The often-discussed trend of independent service providers (ISPs) frequenting car dealers was again brought to light at a recent industry presentation.
Independent repair shops, which represent 75 percent of the aftermarket’s business, are increasingly turning to OE dealers for replacement parts, according to Kathleen Schmatz, president and CEO of the Automotive Aftermarket Industry Association (AAIA), who moderated a panel discussion at the Parts Plus program group convention in New Orleans.
Bob Egan, vice president of aftermarket sales for Federal-Mogul and an event panelist, said that his company conducted several focus groups last year with service dealers, and the participants continued to point out that they couldn’t afford comebacks and therefore wanted quality parts.
Egan touched upon the need for fit, form and function but said that making a part better than OE or solving a problem a current part may have is really where energy should be focused. He charged that 13 percent of all cars today have had recalls, meaning OE parts aren’t “perfect” either.
“We need to re-instill the idea that we do, in fact, have quality branded products that are not only OE equipment but are better than OE: they’re problem-solving.”
John Washbish, president of customer relationship management for Affinia and another panelist at the February Parts Plus event, suggested that the dealer’s aggressiveness is causing the aftermarket to lose share due to the 2-4-8 reality. When dealers sell a new car, net profit is 2 percent; a used car reaps 4 percent.
For parts and service, they claim to have a net profit of 8 percent, explained Washbish. “Even a car dealer can figure out that being in the parts and service business is a smart place to be.”
He indicated that “some of the problems we caused ourselves by overconsolidation. We were working so hard to make the inventory smaller and easier to stock. We cut edges on parts and turned them into will-fit parts,” said Washbish, adding that what the technician really wants today is a part that looks and fits the exact same, meaning “proliferation is going to have to go the other way,” he concluded.
Schmatz succinctly put the strength of the market in perspective, “We have experienced growth in the market for the last four years.”
She told the 1,200 attendees that, as an industry, we employ 4.6 million people and that for the first time in history, there are more cars registered in the United States than people.
Other panel participants included Jack Cameron, general manager, automotive aftermarket for The Timken Co.; Mike Lambert, Parts Plus president and Automotive Distribution Network co-president; and Joe Pomaranski, vice president of sales for Tenneco Automotive.
Communication errors
Pomaranski suggested that part of the problem is a lack of communication. “We do have the right fit, form and function but what we don’t do as an industry is great marketing communications.” Plus, he said, our catalogs aren’t up to date.
Washbish added that catalog service providers need to take the manufacturers’ information and immediately incorporate it into their e-catalogs.
Referencing a study that proved more than 10 percent of parts were listed incorrectly, Egan said that “not only do we not have clean data, we are shipping the wrong part or are actually putting on the wrong part.”
Washbish continued to address how data errors are impacting every step in the chain. “We’ve got to have good, clean, robust, synchronized, standardized data,” he argued. “Before we get too hard on the wholesaler and installer, we need to be sure we have the right information available.”
Fixing the disconnect in the chain is another problem, said Egan. “We build and ship but don’t know what is sold. We keep moving inventory up and down the chain, which is very inefficient.”
AAIA continues Right to Repair push
Schmatz also took the opportunity to address the Parts Plus group with issues surrounding the Right to Repair Act, to be reintroduced into congress this year. “I can assure you that the AAIA will everlastingly work to get the Right to Repair Act passed in the 109th Congress this year.”
After receiving applause, she challenged attendees to help the cause by writing letters to congress. Cameron reinforced Schmatz’s message by reminding the audience of a key industry phrase: “The Right to Repair is the right to exist.” He said that regardless of how much the OEs want to protect their data, they need the aftermarket. “It is not physically possible for the OE dealers to do all the repairs for all the vehicles on the road.”
In a separate interview, Lambert told Advanstar Automotive that the program group is very much in support of legislation, adding to a point Schmatz touched upon: “Doing business on a handshake is dangerous.”
Other items addressed included reaching the female consumer, having both original equipment and aftermarket experience as a manufacturer and the need to eliminate the price pressure the industry places on itself.
“We give the consumer a great deal all the way around,” concluded Washbish. “We bang on each other all the way up and down the supply chain for cheaper, cheaper, cheaper. We don’t sell the value. We sell ourselves short.”
