Might we see a resurgence of traditional motor factors?
Peter Cox is Managing Director of parts supplier Motaquip
As we exit lockdown and emerge into the world of ‘New Normal’ everyone is engaged in speculation about what it means for them, their businesses, and the wider sector.
On the large and National factor side we have already seen the sad demise of Andrew Page, and there are industry rumblings about other businesses planning branch closures. Reductions in headcount, rationalisation of sales forces and cutbacks in office staff are going to be part of the unfortunate reality for some.
However, this is by no means the rule and there are plenty of positives to report. I am seeing many independent factors flourishing in the post-lockdown world – some of the best performers are reporting they are busier now than during the same period last year! Interestingly this is being achieved in some cases with fewer staff and reduced delivery frequency. This may be due to independent garages rewarding the local businesses that supported them during lockdown or a response to a reduced service level from some larger companies in the wake of COVID-19. It is also possible more vehicles are migrating from dealers to independent garages as motorists seek to reduce service and maintenance costs, but only time will tell what is driving these trends.
For parts suppliers, it is again a mixed bag. Those prospering currently appear to be the brands that principally supply the aftermarket with many returning to pre-Covid revenue levels, or even higher. However, for some of the large OEM’s the story appears to be less rosy. Hit by the fall in OE line supply and dropping VM demand there is already evidence of budget cuts and the outlook for this sector appears gloomier particularly with an anticipated move to lower cost parts in a recession.
While the whole aftermarket has been shaken by the impact of the past four months, the process of getting back up and running gives factors the opportunity to re-evaluate their cost base and service levels. The disruption caused by the pandemic has offered the sector a one-off opportunity to reset market expectations in terms of speed and frequency of delivery. Having already seen branch and staff reductions, with potentially more still to materialise, the independents appear well placed to compete with a more regimented and cost-effective service, as opposed to operating at the frenetic and potentially unsustainable pace that existed pre-lockdown.
The good news is the aftermarket as a sector is well placed post-Covid. Motorists will keep cars for longer; seek to reduce servicing costs and drive more miles to avoid public transport. These trends, along with a return to normal MOT’s and the work generated by the backlog, will drive more motorists to the sector.
So how can independents not only survive but thrive after the crisis? The answer for many will be a return to basics. Firstly, ensure you have the right stock on the shelf and minimise your reliance on same day and emergency supply. Now is a good time to revisit your stock profile and order those all-important ‘new to range’ parts. Secondly, ensure you are offering a competitive service and price by understanding your local market and tailoring your offer accordingly.
For me however, the most important step is communicating with your customers. As an industry we are predominantly reactive not proactive when it comes to communication with customers. Whether you are a distributor, factor or garage it is important to set aside time to contact your customers. Some may need reassurance, others specific help related to the pandemic, but all will be pleased to hear from you and grateful for your support. Use this time to find out how customers are getting on, what challenges they have, and understand how your business can serve them better.
There are still challenging times ahead for every business, taking time now to re-engage with customers and plan for the ‘New Normal’ will put you in a stronger position to weather future disruption from whatever direction.