Changing aftermarket landscape requires adaptation for all segments

Data access and telematics to pave way for predictive analytics and tapping into unperformed maintenance

Las Vegas—Insights into the future drivers of the aftermarket and opportunities associated with them were outlined recently by Bob Cushing, president and CEO of WORLDPAC and executive VP of Advance Professional, who was the keynote speaker at CAWA’s annual dinner in Las Vegas.

“I’ve never been so excited to be in the industry as I am right now,” said Cushing, a 40-year aftermarket veteran. “Industry fundamentals are very solid. Technology is developing exponentially and it’s only just beginning. We have to adapt to it and strategic partnerships throughout the supply chain are the key.”

He outlined how each aftermarket segment should concentrate their focuses.

 

OEMs need to secure core business

and strengthen their position:

• Increase customer centricity and segmentation

• Introduce multi-channel strategies

 

Suppliers need to explore alternative sales, branding and pricing strategies:

• Find alternative sales channels

• Multi-brand strategy based on best positioning for the company

• Move closer to the customer through forward integration

 

Distributors need to intensify

their digital service offerings:

• Embrace digital and analytics

• Participate in the platform game and customer data

• Be aware of growth and profitability trade-off

 

Repair shops need to adapt to professionalism, cope with increasing complexity:

• Invest in recruiting, training and equipment

• Adapt front-end toward new customer user-mindset

• Be smart about pricing

 

“We’re going to see more consolidation, because we know the ‘mom and pop’ shops can’t afford to invest in training. It’s the ones that are aligned with national players who can get the training [such as from Advance],” Cushing said.

Latest technology trends center around three areas: Safety (automated driving, demand for active safety features; Green (creating a greener planet, regulations for increased fuel economy); and Connectivity (demand for increased connectivity, seamless smartphone integration).

“Today’s vehicles have a 100 million lines of code, soon to be 300 million. They will essentially be smartphones on wheels and we need to be out in front of it with predictive analysis and having the right part at the right time. Our biggest, undisputable challenge is getting access to the data, and we need to work together to make sure we can get it.

“Data is the currency of the present.”

Dealerships are effectively using data, and telematics and remote diagnostics are changing how they manage their customer relationships, Cushing said.

He noted that dealerships are tapping into a $67 billion underperformed maintenance opportunity by contacting customers with proactive vehicle health emails and monthly vehicle diagnostic notifications.

“As result, dealerships are experiencing as high as 70 percent conversion rate on maintenance and repair opportunities and driving up revenues by 15 percent.”

After the recovery of low new-vehicle sales during the economic downturn, as many as six to 10 million vehicles will be entering the aftermarket sweetspot. Vehicles five years old have grown by more than 10 percent and vehicles six to 10 have increased by 18 percent, mostly driven by popularity of pickups, Cushing said.

New-vehicle import sales have grown from approximately 20 percent of U.S. sales in the early 2000s to more than 50 percent today. He added that consumers are holding on to their vehicles longer, up to 74 months as a result of financing.

Cushing reiterated that the aftermarket has strong drivers, today and moving forward, such as a strong economy, the demand for automotive service and repair, increased miles driven and increased vehicles in operations (VIO).

Parts & People

Parts & People is published monthly by Automotive Counseling and Publishing Company, Inc., a Colorado corporation, P.O. Box 18731 Denver, CO 80203, 303-765-4664. President-Lance Buchner. Founded by Lance Buchner and Dave Lucia.