â€œSo letâ€™s focus on the independent automotive aftermarket retailer.Â Right now, the next five years could seem a daunting prospect. Not only is the economic climate endlessly miserable but just when everyone had stocked up with winter products there was barely a frost!
We all know what the challenges are going to be – supermarkets taking a bigger share, declining footfall in the High Street, large multi-site factors making hard parts very competitive, and those annoyingly entrepreneurial hand car-wash people stealing what used to be bread and butter shampoo and wax sales.
It is easy to predict the steady decline of the smaller automotive retailer.
But it doesnâ€™t have to be that way. There is opportunity. Wiser heads than mine will talk about harnessing the experience and expertise of the staff, providing advice and knowledge that the multiples canâ€™t, adding services that create value and convenience for the customer, not trying to compete on price alone.
All of that is vital, but wasted without communication.
Customer loyalty starts with the retailer. Find out who your existing customers are. Capture e-mail addresses. Build a database. Talk to them.Â Involve them.Â Decide what makes you unique in your locality. Promote what you have to offer.
Find ways of extending your market reach through existing customers.Â Be creative about expanding your audience.Â Use the technology that is all around you and is largely free.Â Never before has personalised marketing been cheaper or more effective. This is todayâ€™s world.Â Those that embrace it will prosper.â€
CEO, Saxon Distribution
â€œThe automotive parts industry could look very different in five years time. The hybrid electric vehicle will be taking a bigger share of the car market, as consumers will need a mortgage just to fill up their vehicle with conventional fuels. The car manufacturers will be introducing even longer warranty periods in an attempt to keep customerâ€™s vehicles in their workshops for even longer periods.
This will all have an effect on the aftermarket parts business, as an even greater proliferation of part numbers will be needed to service the customers ever increasing demands for the right part, at the right price and delivered at the right time.
As well as the challenges this will present to the industry it will also produce an array of opportunities, with products from the new breed of cars having an increasing demand in the parts aftermarket and selling for a much higher value than their current day equivalents.
The bottom line is, even in five years time as today those who listen to their customerâ€™s needs and requirements will continue to flourish and be successful, while those that donâ€™t will cease to exist.â€
General Manager, XPart
â€œOver the coming years we predict a growth in popularity of ‘cloud computing’ solutions as garages, factors and retailers look to streamline their IT procurement and maintenance.
Fueled by media coverage and the attraction of simplicity and lower investment, the aftermarket is becoming increasingly aware of the benefits of cloud computing. Interest is steadily gaining momentum and we anticipate an increase in the deployment of hosted and web-based solutions.
Cloud computing solutions provide an alternative means of acquiring and using software. Rather than purchasing softwareâ€ up-front and installing hardware on-premise, users rent their software ‘on demand’ as a service over the internet.
By utilising existing hardware and charging on a per-user basis, the cloud delivery model reduces the up-front capital investment and improves monthly cash flow. And because the service is fully managed by the vendor, it also alleviates the burden of hardware maintenance, software updates and data security.
We also expect to see more aftermarket companies utilising innovative e-commerce and mobile solutions to improve purchasing efficiencies and enhance customer service. Often embedded within or connected to cloud solutions, features like portals, websites and electronic ordering not only streamline sales and purchase transactions, but also add value to business relationships and encourage customer loyalty.â€
TMD Friction has just achieved what can only be described as the â€œHoly Grailâ€ in friction material development through the Epad. Without compromising on the safety aspect of brakes, TMD Friction invests millions into the comfort factors of braking, in this particular case a â€œno noise, clean wheelsâ€ material.Â Traditionally these materials have been targeted where there is a low braking performance requirement such as North America and Asian markets which leads to a lower friction performance and longer stopping distances.Â Conversely in European markets every brake pad has to achieve a higher friction performance of which dust and noise are often symptoms of achieving performance and temperature resistance.Â Epad solves this issue, using unique new technology epad generates performance from a friction material transfer between the brake pad and the brake disc, this transfer layer delivers cleaner braking performance by reducing wear of both pad and disc, not just almost completely eliminating brake dust from the wheels but also increasing the life of both components.
Vehicle manufacturers have for their own reasons kept the identification of parts complicated and continue to do so.Â TMD Friction is investing time and money to ease this pain for its customers.Â Â A more comprehensive VRM lookup (Vehicle Registration) is being developed as we speak along with strengthening key partnerships with counter top catalogue database groups such as MAM.Â The ambiguity of parts identification is becoming a thing of the past and the days of sending numerous combinations of parts to a garage on the basis that some of them â€œmightâ€ fit are now limited.Â But what of paper catalogues?Â Is the industry now seeing the demise finally of the â€œindustry biblesâ€ as motor factors and garages alike take to technology?
There is an increasing issue of internet trading where members of the public are able to go and purchase their parts on-line and then take them to the garage for fitting.Â Are these parts reputable?Â Given this situation and a subsequent component failure does not the liability therefore lie with the garage that fitted the part?Â Does it damage the profit stream of the distribution chain?Â Garages have relationships with local motor factors but parts can be bought from anywhere in the world by a member of the public, the local garage still gets the business but the motor factor misses out, where does it leave this long term relationship?Â It is promoting localised price wars through price matching which for the consumer is great news but the opposite for the industry driving down profitability therefore pressurising cost, which in turn can jeopardise safety.”
“Whatever the world economy throws our way itâ€™s unlikely to see a decline in the worldwide use of the car, so there will continue to be a need for an efficient and competitive aftermarket. This may see some weaker businesses not surviving whilst the stronger ones will invest and grow.
In difficult times, itâ€™s a wise and possibly brave man who invests for the future. Those that donâ€™t invest will fall by the wayside as they cannot react to the changing market place. Investment can be financial but it can also be practical, helping the trade to understand new products and making them easy to sell to their customers
It will become an increasinglyÂ technology driven market place as vehicles continue to become more and more complex with the drive towards even greater fuel efficiency. The lighting market has been particularly dynamic over the last few years with the introduction of new technologies and product innovations and we see no reason for this to change. Ring has been at the forefront of developing the performance lighting sector and this now accounts for a large part of the market. Ring has also developed charging systems to suit the very latest battery technologies for the next generation of vehicles with Stop Start.
The average driver is less competent at DIY than 10 years ago. They are less likely to be able to change the consumable items on the car never mind attempt a service. Garages and retailers should seek to capitalize on this. By offering to change a bulb or fit a wiper blade at a competitive price they can not only earn extra profit but by going that extra step will create customer loyalityÂ and repeat business.
We repeatedly hear the apparent threat that the internet brings to all established distribution and in particular, the effect it has had on conventional music and book sales but the experience of my own daughter is typical of many new younger drivers.
She is a typical on line consumer buying books and music via the web but regularly returns to the small independent garage in Nottingham to look after her car. The reason ?Â They took the time and went the extra mile. When she needed to replace a broken mirror glass, they didnâ€™t patronize her, chargedÂ sensible prices for the lens and the fitting at a time that suited her. Itâ€™s not rocket science, but a simple friendly approach particularly to new female drivers, will reap its rewards.
The auto trade has the opportunity to add value to what it does creating long term sustainable sales. As drivers retain their vehicles for longer there is an opportunity to sell added value products to those drivers. Getting drivers to upgrade to Performance Halogen bulbs or Long Life bulbs will benefit both the driver and the retailer and grow the market.
Changing a bulb is more of a challenge than before so it makes sense to fit only quality bulbs that are built to last .
Theâ€ instant solutionâ€ generation will rightly demand the best products to be delivered quickly and competitively. Suppliers will need to be equipped with the latest technology products or offer products that support those products.
That alone will not be enough as consumers are faced with a bewildering choice of suppliers through both the internet and conventional supplier routes.
When it comes down to it, itâ€™s the whole package that will count ,sure price will always be a factor, but the reason to return to a supplier will be a key driver for the future.
It will be that point of difference that will mark out the suppliers of the future both to the trade and the consumer.
Itâ€™s the added value that a supplier delivers that will see that supplier rewarded with business growth.”
Marketing Director, Ring
â€œThere will be further consolidation with investors seeing the automotive aftermarket as offering a good business opportunity.
LKQ will lead the way in reshaping the crash and repair market, brokering deals with major fleets and insurers.
I foresee possible vertical integration in certain areas of the industry and increased internationalisation of the European markets.
Technology continues to develop and will lead to opportunities for good workshops to invest and specialise. Those small workshops that lack motivation will disappear.
Manufacturers need to ensure best possible access to required data to enable workshops to continue to repair effectively.Â There is a huge opportunity for groups/manufacturers to facilitate bundles of support initiatives to help them.”
Managing Director, Schaeffler Automotive Aftermarket
“Unfortunately I can see the industry shrinking over the next 18 months to two years.Â Too many people in the motor trade have revelled in past glories while the trade has moved past and now they are not in a financial position to do what is required to survive this recession.Â Also there has been a general down turn in footfall and add on purchases that has had a ripple effect throughout the industry.Â It applies to all sectors of the Trade, suppliers, retailers, factors, garage etc.Â The problem is that luxury purchases have gone downhill considerably and people are thinking long and hard before buying anything.Â The key now is providing the end user with as much information as possible to avoid any margin of error and ensure that the next inquiry they make comes through your door.
However, there have been many success stories in these areas.Â Distributors have been able to capitalise on the reluctance for shops to stock, online sellers have been able to stretch into new market places, suppliers have been investing in new and innovative products to try and prevent stagnation and retailers have been branching into hard parts and garage equipment.Â Those who will survive this recession are those who are looking to identify USPs within their market place and who support their customers/suppliers.”
“I believe weâ€™ll see further consolidation in all areas of the industry, from vehicle manufacturers, part suppliers and factors.
With car sales still relatively low (and likely to remain so for sometime), the vehicle manufacturers with their many trade club incentives are clearly trying to take a bigger percentage of the aftermarket as they look for other opportunities. This is also evident by the likes of Hyundai, Kia and Vauxhall offering extended warranty periods or parts for life initiatives.
As consolidation in the market inevitably means that some companies will get bigger, it doesnâ€™t necessarily mean theyâ€™ll get better. There will still be opportunities for smaller well-run companies who deliver good service and support to their customers to thrive and develop. These companies, who treat their customers well and not just as an account, can provide something the big multi-nationals canâ€™t.
However, businesses of whatever size will only be able to survive by improving their business efficiencies and identifying the right part first time is integral to these efficiencies, whether it is at the supplier, distributor or installer level. This means that accurate parts catalouging throughout the supply chain will be a necessity, not a luxury.
We all need to work together for the good of the independent sector and ultimately for the good of the motorist. We can deliver every bit as good a service as the franchised dealer, but without the cost.
As the vehicle manufacturers donâ€™t actually produce replacement parts, the dealer should be the last place that the workshop should turn and not the first.
Accurate, comprehensive data updated regularly will be the key to delivering the customer service that will be required moving forward and to keep up with the vehicle manufacturer/franchised dealer. The more we can do for our customers the better the benefits will be for all of us.”
Commercial Director, TecDoc UK & Eire
“Well if the movies are anything to go by then by the year 2015 we will all be in flying cars powered by nuclear fission…back in reality I can only dream about flying Delorians. However it is clear that although vehicles havenâ€™t taken flight yet they are getting more complex as manufacturers strive to meet even tighter legislation, save weight and build class leading products.
The opportunities will be where simpler products become more and more complex. In years passed, for example, exhaust systems would consist of pipes and mufflers and more recently converters and diesel particulate filters. Today, to meet future emission targets, manufacturers are forced to add further parts to the exhaust system to trap, filter and control the exhaust gases. This will turn an easy to fit exhaust into an emission control system complete with its own control unit, sensors, additive and other ancillary components. So the opportunity is clear; more complex will equal more parts in a system and potential more things to go wrong. It will also bring up the challenge of being more difficult to diagnose problems and failures and what actually needs replacing to correct the issue. This is just a small example on one product group
Continuous training will be paramount to understand the evolution of a vehicle and how the systems fitted to it work and interact with each other. That applies whether you are a parts distributor or a garage. How can you truly do the job right if you donâ€™t understand the parts you are selling or fitting?”
“Distributors, wholesalers and retailers that do not adapt and include new means of revenue including on-line and direct sales are businesses that are more likely to suffer a decline in the current economy over the years to come. Investments in I.T are crucial to deliver and develop these new solutions for the future. Distributors need to step up by increasing their service offering to customers by supplying Just In Time and offering a one stop shop.
Retailers are also increasingly looking to consolidate suppliers that are able to offer a more comprehensive service. Retailers must differentiate according to the level of the service they supply, such as technical support, help with identifying correct fitments and if location of store allows, then providing a free fitting service on items like wiper blades. The increase in components adds complexity. Vehicle reliability reduces potential sales opportunities longer term but the added expertise required to service the additional complexity creates its own profit opportunities. Ultimately, UK businesses will need to expand outside of the UK and Europe into emerging markets that are not as sophisticated to enhance growth.”
Over the next five years, I think we will see more market consolidation; right through the supply chain from manufacturers and suppliers, to distributors and garages. The strong will partner with the strong to remain competitive. More emphasis will be placed on service; it will be the added value a company can offer which will make or break a deal, as in the current climate price cannot continue to be the only differentiator.
In five yearsâ€™ time, the aftermarket will operate on a more global level. This means we will have to adjust to fewer independent customers. But those that remain will be larger, international and in some cases, global. Customers of the future are likely to be bigger in terms of size and scope than the trading groups of today. Organisations of that size develop their own unique culture, and create a specific way of doing business. Our challenge will be to successfully adapt ourselves to the different requirements of each customer. These future â€˜superâ€™ customers will increasingly develop functional specialisms such as: product marketing; supply chain management; technical data services and channel marketing.
TRW announced its most aggressive growth strategy to date last year with a program to open or expand 11 plants during the 18 month period from the second quarter of 2011.Â Â Â Nine of these openings/expansions are in China; weâ€™ve opened a new braking plant in Mexico; a new steering plant in Poland and our first aftermarket sales office in Dubai, Middle East.
No matter how tough the climate is, there are always opportunities for forward thinking business that have economies of scale and resources to invest. The challenge for the independent garages will be the level they can afford to invest in diagnostic training. A mechanics role has always been about diagnosing problems accurately; with the increasing complexity of vehicles and their electronic systems this is only going to get tougher.
The market needs to manage and overcome the fear and problems caused by the current economic climate and continue to forge ahead and invest. Invest in people, invest in diagnostic equipment and training, invest in more advanced data and scheduling systems, invest in stock.
By doing this, we will modernise at levels of the supply chain and emerge with a stronger industry than ever before.
Suppliers need to invest in bringing the latest technologies to market and not just allowing them to be supplied through the OES channels. Suppliers also need to invest in ensuring the data supplied is 100% accurate and easy to use and most importantly that ranges available are second to none. At TRW we pride ourselves on being an OE supplier and as such we have a head start so we invest very heavily on being first to market with products, technologies and range extensions.
Distributors need to invest in having the right stock available and being able to correctly supply the right part first time every time (obviously a lot of this depends on the supplier getting the data right in the first place!) but the distributor needs to understand how to correctly use the data supplied.
Garages need to invest in the latest diagnostic equipment and training. Marketing, up selling and cross selling is important â€“ when a customer needs new wheel cylinders, do they need new shoes?”