While the aftermarket has seen its fair share of challenges over the decades, according to John Cochrane, the incoming chair of the Automotive Industries Association of Canada, the current business environment marks a significant change in the state of affairs.
Dealer competition that can beat the aftermarket on parts pricing, service provider demands for fit, form, and function, and the ongoing battle for the proper repair tools and information are all earmarks of a different business environment that will require much of the aftermarket.
Cochrane comes to the association post with three decades of jobber experience behind him. His firm, Cochrane Automotive in Toronto, celebrates its 30th anniversary this year, and his personal experience stretches even further, as the operator of a service facility; to this day, there’s still a professional technician’s ticket in his pocket.
He has also spent many years working with the Automotive Industries Association of Canada. He has seen the association change and evolve over time. One notable change of late is the little-publicized move of the annual general meeting from the spring, where it coincided with the Automotive Conference for Executives, to the winter, in order to coincide with the Annual Aftermarket Forum at the end of November. The move is intended to bolster interest in the association’s annual meeting, as the forum has always been the better attended of the two.
One consequence of that change is that he doesn’t actually take over the chairman’s post until December. This means that current chairman Malcolm Sissmore’s term will be closer to a year and a half than the customary year. But with the association’s executive council working as a unit on industry issues, who holds which chair becomes more of a formality every year.
Nonetheless, Cochrane’s perspective is built on experience with the current demands put on those who work on the cars, and in the shortcomings from which the aftermarket can suffer.
Having parts that have the same fit, form, and function as the original equipment part is key to the aftermarket’s success going forward. And while he continues to have confidence in the aftermarket, he knows that there are areas where it not only could, but must, improve.
Ask him about the last time he installed a non-dealer ignition box on a Nissan, and he’ll tell you about aftermarket units that don’t match the waveform required to get them to run. Ask him for another example, and he’ll segue unexpectedly into the tale of an automatic transmission fluid that should be compatible, but isn’t.
“In our own facility, we did an automatic transmission service on a Honda. We used the recommended aftermarket fluid, and couldn’t drive the vehicle out of the shop. We had to go to Honda to get the Honda fluid to do the job.”
Aside from the impact on the job, it’s the effect that kind of experience has on profitability and on the confidence of the technician and garage owner in the aftermarket that has him concerned.
“Now, we have quoted the job, using the aftermarket fluid. We had to buy the Honda Matic fluid at twice the price, we had to dump the old fluid, and I had to pay the technician to do the job again. Tell me where the profit is in that. Tell me where the fit, form, and function are in that?
“We have to do better as an industry. If the oil company doesn’t have the fluid for the job, they should say so.”
He says that this type of situation, and the lack of confidence it engenders in aftermarket suppliers, plays a large role in the erosion of the aftermarket share of the parts business.
“[The ratio of] jobber parts to OE parts used to be 76% jobber parts to 24% dealer parts. It has now deteriorated to less than 72% jobber parts.” And some shops buy much more than that from the original equipment service channel. “Why? Fit, form, and function. And there is another factor that is creeping in: price.”
In any discussions he has during training sessions he hosts for service providers, he finds that a dealer part can be substantially less expensive more often than many in the aftermarket might believe. He says that aftermarket suppliers need to benchmark against the dealers, who are the real competition.
And underlying all this is the need to move away from such a strong reliance on The Big Three for the preponderance of business. The share within the Canadian and North American markets of so-called import vehicles is large and growing. Owners of these Asian and European nameplate cars are less inclined to go to independent service outlets after the warranty period, which hurts the service provider. And even when they do, a higher proportion of parts are bought from the dealer than for comparable jobs on a Ford, GM, or Chrysler.
The aftermarket feasted for decades on the shortcomings of The Big Three automakers, he says. Much of the aftermarket focused its attention on supplying parts and repairs for Detroit’s finest. It didn’t think about import makes, because it didn’t have to. Business wasn’t easy, but there was plenty of it to go around.
And in terms of repair facility competition, the independent sector regularly outdid the car dealer anyway. But rising quality levels in all vehicles, the increase in imports within the vehicle fleet, and the indisputable fact that car dealers as a whole have made great strides in their service facilities have all had a tremendous impact on the aftermarket.
“We had a lot of good years. The model has changed.
“I believe it was Gilles Michaud from Uni-Select who said, ‘It’s no longer an import game, it is a global game.’ We really have to be able to say that we have complete coverage of parts that have fit, form, and function if we are going to win the game. That is an issue that the industry is going to have to rise to, or we will continue to see erosion in this marketplace.”
For those who have been in this industry a long time, there might be the temptation to view some of the challenges as old wolves in new sheep’s clothing, a new twist on the same old challenges that the industry has overcome quite handily over the decades–and that these challenges are best taken on by those with more youth and more energy.
He dismisses the idea that these challenges can be left to the next generation. Often, wrapped up with the issues of succession planning in business are accusations that the greying ownership of many businesses at all levels of the aftermarket are in cruise mode, and not actively investing in their businesses for the long term.
“If you’re going to cruise, get out now. I don’t know how long I am staying in this industry, but I know one thing: I am going to be committed to it as much as I was at the beginning, and as much as I will at the end. That is what you have to do for the industry.”
At the centre of the challenges facing the industry is the consumer’s right to repair. Currently, information and tools available to service providers is sporadic, inconsistent, and where some vehicle makes are concerned, non-existent. This stands in stark contrast to the situation in the U.S., where Right to Repair has actually become an aftermarket brand of sorts. Despite the fact there is an ongoing struggle to enshrine access to repair information and tools into law, in the interim a voluntary agreement is providing a portal for access.
Cochrane says that the independent aftermarket should not take this issue as just another one of the many challenges that the aftermarket has overcome over the decades.
“I don’t think we have ever seen anything of this magnitude. We can go back to the old days of points and condensers. When electronic ignition arrived people predicted the end of the world. Did we overcome it? Yes we did. We provided quality parts with fit, form, and function, we did training programs, and life went on. OBD I came along, and some predicted the sky was falling. What did we do? We mastered it.
“OBD II came along and we mastered a lot of it, but now we need to make sure that we get this remaining piece: the software that is required to make all these components run.
“That is a factor that we never had before. We have to fix that problem. We have to make sure we have access to that information. Will it be easy? No, but I believe we will prevail.”
Initiatives to advance the issue in Canada are taking place on a number of fronts, and not just those restricted to AIA activities. But the AIA did hold a landmark lobby event in Ottawa last fall that significantly raised the profile of the issue with Canada’s Parliament. And discussions with automakers are continuing, with an eye to gaining access without having to go the legislative route.
Even if those moves are successful, though, the tools and information aren’t free and won’t save a business that isn’t run profitably enough to afford them.
Cochrane says that the economy and the technology in cars make training an imperative, and not just technical training.
“I think we are at a really significant crossroads in terms of business skills. A lot of independent service facilities don’t have what they need to have in this economy.”
The model has moved away from breakdown repairs to maintenance, he adds. Businesses at all levels of the aftermarket need to shift their focus from gaining business by default to securing maintenance business from a consistent customer base.
“The vehicle OE facilities have moved way ahead and they provide excellent service to the person who bought the vehicle from them. The retention level is better than it has ever been. We need to compete with them. The whole aftermarket service industry has to rise to be as efficient and as competitive as the OE service dealer. That is a paradigm we haven’t seen before. Things are not as they were.”
At the core of the issues that hold the industry back from changing its approach is a lack of business skills. When Cochrane first became a Texaco franchise owner in the early 1970s, business training was part of the package deal: if you want the franchise, you take the business training. He would like to see the same approach today in the aftermarket.
“When we look at operators coming into the business today, how much business training have they had? Most have very little. They move right from the workbench to become business owners. They need to have business training so that they can have a very profitable, successful business for years to come.”
In this environment of increased focus on the service provider comes an increased focus on making a connection with the service provider within the Automotive Industries Association of Canada.
The association’s Automotive Service Provider Council, though still in its infancy, has nevertheless attracted some significant participation from service provider associations from across Canada.
That initiative has injected an important service provider component to discussions regarding the access to repair information and tools, as well as adding a critical step in communicating the Be Car Care Aware program.
“When you look at the major retailers, they are aware of Be Car Care Aware, but the jobbers need to be aware of it. And we need jobber participation at the various events. That needs to flow down to the service provider, because it is helping. It is another bullet in the gun, if you will, to maintain your business.”
Cochrane says that Be Car Care Aware, industry image initiatives, promoting training, working with government to advance issues important to the aftermarket, and in particular the participation of service provider organizations, are part of a consistent platform for the association that stretches back several years, and is expected to continue in the years to come.
Cochrane says it gives him reason to feel very good about the future.
“I intend to push them the same way. We are not going off on any tangents. I think that the association is probably better than it has ever been.
“With the introduction of automotive service providers, it represents a broad section of the industry, from the people who are installing the parts all the way to the people who are making the parts.
“It was a natural evolution. Is it exactly where we want it to be? Not yet, but it’s getting there.”