What’s Hot, What’s Not

Having the right oxygen sensor inventory on your shelves, and the right source of supply for those that you don’t stock, may be your best entre into being the first-call emissions components source for your customers.

Every jobber has to make decisions about what to carry on its shelves, what to source from the warehouse or suppliers, and what categories to focus on. In many categories, the question goes beyond which single components to carry and reaches into related sales.

You probably won’t be the leader in your local market’s brake business if you only carry friction and not rotors. You’re unlikely to be successful if you carry belts but not hoses. Can you even imagine having motor oil on the shelf but sending a customer elsewhere for the oil filter?

In each of these cases, there are certain products that serve as your entry point into a category, a signal to the customer base that you are in a position to supply their needs in that category. When it comes to emissions and tune-up components, the oxygen (O2) sensor is just that.

In fact, while many categories of tune-up products are lumped together in market research, the O2 sensor has become so pivotal that it is treated as a key individual component.

And that component has changed in both technology and market performance.

“In 2003, one-and two-wire unheated counted for 30% of the market. They have now dropped to just over 11%,” says Chris Harrison, product manager, NGK Spark Plug of Canada. “It has been a precipitous drop. Most of that volume was in fact in a single one-wire part number that the industry was well aware of.”

That largely GM application part is now in its sunset period, he says, and as those vehicles come off the road, the demand has followed.

“Now the four-lead type, conventional oxygen sensors were about 55% of weighted sales in ’03, and in ’08 they are over 80%. It really speaks volumes of the fact that if you are not changing your mix with the times, you are absolutely going to lose sales.”

There is a caveat, though, regarding some of the newer technologies being seen in late-model applications.

“There seems to be a greater lag than we had originally anticipated as to when the sensors are being replaced. That is telling us that they are lasting longer.”

Instead of seeing demand from two-to 10-year-old vehicles, the majority of the demand is six years old and up. So wideband sensors, for example, are still over the horizon in terms of real aftermarket demand.

“We have even bounced that off our original equipment service (OES) accounts, and they are seeing the same thing. That seems to be the market in general.”

Warren Suter, director, engine management systems, Bosch Automotive Aftermarket, agrees that the shift in demand to newer technologies has not happened yet.

“In spite of its age, the 12014 unheated sensor is still the most popular in the Bosch assortment,” he says. This is not surprising, as a quick search of this single number generated a list of nearly 700 applications, mostly GM, starting in the 1980s.

However, he adds that viewed by type as opposed to a single part number, things appear a bit different. “Overall, heated types dominate and fast light-off planar types are the most widely applied in new vehicles. By and large, the hottest movers are those which fit the dominant vehicles in a particular market.”

He urges jobbers to use supplier resources to help craft an appropriate inventory for a market. While he asserts that it takes only 200 parts to cover over 80% of all applications and only 100 parts to cover 90% of sales, getting the right inventory is critical.

Bosch does offer a universal sensor and connector, the Bosch OE Smart Link, that can help keep service levels up with a minimum of inventory–boasting 80% coverage with only 14 SKUs–which can be useful for service providers to have on hand if they are in a remote area and unable to have quick access to direct original equipment fitment parts.

However, there are many service providers who are dedicated to providing the OE fit, form, and function parts for their customer base and will wait a reasonable time for these to be supplied.

Just how long they will wait varies, but it is also true that those who have parts in stock can generate the most sales in a category and also get the accompanying sales.

Steve Knox, aftermarket sales manager for Walker Products Inc., says that this is a point that some of his customers have taken to heart and made work for them.

“Jobbers (in the States, at least) are not embracing the need to specialize in one single line.” He says that task can seem daunting for the jobber, with some 5,300 OE part numbers in the O2 market, and car dealers that can be strong competitors. But many jobbers have shorted their inventory to the point where they are hurting their own ability to be seen as reliable suppliers to their market.

“I visit many stores and they carry anywhere from 20 to 70 numbers. That will get them 60% to 70% coverage. The car dealers fill the void by supplying the part and have created a strong business relationship with the installer by doing so.”

Not doing so doesn’t just hurt their sensor sales; it hurts sales of the entire category.

Knox says that in some concentrated urban markets in the northeastern U. S., very strong oxygen sensor inventories have created a leading market position for their customers.

“Some of my customers are ordering 200 and 300 numbers on their initial orders and are getting very strong inventory turns. That’s a lot of numbers I know, but the concentration in those areas is so high that there is a demand. The jobber needs to balance service level order fill with inventory investment. That is a tough call.”

Knox explains that jobbers may need to aggressively insert themselves into the market with this approach if they have not been seen to be key players in this market category. The history of the aftermarket in the O2 sensor market is, he says, not as strong as in other categories, such as brakes. Initial offerings in the market, going back a decade or more, were not always well received by the service provider, due to highly consolidated parts offerings that lacked strong adherence to the form, fit, and function imperatives so important today. Poorly performing sensors forced technicians back to the dealer, a habit they have held onto.

Aftermarket offerings have drastically changed since the early days, but to get demand up for aftermarket offerings takes effort and investment.

“When you talk about how many part numbers are available, they can’t carry the whole line. They may not have the space or the resources. That is the dilemma the jobbers are having. It is hard to know what part numbers to put their investment into.”

Knox says that all leading aftermarket suppliers are putting a lot of effort into getting lost business back from the dealers, with parts and programs.

“Using a quality sensor, whether for O2 or engine controls, that parallels the performance, and form, fit, and function, is foremost. They have to do that.”

Justin Sequiera, the resident emissions system expert at Blue Streak-Hygrade Motor Products, says that he sees many jobbers employing a combination of strategies with which to attack the market.

“A lot of jobbers are stocking more than one line. Unless it is a big jobber willing to invest in a lot, in the Toronto market, they don’t mind paying the drop-ship. We also have an emergency counter so that they can get it overnight.”

He says that this service is being relied on more and more: more than 75,000 emergency counter orders are logged a year.

“People are cutting down on their inventories, and not only in oxygen sensors. It is across the board. They may stock the ABC movers.”

And those movers may not exactly match up with vehicles in operation data.

“You need to stock the ones that are failing. It is a tough call.”

Some applications
, he says by way of example, have a very high failure rate in certain conditions.

“We have a number right now on a domestic application that the OE part fails miserably only in cold weather,” adding that he isn’t sure why, but is paying close attention to it.

And, yes, there are assortments that can be suggested to garages to carry on hand–about 20 numbers that vary by market area–but Sequiera is adamant that jobbers not focus only on their oxygen sensor offering.

He emphasizes that the real solution is to press their installer base to understand that the “21st Century Tune-Up” encompasses emissions control system components such as O2 sensors, EGR valves, plugs, wires, but also engine control modules (ECMs), proper diagnostic strategies and tools and, in an increasing number of cases, the ability to reflash an ECM. He strongly advises against viewing any component in isolation.

Nevertheless, he does agree that the oxygen sensor is an important entry point into building confidence in your ability to supply a complete offering.

“But getting somebody to stock 200 to 300 part numbers is a difficult call,” especially when the trend is to reduce inventories. Even large WDs only stock about a third of the company’s complete engine management line of some 30,000 SKUs.

“There is a lot of investment, but there is a lot of money to be made. A lot of people are going to the dealer. The returns are there, but you have to have a body to work on it. You have to assign someone to it.”

And that has to be an ongoing process for each jobber. “They have to align themselves with an OEM-type supplier and also a supplier that is going to work with them continuously ensure that they have the right parts mix,” says NGK’s Harrison. “They need to be with someone with the right coverage, and validate that the coverage is as it should be.”

The plain and simple truth is that if you haven’t had your oxygen sensor inventory reviewed at least on an annual basis in terms of vehicles in operation, compared to failure rates, and profiled against the vehicles your customers are seeing in the shops–which may be very different from what they are calling you for–you simply will not know if you have the best inventory, or what you’re giving up in the market.