Automotive Aftermarket Can Be Optimistic About Its Future May 30, 2001

Research Triangle Park, N.C. - The automotive aftermarket can be optimistic about its future, but the entire automotive sector must address the near critical shortage of skilled automotive technicians, according to top industry experts speaking at the Global Automotive Aftermarket Symposium (GAAS) held May 17-18 in Chicago, Ill.

GAAS 2001 drew 434 participants, including four international attendees, according to GAAS Chairman Mort Schwartz, Autovia director. "This is a great turnout in view of the current economic conditions," he said.

H. Lee "Buck" Mathews, professor of marketing at The Ohio State University, presented selections of his research commissioned at GAAS 2000. "The automotive aftermarket will experience relatively stable, single-digit growth," he said. "The aftermarket providers’ opportunities will focus on specialized, economic service providers, big enough for technology and cost advantages, but small enough for customer advantages," he added.
Tom Elmer, director of marketing for CARDONE Industries, discussed the critical shortage of skilled automotive technicians as part of the panel discussion, "Where Do We Go From Here?" Industry statistics show that for every 10 technicians that retire or leave the field, only two or three people join as new technician, and 69 percent of service dealers cite finding skilled technicians as their top challenge, Elmer noted. "Technicians are Rodney Dangerfields in overalls - they get no respect," Elmer said. "Shop owners tell us, ’Stop coming into my shop with hats and trinkets. Bring my techs training and information.’"

He challenged the industry to establish a check-off fund for a public service campaign, such as the Beef Council’s successful "Beef - It’s What’s For Dinner" campaign.

Consumers Drive Changing Automotive Market

John F. Smith, vice president and general manager of GM Service Parts Operations, forecast the future in his presentation, "A 2005 Year-End Review." Smith examined current trends and predicted that both the do-it-yourself (DIY) and independent service garage businesses will decline. "The three-part distribution system will virtually disappear," Smith said. "Independent suppliers will find the going very rough."

Steve Handshuh, president of NAPA, also addressed the declining DIY market in his presentation, "An Aftermarket Vision - How NAPA Sees Industry Opportunities and Challenges." Handshuh said, "We liked the DIY market and took it for granted." He noted that while independent garages are losing market share, "Customers prefer independents, if they feel they can trust them."

James J. Postl, president and CEO of Pennzoil-Quaker State Co., addressed the importance of automotive maintenance in his presentation, "Increasing the Multiple in the Aftermarket." He cited examples of misleading automotive maintenance information from popular entertainment, saying "We haven’t convinced consumers to maintain their vehicles at appropriate intervals." Postl noted that industry figures estimate a market of $60 billion in unperformed automotive maintenance and service in the United States.

J Ferron, partner with Americas Automotive theatre leader, PricewaterhouseCoopers, outlined automotive industry challenges, based on the firm’s recent study, Automotive Second Century. "Aftermarket companies will be expected to be a part of brand service innovation and collaborative customer relations management," he noted. "Businesses used to offer one of three types of service: customer intimacy, product and service innovator or performance excellence. Today’s consumer wants you to be all three," he added.

The Aftermarket and e-Commerce

Dr. Roger Blackwell, professor of marketing at The Ohio State University, discussed "Global Economic Trends - Customers Rule." He noted, "It’s not the ’e’ that is important in e-commerce. It is the commerce. Businesses would have 50 percent more sales if they used e-commerce to enhance, not replace, traditional sales."

Charles Germano, segment executive for IBM Global Medium Business Distribution, urged GAAS participants to integrate e-business throughout operations in his presentation, "Distribution and e-Commerce Trends and Directions." "Don’t make the mistake of treating e-business independently from your business plan or your technology plan," he said.

Bruce Bowen of E3 Corp. and Dave Linnen of Manhattan Associates joined in the IBM presentation. Bowen advised GAAS participants to use demand pull, "Instead of working from raw material to manufacturing to distribution to store, work back from the store and let demand determine production." Linnen discussed increasing gross margins and e-commerce, urging GAAS participants, "Improve your inventory accuracy and your inventory management with statistics."

Derek Kaufman, president of Kaufman Peters LLC, addressed media hype in his presentation, "Some Thoughts on the Wind Chill Factor." "The key return in the next two years will be in inventory and distribution logistics," he noted.

GAAS 2001 also included two panel discussions.

William C. Gager, president of the Automotive Parts Rebuilders Association (APRA), moderated, "The Winning Product Line: Remanufacturing." Panelists included Michael Cardone Jr., president and CEO, CARDONE Industries Inc.; David Deegan, vice president and chief operations officer, Engine Lab of Tampa Inc. and past president of the Automotive Repower Council; Joseph P. Felicelli, senior vice president, aftermarket group, Delco Remy International Inc.; and Gordon Fenwick, CEO and general manager, Fenwick Automotive Products.

Jack Creamer, president, Distribution Marketing Services, and president emeritus, Automotive Warehouse Distributors Association (AWDA), moderated the final GAAS presentation and panel discussion, "Where Do We Go From Here?" Panelists were Fred Bunting, owner, president and CEO, Auto-Wares Inc. Group of Companies; Tom Elmer, director of corporate marketing, CARDONE Industries Inc.; Tom Morrison, executive vice president, Florida Automotive Industry Association; and Gene Zhiss, vice president of marketing and dealer communications, Meineke Discount Muffler Shops Inc.

GAAS 2002: Back in Chicago

The symposium will be back in Chicago for its seventh annual program in 2002. The GAAS 2002 Conference is set for Thursday and Friday, May 16-17, 2002, at the Hyatt Regency O’Hare Hotel, Rosemont, Ill. GAAS details are available online at www.globalsymposium.org.

The GAAS program is a joint professional education effort of the Alliance of State Automotive Aftermarket Associations (ASAAA), Automotive Industries Association (AIA) of Canada, Automotive Aftermarket Industry Association (AAIA), Automotive Parts Rebuilders Association (APRA), Automotive Warehouse Distributors Association (AWDA), Motor & Equipment Manufacturers Association (MEMA), Specialty Equipment Market Association (SEMA), Tire Association of North America (TANA) and University of the Aftermarket.

GAAS Proceeds Invested in Industry Future

Proceeds from the GAAS program are used to fund scholarships for undergraduate and vocational technical students preparing for careers in the automotive aftermarket. The Global Automotive Aftermarket Symposium scholarship (GAASS) fund awarded 69 scholarships to students in two-year technical college programs or in four-year college programs in 2001. GAAS has provided a total of 248 scholarships since 1996.

Scholarship program details are online at www.automotivescholarships.org.


For more information, contact: Neal Zipser, MEMA, 919-549-4800, ext. 811, media@mema.org