by Amy Antenora, Managing Editor, aftermarketNews.com
CHICAGO — The second day of the 2005 Global Automotive Aftermarket Symposium (GAAS) in Chicago included an overview of the aftermarket industry’s efforts to reach out the public and Wall Street via initiatives like the Be Car Care Aware campaign.
Morgan Stanley analyst Jonathan Steinmetz kicked off the Thursday morning session of the Global Automotive Aftermarket Symposium with an in-depth look at Wall Street’s view of the aftermarket.
Of course, the OE sales cycle affects aftermarket growth. Japanese makes are proving strong, growing at a rate higher than domestic automakers. Interestingly, owners of Japanese nameplates are more likely to use the DIFM service channel than owners of domestic vehicles.
Steinmetz discussed his view of the aftermarket of tomorrow, which includes:
- Mix of trucks vs. passengers cars to change
- Percentage of luxury vehicles to increase
- Domestic vehicle manufacturers to lose share to Japanese
- Vehicle complexity increasing
- SKU growth
In the short term, 2005 looks to be a decent (but not great) year for the aftermarket. The negative factors that are currently impacting the aftermarket are high fuel prices, the rising cost of raw materials and higher short-term interest rates.
Steinmetz said investors view the aftermarket as a stable market investment. He also said Morgan Stanley currently prefers retailers/wholesalers versus the manufacturers for investment opportunities. However, he said suppliers can win with low cost and stronger relationships. As the Automotive Aftermarket Industry Association points out, price is not among the major drivers of brand choice. Therefore, Steinmetz said, there is opportunity for manufacturers to improve margin, which may be aided by consolidation.
FEDERAL-MOGUL EXEC. PROVIDES BE CAR CARE AWARE UPDATE
Jay Burkhart, Federal-Mogul vice president of global marketing and chairman of the Car Care Council Advisory Board, gave GAAS attendees an update on the progress of the Be Car Care Aware Campaign.
Be Care Aware, which is a consumer education campaign, was launched four years ago in the U.S., and Burkhart said the campaign is “picking up steam” in Canada. The campaign uses television opportunities, on-going press release distribution that targets radio and print channels, as well as brochures and dealer kits.
Burkhart stressed that the Be Car Care Aware Campaign is different than a mass-media campaign, such as the well-known “Got Milk?” campaign. Be Car Care Aware, as a publicity campaign, has a much higher return on investment, he said. Since its inception, the campaign has a five-times increase in TV interviews, 46 broadcasts of video releases and six national TV appearances. Additionally, there was a 150 percent increase in supplemental articles. The campaign Web site www.carcare.org now gets 100,000 hits per month.
Burkhart said the campaign’s foundation is firmly established, and is gaining media interest. He stressed that the campaign must remain topical. For example, as gas prices rise, the campaign needs to address that current topic as it relates to vehicle maintenance.
National Car Care Month April in the U.S. and May in Canada remains an important part of the overall campaign. Several states now officially recognize April as National Car Care Month.
A steering committee was formed in late 2004. The participants on this committee include professionals from Bosch, Affinia, Aftermarket Auto Parts Alliance, CARQUEST, Delphi, Federal Mogul, NAPA and O’Reilly.
Burkhart unveiled a new Be Car Aware promotional video featuring NASCAR drivers and industry executives talking about the importance of vehicle maintenance both for the industry and consumer safety. The video was developed for use in educating employees, program group members and the like.
“The publicity is working,” said Burkhart. The challenge now, he said, is in creating fresh content and generating better ways for consumers to communicate with technicians.
In 2006, the BCCA campaign intends to focus more on ‘middle-aged’ cars. According to Burkhart, there will be a bigger fleet of 6-13 year old cars on the roads in the next few years than ever before. The campaign is working on a vehicle service manual for out-of-warranty cars, hopefully to launch next year.
BUSINESS CONSULTANT OFFERS PERSPECTIVES FOR THE FUTURE
During the second half of GAAS, business speaker and coach Donald Cooper outlined the keys to defining a compelling and profitable purpose for businesses.
As a motivational speaker, Cooper works with clients in 48 different industries helping them to achieve one simple goal running their businesses better.
“Your business is just like your life,” said Cooper. “It doesn’t have any purpose until you give it one.”
Cooper outlined four principles for defining the purpose of your business based on one simple question, “What are we committed to become?”
Most important is vision a clear and measurable statement of what you’re committed to become to be a profitable and responsible market leader in three to five years. But what exactly is vision? It’s what we want to become, plus the reality of what you must become, said Cooper.
There are only personal goals, not corporate goals, said Cooper. And, not having clearly understood and outlined goals creates a vacuum in a company.
Vision and passion are strongly connected. A clear vision allows you to hire people who will help you become what you are committed to become. Yet, people cannot truly be committed to a company, according to Cooper. They can only be committed to where the company is going, what it stands for and what’s best for them, he contends.
The final presentation at the tenth annual symposium looked to four longtime industry leaders for valuable insights. AAIA president emeritus Al Gaspar moderated the “Industry Leaders” panel. Before starting the panel discussion, Gaspar took a moment to encourage Global attendees to contribute $50 each to the GAAS scholarship fund and he kicked that off with his own pledge of $500.
Gaspar posed a series of questions including one question regarding what O. Temple Sloan III referred to as “channel shift,” OE dealerships’ increasing efforts to capture more service dollars, presenting a threat to independent repair shops.
Gaspar asked about other hot button topics like pricing pressures, industry standards and AutoZone’s POS initiative. Gaspar asked new AutoZone President and CEO Bill Rhodes III what the future holds for POS.
Having the right merchandise in the right place at the right time is the goal of POS, said Rhodes.
“It’s about driving sales and aligning the interests of our partners,” said Rhodes. Nine percent of total AutoZone inventory is currently stocked under the POS program, with 20 percent of total vendors participating in the program, said Rhodes. He said that categories are getting better sales by participating in POS.
What is the future of independent repair shops, given the increasing complexity of vehicles, technician shortage and repair information accessibility?
“We will definitely lose technicians,” said Larry Samuelson, president of GPC’s U.S. Automotive Parts Group. Training will be key, he said.
Growing through acquisition, Right to Repair, data sharing and inventory management were also discussed by the Industry Leaders panel.
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