Who is going to be taking care of vehicles in the future? If you look at the vehicle owner instead of the vehicle itself, you might be able to gauge how much business you’ll get in the next two to five years.
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A four-man panel at the Global Automotive Aftermarket Symposium (GAAS) has some ideas based on research their companies have done.
Dennis DesRosiers, founder and president, DesRosiers Automotive Consultants Inc., says the first owner of a vehicle will be much more closely tied to the dealership for his or her vehicle repairs, while the fourth or fifth owners will be more DIYers. The middle owners vary.
Bill Thompson, CEO IMR Inc., adds that dealerships are getting maintenance work because of loyalty, especially among baby boomers. He says dealerships get about one third of baby boomers’ business, but only about 18 percent of business from those younger than 30 years old. That means the aftermarket is getting about 80 percent of maintenance.
But, he adds, that dealership share has bounced back, because the OEMs cut lower performing dealerships, not just across the board a few years ago. They also are drawing strongly on their touch points throughout the period of a vehicle loan to bring first owners back to their bays.
Tom Langer, president, TLG Research, is not predicting the demise of the independent repair shop, but there might be some changes. He says these shops are working on vehicles no longer in the 4- to 6-year-old “sweet spot.” But what happens when you run out of those vehicles in the sweet spot?
He sees a potential loss of share, because these repair shops will be working on newer vehicles, meaning more investments in technology and training. If owners don’t invest, they will lose share.
Langer also says the car parc will refresh in coming years, adding to the aforementioned group of first owners going back to the dealerships.
But is it no longer aftermarket vs. OEM? Not really. Because of the maintenance and repair work they’re doing, it should be more generalist vs. specialist, or even DIYer. That’s how it’s viewed in Canada, according to DesRosiers, and it might be a more accurate way to see who is working on the vehicles in the U.S.
The lines are starting to blur, as Langer notes that the “specialists of the 1970s that were big on Hondas or Toytoas are now the general repair garages of the 2000s. Now we’re starting to see it splinter again.”
The one place where the difference between the aftermarket and the OEMs still hold true is with employees. Langer says the stratification of technicians can be seen between dealerships, which often can pay technicians better and offer better benefits compared to a small, independent shop.
“They clearly have a draw and a pull to the technicians,” he says.
The second group that tends to do very well with gathering good technicians are the franchisers, because they have a very strong business model, Langer adds.
“I’m not predicting the demise of the independent repair shop, unless they’re not investing in people and technology,” he states. “And with that then will go the vehicle owners. There’s loyalty in brand and warranty the older folks recognize, too.”
Long-term the dealerships might pick up a point or two in market share, DesRosiers says, but the real shift will be between the chain vs. the independents. “The independent doesn’t disappear in no way, shape or form,” but if the dealership picks up a point or two, as do the chains, that market share has to come from somewhere.
Thompson adds that as the specialty shops expand services, the independents are more susceptible to losing business to them rather than the dealerships.
“It’s definitely been happening, and we’re not talking 50 percent or anything, but we’re definitely plodding down that path,” he says.
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