Auto Service World
Feature   January 1, 2005   by John G. Smith

Improving Your Exhaust Flow

The right mix of domestic, import and performance parts is the key to increasing your exhaust sales

The days when a typical vehicle would require three or four exhaust systems in its lifetime are long gone. Today’s aluminized and stainless steel designs–which began to emerge as standard equipment in the late 1980s–last eight years or more. And the need for replacement components has dropped accordingly.

Still, there are signs of hope for those who sell the components.

“We have projected the impact of stainless should begin levelling off, and that’s basically on the fact stainless has been out there long enough that all of the vehicles are into the [ages that require] replacements,” says Jim Fox, the national account manager who oversees ArvinMeritor’s Maremont brand.

Canada’s jobbers could be forgiven if they thought the market was going to recover sooner than that. Just as the first generation of these vehicles aged to the point of needing replacements, there was a drop in the registrations of eight-to-12-year-old vehicles, he says. “So we kind of got a double hit.”

Any improvement in the exhaust market should be particularly welcome news for those who supply independent repair facilities and auto specialists. While car dealers account for a mere 11% of the muffler and exhaust work conducted on vehicles that are eight to 12 years old, auto specialists have 33% of that business, with independent repair shops accounting for 31%, according to J.D. Power and Associates. When all vehicle ages are considered, auto specialists account for 29% of muffler and exhaust work, independent repair shops come in at 27%, and car dealers fall third at 22%.

Despite the promising figures, however, it can be a challenge to balance inventories to ensure the right mix of domestic, import and performance components if you want to service the market.

Inventory levels need to be adjusted to reflect registration data specific to your region, which will offer a look at the number of vehicles that are approaching their first replacement cycles, says Frank Murkowski, marketing manager for Tenneco Automotive’s Walker and DynoMax brands. But for a look at the future, track the success of local automotive dealerships, he adds. “That [dealership lot] gives you a flavour of the vehicles they’re buying locally.”

Graz DiBartolomeo of The Parts Boys in Windsor, Ont. suggests it’s equally important to observe every request made at your counter. “If we don’t have it, we put it down as a lost sale,” he says. If enough lost sales occur, he adjusts inventory levels.

One of the greatest opportunities to expand exhaust sales can be found in the performance market, Murkowski adds, referring to the growing number of vehicle owners who are replacing brand-new OE components with products that offer a shinier appearance or an aggressive sound.

“That business is huge for us right now,” Top Line Auto Supply president Bruce Forsyth says from his Winnipeg facility. “For the past two years, it’s gone right out of sight.”

The Top Line experience isn’t unique. While fewer exhaust components are being sold, the overall value of the exhaust aftermarket continues to rise because of lucrative designs.

“Typically, the performance market is gaining and growing where the other market has been shrinking,” Fox says.

North American manufacturers are already offering new brands that were designed exclusively for the import market, to help capture a larger share of that business. “We’ve more or less invented or promoted a second brand,” Fox says. “The tuner market has its different set of brand loyalties.”

ArvinMeritor, for example, has the Supreme Perfor-mance brand, and is promoting Volt products through tuner magazines in a bid to reach consumers. Tenneco introduced the Walker Advanced Premium design in 1997 to supply European vehicles, and has since upgraded the designs to include Quiet-Flow models. Plus there is the company’s DNX brand, which doesn’t even promote an overt attachment to the Tenneco name.

The changes involve more than brand names. ArvinMeritor’s new performance converter, for example, includes a stainless steel substrate, and walls that are 70% thinner to accommodate the heat and flow requirements associated with performance vehicles. The company’s new Vortex systems offer OE fits for 37 applications from the Chevy SSR to the Hummer H2.

North American suppliers can now offer OE-style fits for most vehicle models, Murkowski adds. (Some of the exceptions include certain European models with rare cross sections and tooling, a market that comprises just a few thousand registrations.)

And a growing number of buyers are insisting on direct fits, DiBartolomeo says. “There’s no cutting, no stretching, nothing.”

That growing call for direct fits can be linked to changes in the industry as a whole. Specialty shops may have been equipped to deal with so-called universal designs, but the drop in exhaust replacements has led many chains to become general repair facilities, Murkowski says, citing shops that range from Midas to Speedy. “They don’t have as many trained [exhaust] installers.” Bending pipe, after all, can be an art. “Universal” fits can still require technicians to expand nipples or add hangers.

“The dedicated exhaust installer is a bit of a dying breed,” Fox agrees. “You need something that a general mechanic may be able to install.”

Everything from pipes to flanges associated with catalytic converters are now available with OE fits, Murkowski says. “The only difference is in the substrate and the precious metal in it.”

But that creates the need for a wider selection of available parts.

For that matter, jobbers also need to track the inventories of every exhaust component, says Fox, noting that about two-thirds of related sales involve complete systems. “Far too often, they have the muffler but not the pipe, but they can lose the entire sale if they don’t have the inventory.”

Part of the reason is that systems have become more complex, he says, referring to everything from new heat shields, hangers and flex pipes to the tight routing associated with them. “It’s not as easy to do a patch with one part.”

Still, it is possible to serve the market without stocking every part in the catalogue. “One component can go across a number of vehicles,” he says.

The need to stock a wider array of fittings has led Ferguson Auto Parts in Dartmouth, N.S., to consolidate its inventories at one of its three facilities.

“Most of the buying groups are pretty good,” says president Rick Slaunwhite, referring to how he isn’t stuck with stock that he can’t move. “But there are just so many part numbers, it’s hard to get turns on them. The guys buying a lot of exhausts are buying direct [from the manufacturer].”

It’s a matter of making wise investments. It may be possible to reduce stock levels by introducing more universal designs, Murkowski says. “But if you’re truly in the exhaust business, the companies that have the inventory on hand will be the winners.”

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