Global Automotive Aftermarket Symposium

There is more to the aftermarket than just hammering away on price: innovation and cooperation are the keys to success, with at least one speaker urging jobbers to force service providers to take care of their own problems.

That was the underlying message at the day-and-a-half-long Global Automotive Aftermarket Symposium, during which more than two dozen speakers covered a diversity of topics under the theme “Collaboration, Connectivity, Creativity.” Held in Dearborn, Mich., the annual event attracted more than 400 aftermarket executives, largely from North and South America.

In a lively panel on the Supplier/ WD/Retailer relationship, Mark Salem, who owns a thriving service business in Tempe, Ariz. had attendees at all levels of the distribution chain wishing there were more service providers like him.

“The installer is the weakest link of the industry,” he said. “We’ve always looked to our local jobbers to bail us out of messes. A lot wouldn’t know a profit and loss statement from an obituary. There are lots of things that you can do, but I would ask that you start holding our feet to the fire. You should be asking for us to look to our profit first, then yours. Unless you do, I don’t see how we’re going to make any progress.”

He also took the aftermarket to task, saying that his dealer purchases have risen to 52% of his total. Some 20% of his purchases are for parts he can’t get in the aftermarket; the rest is about availability and quality. “Think about how we got from 20% to 52%,” he urged.

In addition, the topic of training dominated much of the panel’s discussion. John Washbish, president, Dana Automotive Aftermarket Underhood Group, suggested that, despite technological advances that allow distance learning, clinics are here to stay. “There’s nothing like face-to-face training, but there may be as many as 160,000 shops [in the U.S.],” with the implication that there also needs to be an alternative. “We have to move away from just paper-based training. There are some of the types of training tools that have to be made available to the technician. If it’s worthwhile, they’ll use it. That’s the key to success. You have to make sure your programs are problem solvers.”

Jobber Phil Porpora, Lee Auto Parts, says that they found greater success when they qualified attendees by skill level. “We found that the reason we weren’t being as successful in the past with our technical training of technicians is that we didn’t have a good way to determine their level. In any class of 15, you’d have five who found it boring, five who were okay, five who were not advanced enough.

“By getting 20 guys in the room who are at the same level, we found our clinics were much better appreciated.”

“Many of the clinics are missing an important part,” added Salem. “You bring us in, sit us down, and start teaching us. You talk to us for hours on end and what’s missing is the interaction. There needs to be some time for interaction.”

He said that there needs to be more attention paid to bringing in hard part examples of the good and the bad, and of how to talk to customers about those issues.

“It’s not likely you’re going to teach us how to fix cars, but you can arm us with the right equipment.”

One speaker, Federal-Mogul chairman and CEO Frank Macher, told the attendees that manufacturers’ efforts to maintain a “sustainable competitive advantage” based on innovative, highly differentiated products and powerful new business relationships will play pivotal roles in accelerating the growth of the international automotive aftermarket. Macher pointed to the automotive service industry’s century-long history — and Federal-Mogul’s own success in revitalizing and improving some of the industry’s best-known brands — as a roadmap to enhanced success in the face of today’s competitive challenges.

“The same spirit of innovation will enable all of us to develop clearly differentiated products that command premium prices and will help us attract and retain the business of a new generation of vehicle owners,” Macher said. Macher added that there were six primary barriers to industry growth: pricing pressure; the increased quality and service life of modern automotive parts; growing market complexity; the threat of commoditization of vehicle components; parts counterfeiting; and manufacturers’ willingness and ability to identify and serve emerging global markets. “None of these challenges is insurmountable,” he said, “but I can assure you we won’t overcome them by sitting still.”

Coping with Changes In Aftermarket Is The Road to Success

There are some key factors that will determine how well many of the aftermarket players will fare in a changing global and North American economy, says a General Motors executive.

Growth in the global vehicle population is expected to be strongly skewed to the Asia-Pacific region, and closer to home, many of the factors that had been relied upon to drive business have changed.

“Certainly we can characterize the world economy as relatively weak, but certainly unpredictable,” says Doug Herberger of GM Service and Parts Operations. With the 9/11 events fading into the past, the effects continue, he says, predicting that growth should improve in the second half of the year.

Down the road, though, it is how companies cope with some critical issues affecting every market that will determine success.

Economics, miles driven, and new vehicle sales affect the size of the aftermarket, but there are other factors at play, such as the quality of vehicles and competition. The result is that the number of repair orders continues to decline. In the face of this reality, then, where is the money to come from?

“Executing lean, the systematic elimination of waste, is key,” he offers. Manufacturers have done it. Warehouses can, too, he added. “A lean supplier can be more market responsive, with short lead times and smaller production lots.”

By extension, lean retailing is another factor. “Everyone in the entire supply chain must collaborate to provide high quality service to the customer.”

Telematics is another factor for success. Right now, the concern is that the mobile, satellite-based diagnostic and service referral’s potential resides exclusively with automobile manufacturers, and Herberger did nothing to assuage these fears.

“This has the potential to significantly transform our industry. The bottom line here is that service in a digital world means quicker resolution, higher quality, and improved customer satisfaction. It can also provide complete visibility of service centre demand. The result is the elimination of waste and obsolescence by improving order fill and customer satisfaction.

“In the electronic world, the winners are those who control the information,” said Herberger.

Right To Repair Bill In U.S. “Almost Life or Death”

All eyes are on a “right to repair” bill making its way through the U.S. legislature, and with good reason.

That legislation, coming on the heels of legislation in California requiring car makers to make emissions system data available to the aftermarket, is designed to expand the information available to the entire vehicle. It is, not surprisingly, a measure being opposed by automakers and their dealer networks.

“It’s almost a life or death situation,” said Temple Sloan, president of General Parts, Inc., parent of Carquest Canada. Sloan says that it is a good example of what the aftermarket can achieve. “It’s a prime example of why our industry is getting closer together,” he said. “I don’t know if we can expect the OE to drive things. If we don’t speak with one voice, we are not going to be heard.”

“It’s incumbent on everyone to make whatever effort they can,” offered David O’Reilly of U.S. chain O’Reilly Automotive. “It’s important to us and it’s a great way to demonstrate what we can do when we put our minds together.”

“The part I don’t understand,” says Bob McKenna of Genuine Parts Limited, parent of NAPA Canada, “is that there is no possible way [car dealers] could fix all the cars on the road. It’s just insanity. They’d
have the most unhappy car owners. I really have a hard time understanding their logic and their thinking.

“That aside, I believe that necessity is the mother of invention. The industry is very innovative. I’m a believer that we have to do all we can to get the tools and information, but there will always be people who will figure out how to fix vehicles.

“Eventually people who make laws will figure out that this makes sense, [but if they don’t] I don’t think that the aftermarket will be locked out of repairing a vehicle. If [automakers] don’t tell us, we’ll figure it out.”