I always enjoy the opportunity to attend a conference and simply listen and learn — not presenting or organizing the speakers and panels — and even more so when the conference is not specifically a market that MacKay & Company focuses on.
Last week, I had the occasion to attend an Automotive Aftermarket Supplier Association (AASA) special conference. The conference was designed to provide perspectives from passenger car manufacturers, dealers and suppliers on their current strategies to grow the OES business as well as their future plans. MacKay & Company does not typically complete any research or consulting projects related to the passenger car on-highway market, so it was interesting to learn about this market.
One thing I did notice (and it was nice to see), was that in at least one area, the medium and heavy duty aftermarket is not trailing the automotive aftermarket as we are often told.
I learned car dealers in the aftermarket parts arena are generally reactive and not very proactive, whereas the independent channels in the automotive parts market are very aggressive (this pattern sounds similar to the heavy duty aftermarket). Car dealers get a large portion of their parts sales (outside of their repair and body shops) from answering their telephone. I am sure there are many exceptions to this – it was mentioned that the smart car dealers have begun to train their parts departments to be more proactive by going after wholesale business and making it easier for customers to do business with their dealerships, even those customers who work on their own cars.
Apparently, car dealers also are getting some help from market dynamics to drive more of their focus on the aftermarket. New car sales are plateauing and not expected to grow; people are keeping cars longer because they can and because dealers now offer financing options for 72 months and sometimes longer. Not only are cars lasting longer (we used to scrap a car at 100,000 miles, now that number is closer to 240,000), but many young folks don’t even want to own cars.
I remember when I first started in the medium- and heavy-duty aftermarket industry (for reference, the Buffalo Bills had not been to a Super Bowl yet), it was the case with many truck dealers to be more reactive than proactive, but to the disappointment of the independent parts distributors, this is no longer the case.
Truck dealerships have many businesses and often for more than one brand. In the past, when staffing a dealership, it wasn’t uncommon for those who were considered to have strong skills to be placed in the new vehicle side of the business and those who were considered not as strong to be placed in the parts department. After all, they just had to answer the phones.
Over time, truck manufacturers and dealers started to realize the importance of strong parts and service departments and how they can add to their bottom line, especially when they started looking beyond the revenues for the source of the dealership’s profits. Markets often helped with this education because when retail sales drop (remember the truck market historically has been a dynamic market with many peaks and valleys), a smart dealer understands the key necessity of a strong parts and service organization to carry the dealership through the valleys.
Now we see both the OES and independent sides of the heavy duty market using creative, aggressive ideas and programs to garner more share of the aftermarket. Both sides have learned the importance of having the people with the strongest skills in this area and it is exciting to watch.
Truck Parts & Service September 2018, Article by John Blodgett