There have been ups and downs across the automotive aftermarket over the last year and suppliers have not been exempt.
Though supply issues are easing, it hasn’t been easy. Disruptions continue to pop up. The state of the economy is having an impact on suppliers.
But there are positive signs. Consumers are maintaining their older vehicles longer. That feeds the bottom line of the industry.
Nevertheless, there are things that Matt Otten, senior marketing specialist with Niterra Canada Ltd., which distributes the NGK Spark Plugs brand, is keeping an eye on. He noted there are certainly headwinds but the company is cautiously optimistic about the future.
There are strong indicators and market conditions look good for success going forward, observed Ian Hutchison, marketing manager at Wakefield Canada, which distributes the Castrol brand in Canada.
“With strong used car sales and the average age of the car parc at what is believed to now be more than 10 years, conditions are good to see strong activity at ASPs and throughout the aftermarket,” he told Jobber News.
Indeed, the fact that consumers are hanging on to their older vehicles for longer has created a strong foundation for aftermarket sales.
“Generally speaking, with the high price of new vehicles, we find that people are keeping vehicles longer, and subsequently investing in vehicle maintenance,” Otten said.
This has helped the aftermarket see strong sales. “However, ASPs are hearing consumers are looking for ways to save money as they cope with inflation and high interest rates,” Hutchison noted.
The state of the economy has been top of mind for consumers and suppliers alike. The interest rate in Canada is 5 per cent, unchanged since July. Banks have set their prime rate to 7.2 per cent. In other words, borrowing costs are high.
“Consumers are looking for ways to save money as they cope with inflation and high interest rates,” Hutchison said.
Otten agreed, noting that there has certainly been an impact felt.
“With the higher cost of living and high interest rates, people are feeling the squeeze when it comes to discretionary spending,” he told Jobber News. “While our automotive business is strong, we are seeing a dip in our recreational business. People are deferring maintenance on their boats and ATVs.”
“Consumers are looking for ways to save money as they cope with inflation and high interest rates.”
The supply chain has been an issue over the last few years as disruptions have been a constant. From the pandemic to this year’s port strike in British Columbia, aftermarket companies have had to stay on their toes.
“[It] comes down to forecasting, understanding our customers’ needs and requirements so we can account for any variances or disruptions in the supply chain,” Otten said.
For Wakefield, while the vast majority of its Castrol lubricants are manufactured in Canada, raw materials shortages have been its primary issue.
“By supporting local Canadian manufacturing and working very closely with raw material supplier partners, Wakefield has been able to maintain a largely uninterrupted supply of product through the pandemic and current supply chain challenges,” Hutchison explained.
“We are keeping a close eye on customer supply levels,” Otten said. “Inventories ran higher towards the end of the pandemic, so we are due for some sort of correction, especially when combined with some macroeconomic contraction.”
‘More than a supplier’
Given the challenges in the aftermarket, automotive service providers and distributors want to have more than the traditional relationship.
“With labour challenges and having to manage supply chain interruptions, many ASPs and jobbers are looking for more than a supplier — they are looking for a local Canadian business partner,” Hutchison observed.
He noted how Wakefield is providing uninterrupted supply, wireless remote bulk tank monitoring to prevent run-outs, local market social-media advertising, exterior signage and loyalty tools to drive traffic back to ASP locations.
“From the ASP to jobber to the WD, Wakefield sees the opportunity to earn business by proving value as a partner, not just a supplier,” he added.
At Niterra, they’re looking to expand their scope into other product lines to further benefit customers.
“We have a few lines of complimentary ignition and sensor products that we are excited about growing,” Otten said. “Also, when our customers consolidate their product lines offered, that tends to benefit us.”
Specifically with distributors and jobbers, suppliers see them as key partners in the delivery of a quality, profitable product.
“It is important to realize, though, that for an ASP to be successful, the supplier and the distribution partner should work together to deliver integrated value,” Hutchison said.
“We work on achieving alignment with our WDs so that we are working together towards our shared goals,” Otten added.
How are they doing that? Hutchison pointed to Wakefield’s launch of the ASP-focused program, Castrol Partner For Life.
“The program offers exclusive support for ASPs looking for business partners to help with advertising, consumer loyalty, exterior signage and premium synthetic motor oil pricing, encouraging ASPs to get that value through their jobber partners,” he explained.
For Niterra, it’s all about training.
“The level of field support and training we offer via our national sales team sets us apart from most suppliers in the industry,” Otten said. “We have truly coast-to-coast-to-coast support for our customers.”