there is an excess of fuel going through it,” says Brian Pyette, general manager of IMDA Group Inc. “However, where we’re finding the largest growth is in the components and converters. The converters by far have had the most rapid growth of any section of the exhaust line over the last five years.”

IMDA stands for Independent Muffler Shop Dealer Association, which represents a total integrated supply chain from the muffler shop program. And while the buying group’s supplier is Grand Valley Automotive, Pyett does consulting work with IMDA on its jobber programs. He notes that January store-to-store sales are up considerably from 2008, and that Grand Valley Automotive Warehouse is currently in expansion mode with double-digit growth.

Today, the part of the exhaust system that’s in greatest demand is the catalytic converter. Just how popular is this component? Consider this: when two of the major distribution networks in Canada (Modern Sales and Bestbuy) decided to stop supplying exhaust systems altogether, the one part they continued supplying, according to Pyette, was catalytic converters.

“If you take a look at our sales for 2008, the sales for the aftermarket portion of it were fairly strong. But the strongest areas for us were direct-fit converters. And the reason for that is you have a lot of OBD-II vehicles (’96 and ’97 models) starting to come of age. They’re getting to the point where they need replacement,” says Bill Shutt, emissions control manager for Tenneco Inc.’s Walker Brand.

While it is technically part of the exhaust system, the catalytic converter is more aptly considered as part of the emissions system. A modern vehicle can’t function properly if it doesn’t have a working one, and it doesn’t have to rust out to be worn out. As people continue to hold on to their cars longer, manufacturers will only see a rise in the sales of converters being sold into the aftermarket.

Shutt also discusses further details regarding Walker’s Quiet-Flow mufflers and muffler assemblies that will be available later this year. “One of the things we announced back in November is that our Quiet-Flow mufflers and muffler assemblies will be moving to a stainless steel product in 2009. We really want to utilize that in our assemblies, which make it an even better product for the jobber.”

Beyond the need for quality products, the real imperative is for installer customers to have the confidence that their jobber can supply what they need, when they need it. This sentiment is echoed by Gary Nix, director of marketing for AP Exhaust Products Inc. “What you find is that those jobbers and distributors that are willing to make a commitment in the business are finding success with it. We’ve had a tremendous amount of growth and success and you’ve got to make a dedicated effort to go out and be known as ‘the exhaust guy.’ They’re not just going to come to you. What we’ve found is, along with our sales organization, and the organizations these jobbers belong to, that they find success because they’ve put forth that effort in the market.”

As is so often the case, you get out what you put in.