Auto Service World
Feature   August 1, 2010   by Andrew Ross

The Import Imperative Rising to the Challenge

The traditional automotive aftermarket has always relied on domestic brand automakers for the overwhelming majority of its success. But as consumer car purchasing habits have shifted to import brands, the aftermarket is being forced to follow suit.

“Until the turn of this century, domestic vehicles held the majority of new vehicle purchases,” says Mike Lory, national sales manager — WD accounts for import parts speciality distributor Altrom Canada Corp. “This ratio has now shifted, as import name plates have captured the majority of new car sales.”

Of course, the import aftermarket may be a lot of things, but new isn’t one of them. Import makes have been a part of the Canadian vehicle fleet for half a century, but for a long time they were a niche market, relegated to the specialist service outlets. Many of those outlets sourced parts through different channels from the traditional independents. (I have vivid recollections of having to pick up a specialty tool and repair manuals for a garage owner my father knew when I was in Europe with him in 1981; they were simply not available any other way.)

However, in the last decade or so, import makes became a considerable mainstream force; by 2008, new import-make car sales in Canada had outstripped the domestic brands.

“That alone has put huge pressure on the aftermarket,” says Lory. “The focus on every second vehicle in the garages’ bays has made it a market-up driver, almost forcing the issue, and not a top-down or a sales issue. On the Altrom side, we’re finding more and more interest in what we have to offer, as opposed to us having to beat down the doors to show what we have. It is truly a market-driven trend.”

It’s different days from when Lory started working in the aftermarket.

“When I started as a driver 30 years ago, I can remember being in a garage when a customer came in with a Datsun, and watching the owner tell him that they couldn’t work on it and to take it to the dealer.”

Now, he says, garages don’t want to turn away that business, and can’t afford to. For jobbers to continue to win their loyalty, they have to keep on top of all of the service providers’ needs.

“The mainstream jobber networks, it doesn’t matter which one you name, are tying a lot of their trade customers into programs, through warranty, travel incentives, rebate programs, etc. So again the garages are putting the pressure back onto the jobber and the network to be involved in import parts to be able to secure loyalties.”

Barton Auto Parts, a multi-branch Uni- Select member in Hamilton, Ont. is one such jobber.

The import vehicle service business, says owner Stephen Krieger, is slated to be a key component for Barton in the future. The company even went so far as to rebrand its spring trade show as Import Auto World. And the show’s focus is only part of the commitment.

“Training is a top priority, for staff and clients. We train more than 100 techs a month as part of the swing in the market to import specialty parts.”

A key part of the strategy is to have a crew on staff who have undergone intensive training that will result in a team of experts, each with their own specialty.

“It has us focusing our attention and being entrenched in vehicle platforms. When a guy thinks of BMW parts, we want him to think of us as the BMW expert.” And so on for other vehicle makes, he says.

It’s a strategy that will rely closely on brands aligned with OEM values. “In friction, for example, we are going OEM vehicle-specific. We may have different options, but there are certain brands that the import specialist customer is looking for, different from the traditional brands.”

The import vehicle parts market, says Krieger, requires commitment and effort from customers, staff, and business partners. He is not shy about admitting that sometimes one group or the other requires a bit of a push to get up to speed.

“I believe our business is ahead of where many of our supplier partners are, because we have regular focus groups to communicate the business’s needs and desires. We want to make sure they change as we change.

“It’s a continuation of our plan. The heavy import market there fits well with our business strategy.”

Making good on that strategy relies on more than just good will: brand and product are what will fuel any jobber’s import success.

“The main focus of many jobbers–and WDs for that matter–has been, in the past, to offer good aftermarket products, but not necessarily the items that the foreign car specialist wanted to install on the car,” says Charles Pariano, manager -North American aftermarket sales, Aisin World Corp. of America. “Having OE manufacturers bring product to the aftermarket has started to change this, and it is being welcomed.” Pariano says too that the trend toward less consolidation of parts, as a result of this increase in OE supplier aftermarket involvement, is helping.

“I think that the import and foreign car specialist, whether Asian or European, would prefer the brand that came on the car, for a multitude of reasons, including fit, form, function, and reducing comebacks.”

It’s all about having confidence in the parts being installed. The old aftermarket hadn’t received such good grades for that; current practice has worked hard to improve perceptions and performance.

“The traditional North American aftermarket has relied heavily on North American-based manufacturers. These manufacturers for years operated alongside North American OE manufacturers, and often worked with the OE manufacturers to develop technologies that were incorporated into domestic vehicles,” says Joe Herauf, vice-president sales, NAPA Canada. “By default their strength has been on the domestic vehicle side, and the aftermarket’s reliance on these manufacturers also caused the North American aftermarket to be weighted heavily towards domestic vehicles. This has changed over time as more domestic manufacturers have become global companies and become more involved in the import vehicle production. The increase of import vehicles in operation in North America has caused the North American aftermarket to expand its focus to include both import and domestic vehicles. As we see an increased number of import vehicles on the road, we have also seen an increased focus on being able to repair the imports. Where a traditional repair facility might not have worked on many imports in the past, it is becoming the norm for them today. Broader product selection is required and the need to have products that are traditionally considered import parts has become a necessity.

“The introduction of new aftermarket suppliers from outside North America is helping the North American aftermarket to provide import parts that are more accepted and better fit the need of the import customer. Jobber stores are embracing this change out of necessity, as the import vehicle market continues to grow and the need for products that meet the import form, fit, function criteria are required to be successful in today’s market. By carrying a broader offering of import parts, the jobber opens the door to business that they might not have traditionally gotten.”

Herauf agrees that brand is important, and that the aftermarket might have found itself wrong-footed in the past when it came to import brands.

“Brand carries a significant weight with the customer. The brand acts a symbol of quality and value with customers, and considerable resources are put into developing brands that speak for themselves with consumers. This has been the focus of most North American aftermarket manufacturers and distributors, and it remains a key focus that is used to build confidence in trust in the product. From an import perspective, due to the history of North American manufacturers not necessarily meeting the form, fit, function criteria on import vehicles, the import customer does not necessarily see North American brands as symbols of excellence, particularly as it relates to import vehicles. Instead, the op
inion is often that North American brands, although they may work adequately, do not necessarily meet the same levels of quality and precision in manufacturing as an import part.

“Import brand names that are more synonymous with the import market (e. g., NGK, Bosch, Denso, Hitachi, Akebono, etc.) have a decided advantage in the world of import parts. Customers assume that an import-branded part will function better than a domestic brand-name part when installed on an import vehicle, which may not necessarily be the case, but the brand name associates it with import vehicles. This becomes more prevalent as the perceived ‘stature’ of the car increases. The owner of a Honda or Toyota will probably not be as brand-sensitive as the owner of a Mercedes Benz or BMW. The higher-end vehicle owners feel that they are sacrificing something (quality or performance) by not having the recommended branded parts used by the repair facility.”

Of course, things are changing to meet present-day needs. “With the change in the vehicle car park shifting rapidly to the import side, the change of direction of many aftermarket manufacturers to improve their import vehicle coverage has dramatically accelerated,” says Herauf. “The demand for import replacement parts has caused many North American manufacturers to expand their focus in order to maintain their position in the market. In addition, the direct involvement of traditional North American manufacturers with import OE manufacturers has helped them to accelerate their improvements on import part coverage. These improvements are also being incorporated into the part design and manufacturing processes. The form, fit, function of North American manufacturers’ products has moved towards a more exact copy of the original OE design. Although this is not 100% complete, many manufacturers have improved in this area over the recent years.”

Says Ramzi Yako of brake parts supplier ProMax Auto Parts Depot Ltd., “Most of us (manufacturers and wholesalers) are making sure that import applications are available in our product lines; import aftermarket is a major factor in our business these days. We are actually modifying our product quality standards to meet import applications, in most cases; the import aftermarket will be a significant part of our business in future and it’s hard to ignore. Jobbers need to follow manufacturers’ and distributors’ steps and make sure that they have the coverage and product technology for the import aftermarket.”

Yako says he has noticed a considerable shift at the manufacturer and wholesaler levels.

“Take, for example, brakes: today’s brake pads are manufactured in either NAO or ceramic formulations for most import applications, to meet OE specifications. In the old days, most brakes used to make a lot of noise on import cars, and manufacturers and wholesalers kind of ignored it; today’s brake pads are designed to be noise-free, and are designed especially for import applications.”

Pariano makes a similar point. “For example, because of the high speeds on the Autobahn, the formulation of brake friction has been designed to bring the vehicle down from a high speed.” That hasn’t been the case for most other markets, making needs and formulations different for Asian and North American brands.

“Wholesalers have also improved lately with regard to the import market,” says Yako. “I remember it was only few years ago that we had a few wholesalers who were specialized in import applications, but today almost every major wholesaler is improving on their import aftermarket offerings.”

It is generally considered that the current state of the import aftermarket is in the push-pull stage: customers are demanding more availability and less reliance on the car dealer for parts, while the supply chain is providing products to meet both this need and anticipated growth areas in advance of daily demand.

For jobbers, this can be a difficult game to stay on top of, as hundreds, even thousands of new parts are loaded into e-catalogues every month to meet import demands.

For example, import specialist distributor Beck/Arnley reports that it added 1,600 new foreign nameplate part numbers in the first half of 2010. These additions were broken down as follows: brake and chassis, 1,197; clutch and driveline, 31; cooling, 14; electrical, 15; engine management, 189; engine parts and filtration, 154.

“At Beck/Arnley, we are committed to making life easier for professional import technicians by offering OE quality parts that fit properly, broad vehicle and parts coverage, and product enhancements and solutions to make the installation job more efficient,” says Bob Anderson, vice-president product management, Beck/Arnley. “We have a global supplier network of more than 800 vendor relationships that allows us to pursue the best coverage of critical repair and maintenance parts.”

It’s all about gaining share in this market–from specialists and car dealers alike.

“Market penetration is key for sustained growth, and offering the products being demanded by customers is a necessity in today’s market,” says NAPA’s Herauf. “Wholesalers continue to expand their product offerings by making available multiple choices in products to satisfy specific brand needs and specific price points. The global market has added additional challenges, as products from offshore sources have flooded the market, causing traditional wholesalers to be more creative and responsive to competitive market needs. In addition, the economic pressures of today’s world have altered the expectations of today’s consumers, and all wholesalers are challenged to keep pace with providing the same level of service at more competitive prices.”

Closer to home, keeping pace with these changes at the counter requires a change in habits too.

“It comes down to training on the counter,” says Lory. “With everything constantly changing, and the global market bringing foreign-built, domestic-branded vehicles in, it really comes down to counter training.”

While Lory has a great appreciation for how difficult it is to stay abreast of new part introductions–and understands how the “that’s a dealer part” reflex can be hard to shake–the tools that jobbers have today can really help, if utilized fully.

“It is using the catalogue that they have at their disposal, but also other resources. They have to go into their main system, of course, but they have to be able to expand their research using the Web, too. The good counterpeople will have their own screen up and three, four, or five other catalogue windows up. The good counterpeople are the ones willing to take that extra step.”

He calls getting counterpeople to look beyond that initial screen “their biggest challenge.”

“If they don’t, somebody else will; either way that jobber loses the sale, to the dealer or the competitor.”

But despite the challenges, Lory says the aftermarket is really taking hold of the opportunity.

“The aftermarket is making leaps and bounds, even on the domestic side. A Honda is now as common as a Chevy, a Chrysler, or a Ford. They’re working in that area, so at least Honda is not a bad word anymore. As for the overall potential, are we there yet? No, we still have a lot of room to grow on the import side of the aftermarket. But there is a lot of progress and it is an area of great opportunity.”

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