Consumers invest more in the maintenance and repair of their vehicles as they expect to own the vehicles longer in the wake of financial uncertainties, job loss fears, and uncertain fuel prices triggered by the economic slump. The demand for maintenance-related jobs is on an upswing in this economic slowdown. In some regions, automotive service centers and independent repair shop owners keep a constant eye on their customers’ credit and acclimatize themselves to these changes.
New analysis from Frost & Sullivan (http://www.automotive.frost.com/), Frost & Sullivan Speaks Candidly with U.S. Automotive Shop Owners, finds that there were over 240.9 million light vehicles in use in 2007 and that the repair industry sold over $70 billion in parts to support the industry. Repair shop owners are the front line of that industry and the first place where vehicle owner behavioral changes become evident.
Though domestic vehicles account for the majority of shop traffic in the country, changes are evident in the vehicle brands that frequent the repair shops. Therefore, repair shop owners constantly monitoring their business to meet the needs of the evolving vehicle population.
Repair shop owners consider the original equipment (OE) parts far superior than their private label counterparts in fit and functional quality, and continue to promote their value to their customers, despite the current focus on low-cost repairs. On the other hand, manufacturers, retailers, and warehouse distributors (WDs) patronize private labels, as they are economical, with better margins and revenues.
The installers, though otherwise all right with the private labels, are unhappy with the inferior quality of the parts, as the reputation of their shop is at stake if their customers underrate their proficiency.
“Despite the popularity of private label products in the aftermarket, shop owners delivered scathing reviews to aftermarket private label brands and their products,” says Frost & Sullivan Global Program Manager Mary-Beth Kellenberger. “Complaints of poor quality, variable quality between part numbers within the line, and fit issues indicate that shop owners are unwilling participants in the growth of private label brands.”
The greatest challenge for independent repair shop owners is to find a way of providing quality service at a low cost. Many shop owners put their faith in the industry’s understanding of operational expenses and job profitability as a means of avoiding price wars that could spiral the industry into premature despair.
Repairers need to recognize the value of their services and set fair prices within that value range. An opportunity exists with the import vehicle owners as well. These customers have less faith in the untested private label parts but seek low-cost maintenance and repair services.
“Gaining access to quality aftermarket import brand parts is extremely important as independents position themselves as a value alternative to dealers,” says Kellenberger. “Winning the job at a price that supports each enterprise’s financial structure is as crucial to the survival of the industry as smart management to prevent cost cutting that undermines repair quality and industry profitability.”
Frost & Sullivan Speaks Candidly with U.S. Automotive Shop Owners is part of the Automotive & Transportation Growth Partnership Service program, which also includes research in the following markets: strategic overview of the North American automotive aftermarket, vehicle accessories: the next generation of automotive aftermarket growth in the United States, strategic overview of the North American heavy duty truck aftermarket, private labeling in the North American automotive aftermarket. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
Source: Frost & Sullivan