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Developments and solutions for the new automotive aftermarket

Thursday, December 28, 2017 - 09:00
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The new aftermarket is rapidly developing, yet I witness so many shop owners not understanding what is really going on. 

Consider the following developments taking place:

  • The aftermarket business landscape is undergoing profound changes due to telematics, big data analytics, deep learning AI (artificial intelligence) and fleet service management.
  • In the not too distant future we will have autonomous vehicles and a shift from vehicle ownership to transportation as a service. Companies like Uber and Lyft are leading the way, but expect vehicle manufacturers, dealerships and car rental companies to shift their business models towards transportation as a service where autonomous vehicles are used by multiple riders.
  • Competition has/is designing an aggressive business model to carve out a large piece of market share.
  • Consider a vertical structure developing now over the horizontal structure –  manufacturer to distribution to jobber to retailer with quality parts by one company. The competition is looking to own the entire vertical from the raw materials to make the parts to installing and throwing the box away.
  • Big-box stores open 7 days a week, with long open hours in the service bays.
  • Targeting fleets such as Uber and others
  • Much higher than average tech wages to attract top young techs and then training the heck out of them.​
  • OE arena aggressively going after "service" business using their bays to promote used vehicle sales, as well as offering incentives encouraging used car buyers to return to their bays for service. Used vehicles are enabling dealers to expand their service bay activities to a broader mix of vehicle age groups and nameplates.
  • Uber, fleets, cars to go and ride sharing – many of the next generation has lost interest in owning a vehicle or even having a driver’s license. The number of 18 year olds who don’t have a driver’s license is the highest it has ever been. Getting around another way works for them, and this will continue the evolution of car share.
  • Maintenance is spinning down, so we must consider a current model and rev it up.

Solutions to understand

Learn to think like this: Here is what I do, as it won’t hurt my business to change in this direction. A clear focus must be on the operations of the shop. Here are some specific examples:

  • This business model won't hurt the independent when the shop owner is able to learn how to be an industry analyst to study other industries and see the effect of change and what it does. If this happened in that industry, how would such a change affect my industry? Analyze carefully and fix it.
  • We are not paid for what we do; we are paid for what we know – we are now in a knowledge-based business, and we must have a continuous learning culture within the business itself. Consider that the consumer is looking for solutions to their vehicle issues. You provide that because you have the right ongoing training throughout the shop at every level that provides and maintains the depth of knowledge required educating the client, counselling them and resolving their issues.
  • Change only two things at a time in your business, but complete depth of the change at a time, meaning a full overhaul of the change.
  • The business model of the independent must be to own the client by extreme personalized service. This can be done through managing all service intervals of their vehicle for them based on their mileage, how they use the vehicle and the clients' expectations with their vehicle. There must also be ongoing clear communication and continuous education of the client based on what's in their best interest. Become the family fleet manager and embrace the independent shop revolution called “Careful Customer Care."
  • Order a Car Care Guide for your customer/client base.
  • Stay up to date on telematics.
  • Consider loaner vehicles such as hybrids.
  • Also you may have to look at managing fleets that are owned by small companies. Build that relationship and prove how you can save them money with proper ongoing maintenance for safety and reliability. Do the math for them.
  • Avoid clumsy upselling. Instead become a counselor as to what is in the client's best interest. 
  • When working on all makes and models, a shop may take in everything, but often can’t go all the way on repairs — maybe 90 percent, but not 100 percent. Review the core competencies of your business — should we specialize in two or three vehicle brands and be the absolute best? All makes and models won't be a realistic business model when looking at training, equipment and facility investment required. Small town operations will have to do their homework and really study this. Perhaps it will be time to change the business model in a small town to a hybrid, meaning more focused on specific services. Thought must go into 1. how to tool up to go deep into one or two brands; and 2. what will be the ROI – what is it, keeping updates, software and ongoing training and tools.
  • Vehicle technology will change how labor is measured – maintenance labor, diagnostic labor, inspection labor, re-flash labor, calibration labor. Key information as to the mix of each labor category within the shop will be necessary, as specific training will be required to ensure shops has the right skill set. Measuring the effective rate will be critical in orer to determine how much labor we should be getting from each labor category to justify the staffing level.
  • Better job quoting skills will have to be embraced because knowledge of how a job must be done and what kind of labor is involved to complete a job to total client satisfaction must be learned.
  • We must be willing to continuously make small, positive changes to move forward and earn the clients' trust and their business. Building relationships is an advantage of the independent market and is building a business culture of excellence.
  • There is $60 billion of unperformed work out there, and 70 percent of it is hidden in aftermarket shop management systems databases. Mine the data that you have. Remember, it is for vehicle safety and reliability.

The opportunities for the independent sector are very real and very exciting. The new aftermarket will create well paid careers and not just jobs. Slow down and study everything in depth. Once understood, you will be excited about this new path because when you are clearly focused, you can and will beat the competition. 

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