Effective Strategies for Building your Market Penetration
While the fact is that many of the import vehicles on our roads are, in fact, built in North America, it remains a segment of the automotive aftermarket that escapes many traditionalists who are focused on supplying parts and service to Detroit’s problem children.
While statistics have long predicted the rise of the import market–a story in the September 1962 edition of Jobber News advised readers that it was worthy of attention as “approximately 20% of all autos in Canada are imported!”–many players throughout the aftermarket have struggled to balance the need to serve as much of the vehicle park as possible, with the equally pressing need to build and sell what customers will buy from them.
The fact is that as the import vehicle population has grown (today, more than half of current sales are from non-North American automakers), so has the opportunity for growth. And yet many in the aftermarket continue to hold onto the old assumptions that the import car owner is not a customer.
Take the driveline market, for example.
“I get the odd Honda [CV shaft call], but that’s about all I ever get,” says aftermarket veteran Ron Saunders, a Carquest store manager in Smiths Falls, Ont. Smiths Falls, a town of about 9,000, serves as a satellite to Ottawa, where every major vehicle dealership is on full display.
“This whole strip we’re on has Hyundai, Nissan, GM, Ford, Chrysler, Kia,” he points out. And yet the import market does not, to his mind, play a role.
“There are some guys who do it, but there aren’t enough independent garages who know enough about them. So what do people do? They take them back to the dealer.”
He acknowledges that the Worldpac organization, operated separately but owned by the same parent company as Carquest Canada, probably sees much of the activity, but he insists that it is still a Chevy town.
“Most of them have only been here for five years,” he says of the import dealerships, adding that the cars they have sold are simply too new to have entered their aftermarket years.
Nevertheless, he is surprised to hear how import applications rank in terms of CV sales
How about six of the top 10 part numbers? Or 12 of the top 20? “Mostly it’s the Honda applications,” says Eric Leibovitz, sales manager, Fenwick Automotive Products. While the popularity of those Honda applications is not due merely to the number of them on the road, a tulip-type joint with an unusual arc leads to faster wear than other designs, it is inescapable evidence that–despite what parts store owners and managers like Ron Saunders may be seeing–import vehicles are in their customers’ service bays.
“This is proof that they are seeing the imports,” says Liebovitz. “The dynamic of the car park has changed over the last 10 years. We all know that Toyota, Honda, and Nissan have grown their market share at the expense of The Big Three.”
While GM, Ford, and Chrysler dominate many of the driveline categories, most notably in clutch kits (due to hard usage) and hub bearings (due to inherent problems with the OE designs), that too is changing.
“We are seeing imports in all lines: our steering program, our callipers, master cylinders, water pumps. We are seeing great demand on import applications, and especially late model import applications.”
Six of the Top 10 CV Shaft Numbers are for Import Applications.
It is a point that has not escaped Doug Squires, general manager of Colonial Auto Parts, a large, multi-branch business based in St. John’s, Nfld.
“For us down here, the imports are huge. They’ve become an ever-expanding segment of our market. In some of our markets, 50% of our new car sales are imports.”
Going after that opportunity has not always been easy, though.
“Import coverage is one thing that we have had to struggle with. It is not as readily available from some of our traditional suppliers.”
While the situation has improved significantly over the last six months to a year, he still stresses that jobbers would be wise to consider import coverage strongly when a line comes up for review.
“In electrical reman and ride control, we had to change suppliers just because of the gaps in their import coverage. They just could not source the import coverage we needed.”
Even when shifting suppliers is not in the cards, he says, alternative sources of supply are an effective strategy.
“You can’t wait these days for your normal supplier to fill in the holes that you have. Traditionally you would be loyal to one supplier. Now, while you’re still loyal, your percentage of purchases drops because you have to short-fill. You have a tendency to hook your star to one supplier or another; what we’ve started to do more is backfill in the import areas from an alternate supplier.”
Newer tools such as the Internet and the accompanying web resources help immensely, but it’s more about mindset than anything.
“Realistically as a jobber, customer service is number one. There are times when we will go to the dealer ourselves. You might do it and not make any margin, but you don’t want anybody getting in the door.”
Getting out the door is a strategy employed by Richard Scoble, who has inside and outside sales responsibilities at Auto Parts Distributors in Winnipeg, Man. He reports that 30% to 40% of sales are for import applications, Japanese and German mostly, and that has remained relatively steady. What he feels has made a real difference, however, is simply getting out to the customers, and noting what they have on the hoist.
When he sees an import on the hoist, he brings the customer’s attention to the fact that his firm can supply parts for them.
It’s a “Hey, why didn’t you buy that from me,” scenario. “Generally they are surprised,” says Scoble. “What’s key is being able to identify where you can move the import segment of the market. Since I go around to customers and work on the counter, I get a pretty decent perspective on what the service advisers are asking us for and what they have in the shops.
The two are completely different.”
Notwithstanding that each local market can be quite different, it is an interesting point that Scoble brings to the discussion: what constitutes “traditional” in the first place?
“I am younger than the median in the industry–I’m under 30. Anybody who hasn’t grown up with them, well, they’re foreign cars. To me they aren’t. The domestics are just as much import as the imports.
“I can’t stress enough that if you’re not out to the customers to see what they’re working on, you’re not getting the phone calls. You have to tell them specifically what you have. I can send out literature till I’m blue in the face,” says Scoble.
Squires advises colleagues to take a broad view of the issue. “If someone is calling for brake, front end, or drivetrain parts, it is entirely possible that the part you don’t have is only one aspect of the order. You are much better off to source that part, even if you have to eat it a little. You may not get the rest of the order, so you are better off to source whatever you can, however you can.
“Ultimately you have to realize that the customer is relying on your professionalism and ability. He just wants to know it’s coming,” says Squires. “At the end of the day, where you get the part doesn’t matter to him.”
The automatic transmission continues its inexorable march towards domination of the drivetrain market.
Whereas the manual transmission used to be the “standard,” and borrowed that name as a result, the automatic transmission is now overwhelmingly the standard equipment on most vehicles sold.
There are a few exceptions, most notably pickup trucks, but even the sporting set has gone over to the automatic transmission with the advent of five-, six-, and even seven-speed auto boxes: Porsche offered the option of an automatic transmission for the first time to buyers of its 911 Turbo in 2000; Ferrari h
as made steering wheel-mounted paddle shifting one of its key Formula 1-derived features.
While much of that development won’t make its way into the aftermarket for some time, jobbers should take note that as long ago as 1999, the automatic transmission dominated.
According to a review published at the time by research firm Frost and Sullivan, 88% of light vehicles manufactured in 1999 were equipped with automatic transmissions.
“Although this number is only a few percentage points higher than a few years ago, it is being applied to higher new light vehicle sales figures . In 1999, 18.49 million new vehicles were sold in Canada and the United States. When a higher factory installation rate of automatic transmissions is applied to 1999 new vehicle sales, it represents 16.27 million vehicles equipped with automatic transmission,” said the researcher.
“Although there are more vehicles equipped with automatic transmissions, it is not expected to dramatically increase the number of automatic transmission services performed each year. This is because of increased service intervals in newer vehicles and lack of awareness of the importance of changing the transmission fluid and filter.”
The replacement of transmission fluid and filters will see a long-term, slow growth, Frost and Sullivan predicted.
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