Prospecting for Success 2001 predicts strong future for aftermarket

The Automotive Industries Association Prospecting for Success 2001 conference, held on November 14th declared the Canadian economy to be poised for ling term growth despite the softening economy.

Economist Michael Graham, chairman of investment consulting firm Heathbridge Graham presented an upbeat report on the state of the Canadian economy. “The automotive industry, is controlling itself, controlling inventories and production very well”, stated Graham, adding, “we’re all left with added question marks” in the wake of the World Trade Centre disaster. Future trends? Graham foresees excellent prospects for rebound in Canada in 2002 and 2003. “Somewhere next year, watch for a big turn. This whole country is growing from coast to coast, and not based on resources.”

Well-known industry analyst Dennis DeRosiers presented an in-depth analysis of vehicle service trends. “We’ve put a high emphasis on kilometers driven. The last couple of years, kilometers have softened. September 11th has killed kilometers driven. How long it continues is the question.”

“There are some disconcerting indicators in customer satisfaction”, said DeRosiers, who notes that brand disloyalty is as strong as brand loyalty for poor performers. Unfortunately for independents, general garages ranked high in consumer surveys of service providers not visited in the past 12 months, with dealers and department-store operations doing better. Ironically, new car dealers suffer from lower satisfaction numbers than independents when measures by the total number of repairs performed.

Despite confusing signals from the markets, however, DeRosiers remains optimistic about the independent service business: “There’s no fundamental running away from the aftermarket. Generalists are holding up with a little bit of leakage to the specialists.” And what’s the major issue between installers and jobbers? “Order fill, order fill, order fill, says DeRosiers, who noted that 52 percent of part orders go to the primary supplier. Dealers rank surprisingly high at 21% of parts orders.

Charles L. Seguin, leader of PriceWaterhouseCooper’s North American Automotive Retail practice, presented the perspective from the manufacturer and dealer perspective. “Imports are stronger than ever”, states Seguin, who also noted that the Internet has failed to remove dealers as the primary channel of retail automotive sales. “The Big Three have lost focus” continued Seguin, who notes that the real dealer threat lies in a new emphasis on both quality and on improving relations with customers through improving relations with dealers. Used cars are predicted to form a greater part of dealer profits with service and maintenance an integral part of the process. “There is still a huge expectation gap between what consumers want and what dealers have the capability for,” states Sequin, who notes that the OE’s are increasing capability to retain customer loyalty over the long term. “Dealers follow the money”, says Seguin simply, who points out that with new vehicle margins declining, the shortfall will be made up with more capital investment, a new emphasis on financing and insurance, as well as repair and maintenance, which will become critical to long term survival. “All make vehicle maintenance is becoming a reality,” says Seguin who also relates that at the present, dealers still haven’t raised the bar for customer satisfaction.

The day’s program was wrapped by SSGM columnist and well-known business management consultant and trainer Bob Greenwood of E.K Williams & Co. Bob spoke about the installer perspective. “Successful service providers have an exceptional, positive attitude, are open minded and love to learn, said Greenwood, adding, “they learn business management, and make the transition from mechanic to entrepreneur. ” Most service providers do not understand their business”, relates Greenwood who added simply: “successful owners do. We’re not interested in generating profitability, we’re interested in creating profit”, states Greenwood, who warns of the need to differentiate the process of creating profits from the profit itself. Greenwood introduced four successful owners of service businesses: Dennis Forbes, Forbes Service Centre, Hamilton Ontario, Ed Andrade, Beverly Automotive Specialists, Cambridge, Ontario, Kevin Shaw, Georgian Bay automotive, Thornbury, Ontario, and Rob Brouwer, Precision Automotive, Orleans, Ontario. A question and answer session followed.