By APA Bureau
The Automotive Aftermarket Suppliers Association (AASA), which represents the North American Aftermarket supplier industry, is recognised as one of the most prominent trade organizations in the US. It helps its members, the aftermarket suppliers, to be more profitable, innovative and competitive on a global scale.
AASA, equipped to help aftermarket suppliers drive their business forward through industry analysis and strategic insights for business planning, expertise in government policies and regulations, networking and exchanging best practices through business conferences and peer councils and global outreach in opportunity markets. AASA has a leadership role in the industry of bringing the other associations together.
With the emergence of the connected car, there is a lot of concern that the data the cars generate should be in a consumable fashion which a technician or consumer can figure out without much problem. It has to be in a way that the independent aftermarket can access easily. There has been a lot of discussion on this over the last year.
According to AASA sources, “With connected cars we have to make sure that the information is readily available in the right form so that people can continue to service the vehicle independently. The industry’s message to the policy makers in Washington must be clear and factual; we cannot have 10 different people giving 10 different messages. Today, there is a lot of consensus on what the industry has to say to policy makers.
Training And Development
For the connected vehicles, it appears that the manufacturers want to lead the discussion on the development of guidelines for shop training because all the knowledge and actual awareness of the systems reside with the suppliers. The effort is to figure out how manufacturers collectively can work directly with the end-market or shops.
The distribution channel may be an enabler for rolling out the training content but it is going to be developed by the manufacturer for the shop. The independent repair businesses are still very fragmented, having different levels of sophistication. Hence there is the need to have a certification process that can sort the market out in terms of what level of quality or business investment the independent shop owner can make to keep up with the training and the rest of it. There is also need for some form of cyber security to prevent the vehicle from getting hacked.
The training content will be developed mainly by the manufacturers with the channels and distributors playing a role as they will have to implement some of the training sessions. More of the manufacturers are investing in training centres, infield training, tech lines, and technician outreach. They have the mechanism to do the training. It is mainly focused on the newer technology cars with a secure clean way to access all that without getting hacked. Since this concept is pretty new to the market, special effort has to be taken to increase the awareness levels of all the shop associations.
It appears that the shops right now are a bit confused about the direction of all these as there is so much hype about autonomous cars. The typical independent shop is not sure what to make of all that noise. They are open-minded to it; there is no resistance. “It is going to be a slow process but the shops are going to eat it up – there’s no question about that. Once there is momentum, the national certification process will go wide with larger acceptance in the market. The certification programme will be finalised by next year. Implementation may take three to five years,” AASA sources said.
Third Party Service Centres
An important question at this juncture is, ‘whether increased autonomy would eliminate the multi-brand third party service centres.’ With undue power and market control with the OEMs, they would be able to make customers come to their authorised service centres, which in turn would harm the third party service centres.
Many stakeholders think that it is a very real challenge. The more connected a car becomes the more will it be connected to the OEMs. However, in the US there is a tradition of the independent service model, especially after the car is four to five years old. The OEMs may not have the capacity to take up all their work.
One of the big drivers for the OEMs is the residual value of the car. Americans would not keep the price above a certain level for a second-hand car if a widely available service network for that car is not available. People are holding on to their cars longer. There are four times more used cars than new cars in the market today. In the long run, the scale would be too much for the OEMs to service, the independent shops would get the job.
The Role Of AASA
AASA believes that the solution to this is to engage the vehicle manufacturers, not to fight them. “Our suppliers are the same that provide connected technology to the OEMs, who understand that the life-time value of the vehicle is dependent on the independent aftercare. There will have to be a more modern adult relationship and discussion between the independents and the OEMs.
OEMs will definitely get their share of the business – there’s no doubt about that. There is now a general recognition that the independent channel is going to deal with all these changes; that’s why we have to start these conversations now with the car companies. Because we are Motor & Equipment Manufacturers Association (MEMA), we have connectivity to OESA – Original Equipment Suppliers Association. The channels have no OE connectivity at all; our role is to bring them all together,” sources said.
AASA is excited about the entry of software and electronic giants like Google and Apple to the automotive space and creating a change in the scheme of things. It is believed that their entry will change the whole nature of the industry in terms of technology and human capital. The aftermarket will shed its largely mechanical image and cover new fields in the next couple of years. It will certainly be disruptive as the definition of a supplier would change a lot. There will be a different mix of suppliers that will refresh and rejuvenate the aftermarket.
According to an earlier AASA study, the amount of undone or postponed maintenance work in the US would be worth $60 million. This issue has been in discussion for the last five to six years. That number has not changed much over the last 10 years and efforts should be made to ensure that most of the undone is converted and gets done.
Future Of Aftermarket
It is expected that the US would continue to be a large slow-growth industry with annual growth of two to three percent. Within that, there will be a continual change and consolidation of the shop environment with a different segmentation of suppliers – a diverse mix from mechanical to high-end IT.
Europe looks a little like the US with less consolidation. It is going to be a slow evolution there. High growth is unlikely in Europe. In China the aftermarket is yet to evolve into a good sustainable independent service model. A structural change in China may take about five years.
For AASA “what is great about the business is its survival of the recession and the recovery of the OEM vehicle market. This increases our confidence level as we have more than a billion cars out there now, and that number is going to keep growing. The regional markets will probably evolve in different ways with short-term consolidation being the biggest factor there.”