If you think back to your most recent visit to a repair shop, did you take the time to stop and look around — to review the waiting area, to watch the employees, to see how this business segment is drastically changing to benefit the distributor?
Didn’t think so.
But now it’s time to begin paying attention, because some of the industry’s eminent shop owners predict a fruitful future for their relationships with aftermarket distributors, a relationship that is also not without its share of concerns.
Shops do report buying parts from dealership channels, but it’s usually out of necessity, according to those repair shop owners we spoke with. The majority of parts are still purchased through aftermarket channels, and these shops project the large percentage of aftermarket distributors in their books will remain in coming years.
Predictably, the top shops are steering toward maintenance service to compensate for the longer life of automotive components. And these business owners allude that repairs, though integral, are rivaled by such necessities as sales, marketing, technology, aesthetics and a host of other issues that affect just about everyone in the industry.
Service dealers are forced to consider lean and mean operations, and they have no choice but to look above and beyond their core services to meet today’s challenges.
Who’s the MVP?
These businesses do admit that the number of distributors has increased, with a handful of stores doing the job once performed by only a single aftermarket distributor.
And the internal workings of the repair shop have drastically changed.
To illustrate, Eddie Butler, owner of Butler Automotive in Augusta, Ga., compares the situation to sports.
“When they went with salary caps in sports, they joked that the MVP was now an accountant,” he says. “When we transitioned from repair to service, the MVP went from an ‘A’ tech to an ‘A’ salesperson.”
Repair shops also face a number of challenges these days as dealerships, tire stores and oil change shops, among others, struggle for the same market share, adds Butler. Everyone each had a respective niche and stayed in their own corners of the sandbox.
“At one time each person had a real neat area, but those barriers are coming down,” Butler adds. “We’ve all got our ropes crossed.”
The Blue Seal of Excellence
In order to gain a perspective from the industry’s leaders, we called a number of Blue Seal businesses — those shops that are recognized as having a Blue Seal of Excellence by the National Institute for Automotive Service Excellence (ASE).
“We’re all ASE Master certified,” says John Murdock, owner of M & M Auto, in North Logan, Utah. “Where most shops have a single certification for something, we’re masters in all areas.”
Despite much of the news we read that points at the independent repair industry as being faced with a dire competitive situation, these businesses cite a number of points that distinguish them from such competitors as dealership repair centers.
For example, a 17-year career in dealership repair provided Robin Ramirez, co-owner of At Your Service Automotive in Bakersfield, Calif., with the wherewithal to acquire warranty work when he opened his own shop last February.
“We have programs that enable us to view manufacturers’ maintenance intervals,” he says. Because of the extreme heat and high content of particulate matter in the air in his part of California, Ramirez often recommends more frequent maintenance than that suggested by the manufacturer.
He sees the motorist gaining much more from a vehicle’s warranty when employing an independent shop. In dealership circles of repair, “it’s almost frowned upon to upsell warranty,” he says, pointing out situations where a dealership technician may not speak up when it comes to suggesting that an entire transmission needs replaced. Dealerships are beholden to the price of the vehicle, so they must err on the side of keeping costs down, he adds.
Others also see their stores standing out in the pack.
Mark Moses, owner of Moses Automotive in Toledo, Ohio, sums up his company’s distinction in one succinct word: “Passion. We have passion for everything we do, from the cleanliness of our epoxy-coated shop floor to our award-winning showroom.”
In addition to the ASE Blue Seal Shop designation, Moses says he gives every customer a carnation when they pick up their vehicles. It “can’t speak enough what that small token does for us,” he adds. “Customer service is our strength and will continue to guide us into the future.”
A maintenance focus
It is by no means a necessarily sage or new prediction, but many shops we spoke with see a strong shift toward more maintenance work for the future of the aftermarket repair shop.
Cars do not break down like they used to, mentions David Lee, owner of Lee Automotive, in Beulaville, N.C. “If you try to make it on repairs, you’re being reactive rather than proactive.”
If a focus on maintenance is inevitable, how do the top shops compete with the value price of oil change specialty shops?
For one thing, you emphasize who’s actually performing the oil change.
“My oil changes are probably the most expensive in the area,” says Lee. “I just did one and it was $26. I’m not even going to try and compete with someone who’s doing $9.95 oil changes. We offer an oil change from an ASE-certified tech.”
“We really push the fact that we (also) do full inspections on our vehicles,” says Gary Carpenter, president of Kansas Auto Repair in Newton, Kan. “We have certified techs working on our vehicles and not $7-an-hour guys.”
Shops need to push the quality of work over the price of work, say those we interviewed. It also helps to launch maintenance-oriented programs.
Carpenter, for example, has a program where the motorist can purchase $400 of service for $80.
“It’s a value for them, and it’s good for us because we get to see them repeatedly,” he adds.
A report card for distributors
So, how are aftermarket distributors doing in their quest to ensure a productive business relationship? The feelings veer toward the positive, but repair shops still have suggestions for improvement.
For example, these companies are resoundingly concerned over walk-in retail customers getting the same prices as they do, or worse, lower prices. There seems to be a lack of “exclusivity” in the relationship between parts distributors and service centers.
“Selling the same walk-in price for the customer as us still creates a lot of tension within the industry,” adds Carpenter.
In addition, he believes different customers should also get different treatment from distributors.
“There needs to be a difference between the guy who does $200,000 in business and the one who does $100,000.”
Moses Automotive’s Mark Moses believes distributors should focus more on their wholesale programs.
He sees a distributor who equally caters to wholesale and retail sales as “trying to butter both sides of the bread.” Like others we interviewed, Moses realizes that trying to please the interests of both retail and wholesale markets is a matter of survival for the distributor; however, these distributors should expect some pushback. “The focus on retail tells me to start looking for a more ‘wholesale cultured’ supplier,” says Moses.
“The local meat vendor sells to restaurants, not the public,” he attests.
Additionally, he would like to see an improvement in training, with it being mandatory for any program.
“Two hour ‘clinics’ are not training,” he adds.
Repair shops are also pushing for more online parts ordering.
Bob Arlotta, owner of Long Hill Auto Service in Millington, N.J., says every time he attends a meeting with his distributors, offering more effective online parts ordering is the first thing he utters.
“The electronic way of ordering parts needs to be stepped up,” believes Chuck Hartogh, owner of C & M Auto Service, which serves the Chicago area. “For the amount of money this industry generates as opposed to other industries, our computer systems are pretty weak.” Hartogh admits catalog errors and lack of coverage slow him down.
Carpenter says if he has to pick up the phone to order parts, then he’s not being as productive as he would were he to exclusively order parts online.
Others, like Lee, prefer to see the person they’re ordering from and favor a more personalized relationship over the technology-based relationship.
Butler, of Butler Automotive in Augusta, Ga., acknowledges technology’s importance in distribution but warns distributors not to lose sight of other aspects of their business. “You can get all caught up focusing on technology, (but) one thing that customers are still demanding is service.”
It’s a matter of communication for some repair shop owners, who feel there’s such a gap between themselves and the manufacturer that their suggestions for improving the business relationship fall on deaf ears.
“There needs to be better communication between the installer and the manufacturer,” says Hartogh. “There needs to be some kind of network set up.”
He adds there should be better systems in place to inform aftermarket repair shops that a new product is out. He recalls certain times when the aftermarket version of an existing OE product is released, but no one’s bothered to inform him the part’s available.
Butler would like to find a distributor that tracks cores. “Why are we forced to track cores?” he asks. “If a vendor tracks cores, we are more likely to do business with them than someone who doesn’t track cores.”
Giveaways give wrong impression?
Manufacturers may think that giving away prizes is an ample incentive for technicians, but Butler advises suppliers and distributors to think out these promotions beforehand, or else risk facing the opposite of the intended results.
While attending a seminar sponsored by his distributor, a national chain, Butler recalls the mantra was “efficiency, efficiency, efficiency, productivity, productivity, productivity.”
However, he remembers watching his employees clipping box tops for a promotion sponsored by the same distributor. “I thought, ‘how efficient is that?’”
Eventually, all of the box-top clipping did not yield the results he expected.
“We clipped grocery bags full of box tops and they got lost,” he says. “They were inadvertently thrown into the trash can and it wasn’t just our shop. They subsequently lost all the bags for the entire town.”
Future of distributors, shops of the future
The shop owners we interviewed do not foresee much to change with their distributors.
Arlotta, of Long Hill Auto Service, says he hasn’t seen much change in the past 20 years as far as the percentage of aftermarket distributors he does business with.
“There appears to be a push to get the aftermarket out of business, but there’s been the same push (since) 20 years ago. The aftermarket’s not going to go away.”
So, what will the shop of the future look like?
Butler, from Butler Automotive, envisions repair coupled with a number of other services.
“Maybe the idea of a shop of the future is a two-bay Quick Lube in front with a six-bay repair facility situated a distance back. I think you’re going to see more than just repairs.”
As vehicles become more sophisticated, and repairs become more costly, motorists begin to expect a different experience than that of the repair shop of the past, says Chris Greulich, president of Greulich’s Automotive, in Scottsdale, Ariz.
“Consumers don’t expect a corner gas station anymore,” he says. “They want to come into a facility like coming into a doctor’s office.”
Lee, from Lee Automotive, says customer service is the No. 1 concern for his business. “You definitely have to cater to the women in the area,” he says, adding he’s already changing his waiting area around by removing some of the overt male-oriented items in an attempt to make the area more gender neutral.
Moses Automotive’s Moses believes planning and partnerships will sustain today’s shops. A marketing plan should be in place at least 12 months in advance, along with an annual training program, he recommends.
Regarding partnerships, “By working with partners, you can market bigger, train easier and deeper,” he says, adding, “You must be willing to reinvest in every facet of your business. Your shop cannot look the way it did 10 years ago, and most important, you must invest in your people.”
“You have to be aware and take advantage of every opportunity,” advises C & M Auto Service’s Hartogh. “You can’t afford to lose customers.”
Butler also emphasizes a solid business plan for repair shops.
“At the end of the day, an independent can have all the ‘A’ techs in the world, but if they can’t get everything else in line, they can still see an erosion of their business,” he says. Pricing strategies need to be effective, and repairers should be well aware of what labor margins they need, adds Butler. “Return on investment and return on equity should not be abstract terms.”
