Opportunities in Exhaust and Transmission

While exhaust and transmission services in the Canadian aftermarket do not rank among the top transactions reported by consumers–they actually round out the bottom of the list of services that NPD tracks in the Canadian aftermarket–the news is not all dismal.

Service providers and the various associations have done a good job of showcasing the benefits of performing maintenance on vehicles in Canada and, as it relates to exhaust work, these same groups have extended great effort towards outlining the benefits of a smoothly operating exhaust system, primarily highlighting operating efficiency and environmental benefits.

In a ranking of the top automotive transactions in Canada for the one-year period ending October 2006, exhaust and transmission service place 16th and 18th respectively. There are a number of factors that place these services at the lower end of our ranking. For example, newer materials used in these systems and improved engineering over time have created greater intervals for service. When compared to other types of services that take the top positions such as those that can be categorized in the maintenance category, like oil changes and brake service, transmission and exhaust work simply operates on a different timeline.

There are, however, still opportunities within these niche markets.

When we examine NPD’s consumer data, we find that the top channels for exhaust work are the independents and muffler/brake shops, followed by the new car dealers. Conversely, it would appear as though the playing field is much more level among all three when it comes to transmission work.

Research reveals much about the exhaust service customer. Customers are approximately 60% male, and the majority falls within the 35 to 44 age bracket. Their households are typically comprised of four members, with an annual average salary in the $55,000-$99,000 range. Very little changes in terms of the transmission service, save the fact that the gender differential rises to about 62% male.

A Question For The Ages

The research shows that the question is not so much about the age of the consumer as it is about the age of the car he drives.

Not surprisingly, NPD’s research reveals that the majority of vehicles that report exhaust service are more than eight years old. In fact, approximately 75% of exhaust service consumers have vehicles that fall into that age range.

With the advent of advanced materials for exhaust technology and evolving emission standards, consumers find that vehicles can wait longer for exhaust work. With the average age of vehicles on the road increasing, this can be seen as a positive for the aftermarket.

For transmission service, NPD finds that the majority of vehicles are also part of that same age range.

More interestingly though, there are significant service opportunities reported for vehicles between four and seven years old. This means that as vehicles enter this prime repair and replacement period, there is an opportunity to try to win the customer and have him move into the traditional aftermarket for transmission service. Additionally, as the Canadian vehicle population ages, opportunity exists for greater service transactions.

The split between domestic nameplate vehicles and import nameplate vehicles can also provide some insight for your installer customers as well as your own counter people.

NPD’s consumer data finds that significantly more customers reported having had transmission work done on a domestic nameplate (approximately 75%), but the numbers shift dramatically when it comes to exhaust.

The ratio of domestic to import nameplate vehicles narrows significantly at approximately 58% domestic to 42% import, which is likely fuelled by the growing trend towards retrofitting import nameplate vehicles with performance exhaust systems.

Reasons Behind The Choice

Vehicle owners have a wide number of channels such as mass merchants, warehouse clubs, independents and car dealers to choose from when deciding where to have their vehicles serviced.

Consumers also weigh a great many factors when making a decision about which outlet to take their vehicle into for servicing. There are convenience factors, such as hours or location; trust factors, such as referrals and recommendations; service factors, such as friendly service, or knowledgeable employees; and obviously some self-evident price factors.

When we revisit the top channels for these services–independents, car dealers, exhaust specialists, and transmission specialists–we find that there are similarities, between these channels that draw consumers to them.

Outlined in the final results for all three channels, consumers indicated that by and large they chose their respective channels for the same reasons: they trust that the work will be done correctly, and that they have used these channels before. Outside of these two common reasons, we find several unique reasons why these channels were chosen instead of the other outlets.

This is where the most meaningful information takeaway resides.

In essence, the data indicates that in order to take business from another channel that competes for exhaust service, the other channels should focus on the motivations not mentioned above.

The motivations that do not appear to be shared among all three indicate the final motivation or deciding factor that led the consumer to select a certain channel. Some of these factors are good knowledge, good price, and friendly service.

Knowing where your ultimate end user is going, why they go there, and what type of vehicle they drive, allows you to know your current and potential customer, thus allowing you to make better business decisions.

The NPD Group tracks consumer purchases, buying patterns, behaviour, and retail satisfaction across a wide range of automotive services performed on vehicles in Canada and the United States.