LAS VEGAS — Call it the role reversal of all role reversals.
No matter which way you look at it, now perhaps more than any time in recent history the aftermarket has been bolstered by Wall Street for a competitive advantage over other industries.
That’s the good news.
But we still have our share of industrywide problems, according to participants of this year’s sold out Automotive Aftermarket Industry Association (AAIA) Town Hall, held during Industry Week.
“The automotive aftermarket stocks have trounced the S&P this last year,” said Kathleen Schmatz, president and CEO of AAIA, quoting a well-known industry analyst. “Certainly, we are outperforming a lot of other industries.”
The presentation explored Wall Street’s bullish take on today’s aftermarket, along with other subjects such as the industry’s image problems. The topic of the program was “What Part of Parts, Accessories and Service Don’t We Understand?”
Schmatz hosted the TV talk show-format discussion, which was interspersed by video clips of interviews with industry leaders and consumers, among others.
The fact that some dealerships are shortening warranties and others are eliminating free maintenance offers the aftermarket yet another competitive opportunity, said Schmatz.
Dealership competition remaining a vital issue for independents (distributors and repair shops alike), Chris “Chubby” Frederick, Sr., president and CEO of the Automotive Training Institute, said dealerships are astute competitors, often pulling in high margins.
“Most independents are working in their business, they’re not working on it,” he said, adding many independent owners know what they need to do to improve upon their operations — they just don’t have the time to do it.
When asked where wholesalers fit into this equation, Tim Lee, chairman and CEO of LC Enterprises, LLC, said, “We haven’t really installed the part until (the service installer) puts it on the car.”
He looks at the service end of the chain as vital, especially as it pertains to the WD being the “middle man” between the manufacturer and installer when educating techs about such changes as 300-volt systems, of which improper knowledge could cause serious injury to the tech.
Van D. Kirk, another Town Hall participant, described himself as the “hands-on guy” of the panel. Kirk, an ASE-certified technician and radio host, is president of Auto Tech Service, Inc., Before You Buy Auto Inspections and Kirk Auto Group, Inc.
From the tech’s point of view, the one who is unable to take the time out for training sessions and industry events “is working too hard, he’s not working smart,” said Kirk.
Tech and management training and equipment should be core components of a repair shop’s budget, he said, adding that a lot of operations up to this point in time have never considered these things.
After this comment, Schmatz noted that 62 percent of independent shops have no training at all.
Lee also said distributors should resist the trend of parts consolidation in order to remain competitive and adjust to OE prices.
“It’s our responsibility in the distribution business to put the pressure back on the manufacturers to give us the exact look, the exact fit that came off the car.”
Lack of tech interest
It’s not only retaining good employees, but finding the right contingent in the first place that troubles many in this industry.
Citing U.S. Department of Labor statistics, Schmatz said there is a 100,000-tech shortage in this country in the face of a 13-percent yearly increase in new technician jobs.
Half of today’s technicians will retire in the next seven to 10 years, she added.
It may not always be pay raises that are sought by techs either, said Frederick. It could be more flexible schedules — or days that include longer hours so the tech can get an extra day off a week to be with his or her family.
“A majority of technicians aren’t money motivated,” he said. “Many shop owners realize by actually giving (techs) a raise they work less.”
Quality of life is very important to techs, he said, adding the tech’s spouse is often the one who has to be sold on the job when it comes to recruiting. It doesn’t help that many shops don’t actively recruit techs either, added Frederick.
The aftermarket is also confronting a loss of maintenance, which often occurs during times of financial hardship, said Frederick, who compares this situation to elective surgery.
Like the medical analogy suggests, the aftermarket needs to educate the motorist to invest in proper maintenance.
The industry may also find itself with a shortage of DIYers, though that particular population is by no means extinct, said Town Hall panelists.
Much like grocery stores capitalized on the fact that many mothers stopped teaching their children how to cook, “I think the same thing has happened in the auto aftermarket business — fathers stopped teaching their sons and daughters how to repair vehicles,” said Michael Coppola, president and COO of Advance Auto Parts, who added Advance embarked on a customer education program last year in which more than 120 how-to brochures were disbursed.
‘Major League’ techs needed
“I think our image problem and where we go in this industry starts with the problem we have in this room,” said Lee, who added there is an existing stereotype that teachers send the trouble-making students into the school’s automotive trade program.
“Would you hesitate to tell your nephew that because he loves to work on cars that maybe he should be a professional technician?
“If you love baseball and they send you to the big leagues, that’s your dream. If you love to work on cars, we don’t send them to tech schools because it’s the image, and it starts in this room.”
Image problems in the industry also pertain to the female consumer, whose attention is invaluable, as many shops and parts stores say they are the most loyal of all customers.
Customer and motorist demographics have changed considerably since the good ol’ days, continued Schmatz. “Before we can all serve this effort, the diversifying consumer, the aftermarket needs to kind of look inside. And frankly, we probably need to be brutally candid about whether we’re prepared to do the job right.”
