Motor Age: How have the OEMs affected your business this year?
Hippert: Yes, one of the growing parts of our business is on the OE dealer service side. Prior to Cash for Clunkers, OE suppliers were not in a hurry to supply low volume service parts that came with low margins and had to be delivered under tough scheduling and even tougher payment terms. This created a lag in supply for parts like catalytic converters, and led to an increase in the demand for aftermarket parts like ours that fit and function like an OE component. Now, in the aftermath of Cash for Clunkers, the opposite is happening. Manufacturers have ramped up to replenish depleted inventories, and suppliers are trying to keep up without having to add resources that they may only need for a short time. However, this effort to meet the demand for new parts is creating a shortfall with the inventory of service parts, which in turn is helping our business.Motor Age: What are some trends in catalytic converters that the industry can expect in the near future?
Hippert: Some of the new things you will begin to see will include a shift from the older style universal product that fits many applications to a direct fit converter that fits specific make, model, engine and even emissions type applications. With current OE designs, such as those that integrate pre-converters into the exhaust manifold, the technician has little choice but to use a direct fit converter. Eastern has been concentrating on not only making as many direct-fit units available as possible, including integrated manifolds, but also trying to make the units look, fit and function like OE.
Motor Age: How are your products influenced by recent (and future) environmental legislation?
Hippert: Our products are driven by legislation that not only continues to provide us with an increase in demand and market size, but also increases our development and product certification costs. Emission legislation now exists, in some form, in most countries throughout the world. While legislation continues to get more stringent on the automotive OE side, the aftermarket must keep up with changing laws and technology in order to offer a viable replacement part when needed. Most recently, the state of California changed their aftermarket legislation and literally split the U.S. aftermarket product category in two. Most manufacturers now supply products for the state of California that must meet legislation set forth by the California Air Resources Board (CARB) and 49 state products that meet EPA legislation. There may be vehicles, originally built to meet CARB legislation, that can now legally use a 49-state replacement converter if they are registered and being used outside of California. So, we have products that actually say "for CA emission vehicles, not legal for sale of use in the state of CA."
