Straight Talk Dominates Regional Conference

Import market share is the number-one issue affecting the aftermarket, says Dennis DesRosiers.

“Last year, 2003, for the very first time, more consumers bought import nameplates than domestic,” the noted researcher told attendees of the Automotive Industries Association of Canada’s Eastern Regional Conference in Brockville, Ont. The transition, he says, might be painful for the aftermarket.

“This is an industry that has feasted on the Big Three vehicles over the last 50 years. If you play to that, it is ultimately going to deteriorate.”

The aftermarket must learn to effectively address the import market, he says. This may not be easy–addressing import applications is not one of the strongest points of the traditional aftermarket–but there are some opportunities.

“There are a lot of vehicles that you aren’t going to have trouble supplying. But there is a wide swath of import product that isn’t coming into your customers, and when they do come to the independent garage, the technician has a positive attitude to the OE part. Even if the aftermarket part is identical to the OE part, the mechanic doesn’t understand.”

In focus groups conducted earlier this year, says DesRosiers, technicians were presented with parts in a variety of packaging. Often the part in the OE packaging and the national brand box were the same, exactly the same, even from the same supplier. Through this exercise, the perceptions of the technician became abundantly clear.

“In every single case they put the OE part as the best quality. Their perception is that if they buy from a dealer, they are getting a better part. So you may not see these cars because they are at the dealer. And when they are in your customer’s shop, they are increasingly going back to the dealer for parts. This is a big, big issue.”

A big issue indeed, and one that has not been helped by the influx of what is charitably referred to as entry-level product lines, and less charitably referred to as “whitebox.”

“The whitebox programs hurt this industry badly. It has created a negative image with a lot of the technicians that the traditional aftermarket does not have the quality,” said DesRosiers.

But there are other issues revealed in focus groups. He is often asked to probe the state of business at service providers, and has come to the conclusion that there is less of a crisis of demand than might be readily perceived by the traditional jobber.

There is a lot of business out there, said DesRosiers. “Demand is not the problem. The issues are on the supply side: who is getting that business?”

He says that many traditional players are struggling with new robust competitors such as the car dealer. “Car dealers are bringing more service business in, but they are also more aggressive wholesalers. They are significantly growing their share of the available business out there. Your customers are increasingly calling the dealer as their first call jobber.”

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PARTS AND PEOPLE NEED IMPROVEMENT

John Cochrane laid down the gauntlet at the conference, challenging jobbers to enlist their customers in improving their business skills. He also challenged suppliers to improve the quality of some of their parts.

Cochrane, as if to respond to the findings of DesRosiers’ focus groups–that the OE parts have a higher quality perception, especially among imports–called the problem more than just a perception. He spoke of a variety of situations he has run into where quality problems have existed, the most vivid being that of a Nissan aftermarket ignition part that did not effectively provide the right signal and caused engine management problems. It’s not just about technicians not believing the aftermarket when it says it has OE quality. Sometimes their experience leads them to believe otherwise.

This perception is not helped by the influx of low-cost parts, which affect the reputation of the aftermarket, and also depress the bottom line of the service provider.

“The impact of low-cost parts on the bottom line has created serious issues that threaten the continued existence of the independent sector,” said Cochrane. “The profit percentage must be the same, but we need to focus on the dollar profit.

“Without those profits, the service providers cannot make the necessary transition to repairing modern vehicles.

“A Ford-specific tool costs $10- to $12,000. And it’s just going to get more and more and more,” he offered. “Want to fix a dome light that won’t go out?” he asked rhetorically. Without a scan tool to determine which door switch might be causing it, a technician can waste hours of time and hundreds of dollars guessing. Not only are the problems harder to diagnose than they used to be, they are more expensive and tougher to install.

“Without these tools, many cars can simply not be fixed, and service providers who try will find that they are doing so inefficiently, and more expensively than the dealer.”

TRANSPORTATION OF DANGEROUS GOODS: NEW RULES OF THE ROAD

Also on the slate of events at the Eastern Regional Conference was a presentation by the Ministry of Transportation on the new rules relating to the transportation of dangerous goods.

While many in the aftermarket are familiar with the need to placard their vehicles and train their people, the changes in terminology and classifications of goods still leave many jobbers guessing.

“Make sure you know what you’re doing. If you do and it’s packaged properly, it should get there,” said TDG inspector Sharon MacDonald.

The most difficult area to understand might be the new rules regarding the 500-kg limit, which provide more freedom and less documentation than larger quantities. But there are still many detailed requirements in terms of documentation, training, and packaging of the goods.

“The object here is to get the product to where it is going, because if it is stopped, it generally goes nowhere until it is brought into compliance.”

MacDonald says that the biggest error is in naming the product. Using the wrong shipping name, or mixing and matching information from different parts of the transportation rules, can cause inspectors to question what the truth is, and that can stop a shipment.

“The biggest area of non-compliance is in documentation errors. A lot of that can be corrected on the spot.” That is not the same with packaging errors, she says, which can halt a shipment indefinitely.

“It’s not because the inspector wants to be a hardass, it’s that the legislation does not allow them to give you 30 days to comply. If your shipment has been held up for packaging errors, that’s why.

“And, if we interview a driver who doesn’t have the proper training documentation, the shipment stops.”

Focus on the three key areas–packaging, training and documentation–and everything should roll along smoothly, she concluded.