AKRON, OHIO — For this week’s Ask the Industry, we asked top executives at three leading aftermarket parts manufacturers: Do you foresee more suppliers expanding their aftermarket product offerings to include additional ‘premium’ products, since the demand today for OE and OE-equivalent parts, with their precise fit, form and function, is so strong?
Here’s what they had to say:
Max Dull, President and Chief Executive Officer, Beck/Arnley:
The simple answer is “absolutely yes.” Many manufacturers and suppliers spent a lot of years working toward a product consolidation strategy, with the goal of being able to offer more application coverage with fewer dollars invested in inventory. While consolidation did help inventory turns, professional technicians and service dealers have clearly told us that they want and need aftermarket parts that match the to OE part, in most instances. They have told us this through surveys, but more importantly they have told us this with their shift in purchases to OE dealerships. Smart suppliers are paying attention to this trend and taking action. The challenge facing most aftermarket suppliers is successfully balancing a product strategy that addresses the three needs that technicians have; 1) OE equivalency; 2) premium differentiated products and 3) low priced, so-called value line products.
Regarding OE equivalency, it’s not just as simple as declaring exact OE match as a strategy. There is no shortcut to accomplish the task. Achieving OE equivalency requires an incredible investment of time and money. We know this at Beck/Arnley, because we have been doing it for years. It starts with an investment in qualified people. While computers and data help us do our job, there is no replacement for “hands-on” research. Then comes the investment in product samples. We maintain a library of OE and supplier product samples that has a value of well over $2 million, and it grows every day. Finally, it takes a significant investment in inventory. To match OE form, fit, and function many times we find that it takes six or more parts to cover what our competition covers with one consolidated part.
Then there is the issue of premium products. Oddly, premium products often actually contradict the strategy of OE equivalency. The key to a premium product is differentiated performance. Often to make a part better than OE, it must look different. Now the onus is on the supplier to convince the service technician that the part that looks different (form) actually performs better (function) than the OE part it is replacing. At Beck/Arnley we do, when warranted, offer such premium, differentiated products in certain product segments. Candidly, their acceptance is highly regionalized where they are recognized and accepted as superior to OE. This creates marketing and communications challenges for suppliers, but in the end, such products can serve to differentiate aftermarket suppliers from the OE.
The third dynamic at play is the fact that there will always be a demand for low priced, so-called value products. Deciding to play in this area can be a double-edged sword. Most suppliers will need to determine which market segment is their target, as it is very difficult to serve two masters. If a supplier establishes its brand as representing a match to OE form, fit, and function and premium products, having a low priced “good enough” product line stands to dilute the brand equity in the minds of the technician.
While I agree that most suppliers are moving in the direction of offering more OE equivalent and premium products, there are some significant traps that they must negotiate in adopting the strategy.
Eric Sills, Director of Headquarter Operations, Standard Motor Products
I can only speak for Standard Motor Products and its product offering. No doubt, the days are largely gone of intentionally making a product physically different from the OE by adding performance enhancements. More and more we hear customers say, “I don’t want better than OE, I want an exact match.”
There do remain certain product categories where a consistent enhanced feature is recognized and welcomed by our customers, such as brass terminals on distributor caps or pre-applied thread sealant on temperature sensors. We do always strive to fix inherent OE problems such as durability issues, but now usually do it without modifying the appearance of the part.
Katie Noga, Manager, Marcom and Motorsports, SKF:
I think that companies are definitely going to have to continue supplying a value line; I think it will be a short line because you are still going to have to carry the premium product. That’s what your customers are going to be looking for – the high-quality OE-level product.
Summary by Amy Antenora, Editor, aftermarketNews:
It seems automotive aftermarket parts manufacturers are getting hit from all angles these days. In addition to a struggling U.S. manufacturing base, North American parts suppliers are contending with low-cost quality imported parts from China, as well as cheaply made knockoffs coming in the back door. And then, there are the OEMs beating down the front door, trying to capture their piece of the service and repair pie.
As the OEMs continue to vie for more marketshare in the replacement parts and service segments, and the quality of imported parts increases, U.S. aftermarket parts manufacturers now have triple the competition to contend with. The phrase ‘OE form, fit and function’ is no longer simply a selling point; it’s a requisite in this increasingly competitive marketplace. It also begs the question: Is differentiation still the key to success in the automotive aftermarket?
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