LAS VEGAS — “Driving the Road to Recovery” was the theme of this year’s Town Hall meeting, hosted by AAIA, brought to attendees by the NASCAR Performance family of automotive products, and moderated by Kathleen Schmatz, AAIA president and CEO. A distinguished panel representing manufacturing, distribution, retail and the service and repair sectors discussed how their respective segments of the channel were impacted by the economic recession, and shared their thoughts and projections for the year ahead.
AAIA Town Hall panelists (from left): Jim Dykstra, Rusty Bishop, Bill Rhodes and Larry Sills share the stage with moderator Kathleen Schmatz.
Panelists were: Larry Sills, CEO and chairman of the board of Standard Motor Products; Bill Rhodes, chairman, president and CEO, AutoZone; Rusty Bishop, CEO, Federated Auto Parts; and Jim Dykstra, owner of Dykstra’s Auto Service, Hudsonville and Byron Center, Mich.
Topics ranged from investors’ view of the aftermarket, the rapidly expanding pace of vehicle technology, shop efficiency and vehicles per bay, parts proliferation, attracting quality employees, green initiatives, Cash for Clunkers and the growth of imports in the marketplace.
The resounding message from panelists was that the aftermarket is incredibly resilient and is well positioned to provide growth and profit opportunities for players that lead the market through innovation, highest-quality product and service offerings, and a value proposition that helps customers throughout the distribution channel run their businesses more efficiently and profitably.
“We as an industry control our own destiny,” said Rhodes, who emphasized that success hinges on better serving customers.
Despite slumping vehicle sales, opportunities abound in the aftermarket. Panelists concurred that an aging vehicle fleet, coupled with the fact that miles driven is recovering and the number of vehicles per household is increasing, will generate repair and service opportunities as consumers understand the link between maintenance and vehicle longevity and performance. Dykstra noted, “Consumers want to protect their investment by maintaining it.”
New vehicle technology and the impending proliferation of diesel, hybrid and electric vehicles on the road will present both challenges and opportunities for the aftermarket.
“We’re going to have to figure out how to not go broke carrying and handling all of this inventory,” explained Sills.
Rhodes countered, “There are so many elements of the car that will remain the same, and we will have the time to understand the new technology and get ready to serve our customers.”
Bishop commented that new technology will positively impact the aftermarket because of DIYers’ inability to handle increasingly complex repairs.
Shop efficiency becomes more critical, as the number of vehicles per bay continues to increase. Schmatz said that AAIA research indicated there were 193 vehicles per service bay in 2006, 205 vehicles per bay in 2009 and there is no slowdown in sight, with a projection for 2010 of 215 vehicles per bay.
Dykstra, who has 16 bays and eight technicians among his two shops, commented that technician efficiency can be boosted through internal processes and also by sharing information with suppliers so they know what to stock, which increases order fill and speeds parts delivery. His “first-call” supplier provides him with 20 parts deliveries per day.
Panelists agreed that there is a talented, skilled pool of prospective employees in the market, prompted by company downsizing in this challenging economy and dealership closings. The aftermarket’s solid track record of steady growth makes it attractive to this labor pool.
The panel also emphasized the importance of the aftermarket getting credit for being “green” before green was cool. The industry’s long-time tradition of recycling batteries, oil and cardboard and remanufacturing engines, for example, speaks to its commitment to green initiatives and sustainability.
While the panelists felt that the “Cash for Clunkers” program negatively impacted the aftermarket by taking 700,000 repairable vehicles out of the market, they are hopeful that the volume of negative press will prevent it from rearing its ugly head.
An industry bright spot is the continued growth of import nameplates on the road. The aftermarket can maximize its share of this proliferating market by working together to convince vehicle owners that we have the technology, training, expertise and the parts to fix their vehicles.