Independents are in Danger Without Industry Help

It will take more than a clean restroom to succeed in the new automotive repair market.

That was the opening message in a panel on the future of the service and repair aftermarket at the 10th Annual Global Auto-motive Aftermarket Symposium in Chicago, Ill., in May.

Key among concerns for the independent is access to repair information, which has a degree of availability in the U.S. as a result of a voluntary agreement between the Automotive Service Association and the automakers. However, that agreement leaves too much to chance, said Mike Kamal, co-president, Automotive Distribution Network, which serves more than 2,000 jobbers across North America.

“What we currently have really amounts to a handshake,” he said. “I can’t think of anybody who will put their future in the hands of even a well-meaning partner on the strength of a handshake.”

“It is the consumer who will determine the right to repair,” says John Watt, responsible for the Petro-Canada Certigard chain. “If we can’t fix the cars of the [customers] we know, we are going to start recommending to them the cars they should be buying. I am not saying that this will happen overnight, but it will happen.”

Watt says he believes it is inevitable that the issue will resolve itself.

“I think it will go away, but not because of some hand of God coming down, but because the consumer will drive it.”

Who will be left to take advantage of that is a more critical issue. With a network of 2,000 jobbers under the Parts Plus and IAPA identities that merged to form the Automotive Distribution Network, it is obviously an important question for Kamal.

“The independent aftermarket has done a terrible job of empowering the independent to attract the upscale customer,” said Kamal. “Very little of what we do to convince them to buy our parts relates to what they have to do to decide to drive past a company-owned store to go to the independent shop.

“If a lot of our family members won’t go to the independent, what does that say about what we have been doing?”

“If no one gives these independents a hand, they’re in danger,” says Watt. “If the mom and pop station isn’t up there charging the correct door rates, making the profit margin, they won’t be able to afford the technicians.

“If you leave it up to the independents themselves, they won’t survive. They need help, and that help has to come from us.”

Peter D. Lord, who has a dual responsibility with GM in the U.S. with dealers and ACDelco service outlets, gave some insight as to the kind of resources that will be required. “Some of the support we are providing to the TSS independents leverages the same resources as the dealer network.”

“It is really an inability to see that there is a need for change in the market,” that is at the root of the problem, said Mike Boswell, with Goodyear’s Gemini chain of independent outlets. “The biggest thing I see is that some locations still do business like we did it 20 years ago. The hours are the same. The same POS. The way it is merchandised. That is a little concerning, that we haven’t changed with the times.”

The biggest barriers to success aren’t sweeping external issues, though, said Watt.

“It is a site-by-site issue. There are more issues inside a small operator than on the outside. They may lack some fundamental skill sets, process-wise. Or, let’s say they’re not properly staffed and have an aversion to hiring the next technician because they can only see it as an expense and not an opportunity.

“At another shop, maybe their [customer] retention rate is 60% as opposed to 90%.

“You don’t have to look to the outside world to see the problems. You just have to look inside.”

Understanding Differences Key To Team Building

Super Bowl winning football coach and winning NASCAR team owner Joe Gibbs knows the importance of teamwork from his sports endeavours, but defining what a team is, and motivating a group of people to behave like one, are two different things.

“When we started in racing, we had 17 employees. Today we have 330. We had one engineer. Today we have 20,” says Gibbs. These people have different jobs, different skills, different methods, and different personalities, he told symposium attendees.

“How many times do we give the accountant the same test we give the salesman?” Gibbs says that the Washington Redskins used to look at SAT scores of college players to determine their “football intelligence.” It was a mistake, he said.

“Test for what you want in the person. Make sure you are doing that.”

Goals are important, too. In business, he says, it can be more difficult to provide goals for a team. In sport, the goal is easy to communicate. How often, asked Gibbs, do employees go month after month without a clear idea if they are winning or losing, with no game plan or goals?

“We need to get them in a competitive environment. Define the goals in the shortest time possible. Then we need to hang some carrots out there. They don’t need to be expensive, but we need to be sure that we hang those things out in front of their peer group. A small prize can motivate even the highest paid athlete if it will put them atop their teammates.

“People love recognition. People are competitive.”

Even so, a team is about all the members. Managers need to be inclusive and strong communicators.

“Can you make everybody on your team feel important? Can you sell them on a plan, be able to teach and communicate a simple plan and make them feel important?”

Overall, success comes from the people you put around you, he says, and how you lead them. There are no shortcuts, he adds.

“If you take the low road and you play the game by cheating, in the long run you are not going to make it. The high quality people are the ones who take the high road.”

Lean Supply and Cooperation Key to Success

Joseph Felicelli, executive vice-president, worldwide aftermarket, Federal-Mogul Corporation, (shown here flanked at left by Michael Cardone Jr., Cardone Industries and at right by Terry McCormack, Affinia), says there is a place for value lines, but they must not be misrepresented in the marketplace.

Manufacturers are facing a host of issues affecting their profitability and the overall profitability of the aftermarket.

A key issue is the role of the value line, within an aftermarket that has relied for so long on the added features of premium brand offerings.

“This is an interesting dilemma,” says Joseph Felicelli, executive vice-president, worldwide aftermarket, Federal-Mogul Corporation. “We call them value lines. They have to be products that provide value. There are so many people in this country who don’t have the economic wherewithal of most of the people in this room. There is a place in this world for the value line. I think they have to be suitable for the purposes for which they are intended.

“We have to careful that we are not trying to misrepresent these in the marketplace.”

Dangers in not doing that are great.

“There is a place for value lines, but they have to be presented for what they are.”

“Value lines have a role to play in keeping cars on the road longer,” said Michael Cardone Jr., CEO of Cardone Industries. “As technology becomes even more complex, we are going to have our hands full.” Keeping cars on the road longer will also keep more accessible repairs in the market longer.

The panel also dealt with branding issues, the rise of the dealer competitor, counterfeiting, and a host of other issues.

“I believe that manufacturers in the aftermarket will become very global,” said Terry McCormack, CEO of Affinia. This is strongly driven by cost, but not only cost.

“There are products today that we are producing from the Asian bloc and we will continue to increase the procurement of those products,” said Bruce Zorich, United Components, Inc. “It will end up being a combination [of offshore and domestic production]. All of our manufacturing is not going to go offshore.”

Where do the opportunities lie?

“The big opportunity in the supply chain is the elimination of waste,” says McCormack. “All through the chain there are areas of waste. We have to find ways of working with our customer base to identify waste and remove it. All of that translates into more profit. It revolves around trust.”

“What does a successful supply chain look like for the aftermarket?” asked Cardone. “What does success look like? We are going to have to have a collaborative effort from all segments of the aftermarket if we are going to have that lean supply chain that we are all dreaming of.”