There are quite a few people who are very concerned about the future of the aftermarket. They highlight competition from China, shrinking margins, dealer parts encroachment into the market, increasing technical training needs, ballooning business costs, import nameplate share . . . Shall I go on?
The fact is that the aftermarket has seen greater challenges over the past year or two than it has seen for some time. This, however, is not the same as suggesting that these challenges are insurmountable.
Let’s take these challenges one at a time.
Competition from China. How is it competition when you’re doing the buying? What is termed competition is really an issue of poor business practices that lead too many companies to price incorrectly, leaving them with insufficient profit. If you want to allay concerns about Chinese sourcing, price in a way to generate required profit. It’s not easy, but it is what you have to do.
Shrinking margins. See above for all your “value lines.” And then tell your counterpeople to stick with it. While there are some great counterpeople out there, in a bid to deal quickly with a customer, they sometimes drop to the bottom rung to make the sale. Remind everyone in the business what that does to the bottom line, and minimize the damage by pricing properly.
Dealer parts sales got you down? The share of parts that dealers are selling has risen swiftly over the past few years, due, mostly, to problems that the aftermarket has had in dealing with a changing market. This is an important distinction. It is not that dealers have become suddenly more aggressive and more savvy, it’s that the market has changed, in terms of customer demands and vehicle population, and dealers have filled the gap. So, get your program together, get your pricing on target, make sure your import offerings are strong, and change the momentum.
Training. Stop complaining about how you cannot get customers or their technicians to come to clinics and start learning from those who can. For starters, don’t allow any clinic to become an afterthought for your staff. They should make it a priority to talk to customers. They should think of it as more important than making that next sale, because it is. Training is about getting sales for months and years to come and it should be given its appropriate effort.
Business costs. If you keep doing what you’re doing, you’re going to get the same result. Trim what you must, but look to efficiency through technology, processes and a changing focus, and unlock the potential of your people.
Imports. Why do we even call them that? Toyota is poised to enter the Nextel Cup in 2007 with NAPA sponsorship. Carquest purchased import supplier WorldPac. Import-focused Beck/Arnley is going through a rejuvenation. Groups like Altrom are accessible to everyone. The pieces are there for the traditional aftermarket to improve its track record when it comes to Asian and European nameplates. It won’t happen overnight, though, and jobbers need to work hard to put programs together for their customers and help their customers make the transition and get these cars into their bays. It will pay off for everyone.
Mostly what is missing in many organizations in the aftermarket is a forward-looking strategy built on growth by more than acquisition.
If service providers are buying 40% of their parts from a dealer, get that down to 35% and you have increased your business 8%, and bumped up your profits probably more. If you charge a buck more a brake rotor, what does that do to your bottom line? Do you factor dealer pricing into your pricing strategy? Do you track and charge for delivery?
Do you know what your business does right, and wrong?
Ultimately, do you recognize where your opportunities are and do you have a strategy to address them?
Every business can succeed if it is willing to change, but without a strategy for success, you will never succeed, and without information and commitment you will never improve your future.
And without a belief that you have a future, you’ll never even start, and that is an attitude that has no place in this industry.
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