Editor’s Note: Our bi-montly Ask the Industry column, normally published on Monday, is being published today due to the recent New Year’s holiday.

With every new year, it is common practice, both in business and in one’s personal life, to evaluate the past 12 months – what went well, what didn’t – and create a plan to make improvements for the new year. For the first Ask the Industry of 2007, we asked a couple of aftermarket professionals what they anticipate will be the biggest issues for their companies this year.

Richard Mezadurian, president of Falcon Steering, said it’s hard to define the single biggest issue with so many to choose from, but it he had to pick just one, it would be the disappearance of the WD.

"Last year’s AWDA conference left no doubt… consolidation in the WD ranks has reached a critical level,” said Mezadurian. “There are so few good ones left. This is forcing several issues. One it is further strengthening the power these WDs already had over the factory. Second, it will lead to either bankruptcy or consolidation in the aftermarket supplier side. In 2006, my company, Falcon Steering, purchased the assets of QSP Automotive, and we’re looking to buy more companies in our sector. But my fear is [that] within 15 years, there will 10 companies exhibiting at AAPEX, and only three buyers to sell to."

For Alan Mosher, area manager of Uni-Select member Fred Roberts Auto Parts Group, the biggest issue for his company isn’t as industry-specific. His biggest concern – finding and developing a strong staff – is a universal struggle today.

"The biggest issue is to find and develop good quality employees and customers,” said Mosher. “The demand of technology and business awareness requires a different approach for our industry."

KMPG, a U.S. consulting firm, recently surveyed 150 senior level automotive executives to find out what they expect 2007 to look like. According to KPMG’s eighth-annual Global Auto Executive Survey, most industry execs overwhelmingly agreed that more consolidation and bankruptcies will take place this year. The firm surveyed executives from vehicle manufacturers and suppliers in North America, France, England, Germany, Sweden, India, China, South Korea and Australia.

More than half of the executives surveyed said that alliances will be more important than mergers and acquisitions in the auto industry this year. Fifty-nine percent of those surveyed said they expect to see an increase in consolidations and alliances among vehicle manufacturers and Tier 1 suppliers. Sixty-one percent are anticipating an increase in consolidations and alliances among Tier 2 and Tier 3 suppliers. Nearly half of the executives surveyed also said they expect consolidation activity will be affected by the potential for product synergies; 44 percent said access to new markets and new customers will be an influencing factor.

Nearly 90 percent of auto executives said they think the rate of bankruptcy will increase or remain the same over the next few years, with 47 percent citing non-competitive cost structure as the driving force in bankruptcy filings.

On the profit side, 42 percent those surveyed expect industry profits will be flat or generally rise over the next few years, showing slightly more optimism than they did on last year’s survey.

Ninety-six percent expect to see manufacturing grow in Asia; 60 percent expect increases in manufacturing in South America and Europe. And, 73 percent cited India as the next region, aside from China, to undergo the greatest growth.

— Counterman Editor Brian Cruickshank contributed to this report.