Stealing victory from the dealerships

CHICAGO — Stepping up to the plate, the player who can take care of their customer best will knock one out of the park. Who wins and loses in the aftermarket ballgame is up to the person at home plate, guarding the end of the distribution channel — the consumer.

There are a number of variables to keep in check when it comes to commanding the ball and taking care of business. Getting work done right the first time, building trust and confidence, showing the service advisor/technician relationship, offering a fair price (not necessarily lowest price), getting the work done on time and providing guarantees are the key soft variables Dennis DesRosiers, president and founder of DesRosiers Automotive Consultants, says will boost the aftermarket.

"You're still the dominator in the marketplace," he shared with attendees of the Global Automotive Aftermarket Symposium (GAAS) in Chicago. "(This) is because this industry knows so well how to do all the soft stuff. The relationships, the trust, those kinds of things, if the car dealers ever learn the soft variables, then the independent aftermarket would be in really big trouble. The soft cynics would say they're not going to get it, but anyone who listened to (Nancy Fein of Lexus present earlier) would say, Lexus has got it."

Dealerships do not do well with the soft variables, but have mastered hard variables that draw consumers in: new vehicle warranties, extended warranties, modern equipment, OE quality parts, understanding technology, the ability to fix and parts availability, according to DesRosiers.

He offered these suggestions and other descriptions of the game against dealerships in his GAAS presentation "It's a New Ballgame: Which Team is Winning the Service and Repair Battle?"

Going through the window
To nail down a consumer, there are four windows of entry, DesRosiers illustrates: new vehicles, automotive finance, used vehicles and aftermarket.

"Put the consumer into the middle of this auto sector, and ask what fundamental good is the consumer buying?" DesRosiers poses. "In many terms, they are very often just buying miles, or in Canada they are busying kilometers. And they can either buy new kilometers or used kilometers."

Inside these windows are a number of value chains, and the dealer is the only one to have a presence in each one. "That gives them a special power that other players do not have," DesRosiers says.

The dealers now more than ever are battling on more fronts than the traditional aftermarket. One of the biggest battlegrounds is the oil change.

"The oil change is turning out to be the battleground, and car dealers know this and they know this cold," he says. "The reason it's at the center is that it triggers so much of the maintenance repair work."

If the dealer does the oil change, DesRosiers notes that it gets 94 percent of the other work. Even if the vehicle is 15 years old, it still is getting 80 percent of the work. If an aftermarket repair shop does an oil change, it will get 84 percent of the work.

"We all know maintenance repairs are close to who sells the vehicle. We have always known that," he states.

Aftermarket retention during the early years of ownership for used vehicles also is high. If a new car dealer sells the used vehicle, it will get the aftermarket as well. "If the car dealer sold that vehicle used, in every single model year he got more aftermarket than if he didn't sell that vehicle," DesRosiers reports. "The curve still goes down every model year…but if he hadn’t sold a 10- or 11- or 12-model year vehicle, he might have only gotten 5 or 6 or 7 percent."

Quality, not quantity
With vehicles lasting longer, there are more owners per vehicle now, meaning more chances for maintenance and repair work. Where vehicles used to have three owners in their lifetimes, many now go through four. The second owner is the "new market niche" and a key target for the aftermarket.

"That second owner is really a battleground in the used vehicle marketplace," he adds. "It is really important for the car dealer from an aftermarket perspective."

They also get extra cracks at the second owners because the improved quality of vehicles has lead to leasing. DesRosiers says dealers now have to sell up to one-third of their vehicles twice because of leasing.

"If you actually track maintenance on leases, there is less aftermarket work done on a lease than ownership," he says. "That's a positive for this room, because the aftermarket doesn't do much in the first four years and because the guy didn't do proper maintenance in the first three, four years, that benefits the aftermarket."

Despite the dealerships' attempts, he says the aftermarket has held its ground as best it can, but has lost some of its share. "But how long will this continue given some of the power they have going behind them?" he questions.

Image is everything
DesRosiers says the independent aftermarket still has an image issue it must overcome, in addition to training and improved management skills. This is because people at these shops often use English a second language, have poor selling skills, are not aggressive and have weak customer handling skills, especially with female maintainers (who prefer dealers), he offers.

"There are a number of programs out there that work and work very well," he continues. "But they still cut not as wide of a swatch through this industry."

By improving on these aspects, the aftermarket can battle through the competition and come out ahead in the game, especially since a new section of opponents is coming into view. Import nameplates are of growing concern, DesRosiers notes, as their popularity is due in part to their lower repair costs. For example, he reports Japanese vehicles have $9,000 to $10,000 worth of repairs in their lifetimes, while domestic vehicles have $11,000 to $12,000 worth of repair.

"The consumer has a lot of value in that product," he says. "Are they going to risk that value?"