Aftermarket faces headwinds as data proliferates and OEs challenge market
Bethesda, Md.—Vehicle technology is impacting all segments of the aftermarket community, as well as consumer repair choices, as data information and its accessibility becomes a battle ground for market share with OEs.
“Aftermarket product development will face greater challenges as the industry moves forward,” said Mike Kealey, senior vice president of product and business development for Dorman Products, who was a panelist on a recent teleforum, “Top Business Challenges 2017,” presented by the Auto Care Association and SalesWise.
As products are increasingly using embedded software and code protected by the Digital Millennium Copyright Act, they present difficulties in reverse engineering for aftermarket manufacturing.
“It’s only a matter of time before the OEs move to encrypted data across vehicle communication networks,” he said. “From our standpoint of trying to understand how data fits and functions, it will become increasingly more difficult. If the aftermarket continues to produce goods, but can’t produce the software for them to function, it undermines the aftermarket’s value proposition to consumers.”
Panelist Larry Pavey, president of Federated Auto Parts and CEO of The Group, added that data information must be made available to all levels of the aftermarket while remaining sensitive to any concerns the OEs might have [such as cyber-security]. “Ultimately, our industry and technicians need to be able to successfully service the consumers and the solution will be partly legislative and good communication between industry associations and OE manufacturers. The information needs to be available to the marketplace.
“Vehicles will continue to advance in self-diagnosis and the communication between the vehicle and shop will be imperative.”
For installers, the investment in equipment and training required to mate those aftermarket products to vehicles will significantly intensify, Kealey said. “Data ownership is an issue with many tentacles, and it affects all of us throughout the aftermarket supply chain directly.”
Panelist Jim Dykstra, director of telematics for Innova Electronics and a multi-shop owner, said the industry has been, and will continue to be, resilient. From a shop’s perspective, if the needed replacement part is not readily available in the aftermarket, however, then shops quickly develop a habit of buying from the OE.
“The OEs are being aggressive with that,” he said, “so we have to make sure the industry has good communication so it doesn’t lose those sales opportunities. Shops need to know what is available and that there’s proper support and training. Segments above the installer level have to come up with new and innovative ways to help their customers stay in business.”
Information is key, Dykstra said, and the aftermarket must make sure it has an affordable means of acquiring it. But first, it must be made available. “There’s only 16,000 OE dealerships in the U.S., so they need the aftermarket, but in five or 10 years will there be a working relationship to have access to the needed information and tools? That’s the question that needs to be on the table. We need a fair playing field — for all segments.”
There must be an end-to-end solution. The independent installer can’t afford to do it on its own, he said, and it must be supported and worked on through all aftermarket segments. “We need to make the public aware of the aftermarket’s importance and send the message with a unified voice.”
Kealey added that the industry must do a better job of coordinating its efforts, because “the OEs are much better at that than we are — they have more lobbying and legislative power and funding than the aftermarket. We have a better chance at a solution if we can educate our constituency and operate with one message.”
Information needs to be available to the independent repairer as it is the OE dealers, Pavey said. Parts will become more complex with more embedded software and there will be a desire from the OEs to lock out some of that information. “There will be a test coming of the OEs and aftermarket of working together from a service, distribution and manufacturing standpoint.”
Consumer data awareness
The industry needs to determine how to get its message to consumers that they have a choice as to where they have their vehicles serviced and repaired, Kealey said. “I would venture to guess that the vast majority of the motoring public doesn’t associate their vehicle as being a data producer with an operating system as they would their home computer. They would be surprised if the OEs told them they don’t have an implicit license to their vehicle software. They also don’t have a full grasp that their car is telling the OEs a lot about them, such as habits and geo-locations — and doing so without their consent.”
He added that by educating the consumer, the aftermarket can put a lot of pressure on representatives and OEs to figure out a mutually beneficial solution to allow consumers choice.
As an example of the proliferation of electronics and data in vehicles, Pavey said the CES (Consumer Electronics Show) has “really evolved into an auto show, because everyone wants to become involved in connectivity.
“Change is coming and it’s coming faster than we ever thought. As an industry, we’re going to have to keep up make sure we’re hitting all the bases.”