The changing face of the Aftermarket

A visit to Automechanika Frankfurt provided Neil Pattemore with a perfect physical manifestation of how the sector is changing

Published:  17 December, 2018

Arguably the world’s largest and most successful aftermarket show was recently held in Frankfurt – Automechanika.
    
If you didn’t go, you missed something very impressive, but there will be various reports about what was there and details of specific exhibitors and their latest product or service in this most noble magazine.
    
However, although I spent most of a week at this exhibition, what intrigued me was not just the enormous variety of exhibitors, with their corresponding products, services and new ideas, but the wider question of why it is so successful and why so many visitors – over 130,000 this year - attend this bi-annual show out of their busy schedules. Most importantly, well over two thirds of these are senior business managers or business owners with 96% stating that they were “very satisfied’”with their visit to the show. Doesn’t this start to tell you something very important?
    
It starts to show why exhibitions are so important, especially at this moment in the history of the aftermarket, and why it is increasingly important to attend this type of show. Let me explain.

Evolution
For over a century the aftermarket has continuously evolved and primarily provides consumers with competitive choices about the diagnosis, service and maintenance of the vehicles – generating healthy competition and impressive innovation along the way. If evidence was ever needed as to how important this is, then Automechanika shows this in abundance. Whole halls (several on three levels) exhibit specific sectors of the aftermarket and the Automechanika organisers help the visitor by keeping all similar products or services in a dedicated area or hall. Believe me, this really helps when planning what you want to see and how to find it, but equally reflects the needs of the visitors who plan their visits almost like a military operation. However, there were some important differences with this year’s show as there was an interesting dichotomy. For the first time, there was a significant retrospective view with older (classic) vehicles in a dedicated hall and at other stands around the show. This was to illustrate that growing skills gap in what is a lucrative and resurgent market, but was also clearly based on the B2B opportunities that servicing and maintaining these cars can create.
    
From the opposite perspective, there was much evidence of new technologies and the rapid revolution that is taking place towards the garage of the future. Perhaps these two elements summarise nicely the question of why so many senior people go to this show – it enables them to understand the threats and opportunities in relation to their businesses and equally, flowing from this, where and when investment in their businesses should take place. This leads into how their businesses can remain competitive, which can be a combination of exploiting new digital technologies to create higher workshop efficiencies, implementing improved tools and equipment or understanding how improved work methods using internet and cloud based solutions can reduce the costs.

Competition
On the other side of the equation is the wider competition issue of how to remain in the position to offer competitive choices to the consumer, as the ability to remain competitive could be under severe threat from changes to the vehicle design, access conditions and new competitors entering the market.
    
Automechanika represents the epitome of the aftermarket’s success, but is viewed by the vehicle manufacturers as a rich opportunity to encroach into the aftermarket sector and ‘take back’ what they consider should be rightfully theirs.
    
As I have written about before, this is part of the connected car and allows the vehicle manufacturer to control all remote access to the vehicle. You may consider that this is not your problem, as you repair vehicles when they come into your workshop, but what is happening now is that the start of this repair process starts with vehicle manufacturers’ applications embedded in the vehicle, monitoring what faults or service requirements are needed and then proposing via the in-vehicle display a location and price where the service or repair can be conducted – the driver just clicks  the icon and ‘voila’, the appointment is made at the nearest main dealer. You can’t compete if you can’t make a competitive offer as you don’t know what is needed and cannot contact the driver at the time the vehicle manufacturers are making their proposal.

Access
So, the aftermarket is evolving, but in a way that may not be obvious until it is too late. Independent service providers can manage their businesses to remain competitive with each other, but there is a distortion with which they cannot compete and with a competitor who wants to control the whole aftermarket value chain and its corresponding profit margins. Without being able to communicate with the vehicle, access its data and use the in-vehicle interface to communicate with the driver, all independent service providers (workshops, parts suppliers, data publishers – i.e. the complete aftermarket value chain) will be unable to offer competing offers, as they will not be able to pre-diagnose the vehicle and identify the parts or technical information required before the vehicle comes into the workshop.
    
This remote access can reduce workshop costs by 50% and the corresponding competitiveness of any service you may wish to provide.
    
This is not a ‘let market forces rule’ scenario, but is a real threat to the ability of the whole aftermarket to continue to offer consumers competitive choices and is an excellent example of the ‘primary market’ being able to dominate the ‘secondary market’ – a similar situation to the famous Microsoft Explorer case, where once you had made your choice of a PC, the only choice for an internet search engine was from Microsoft. To address the problem of monopolistic control in the aftermarket, we need the same support from the legislator as they enacted with Microsoft – ensure that there is the ability to implement a competitive choice and let the consumer choose.
    
Only if legislation supports this basic principle of undistorted competition, will the Aftermarket be able to continue to do what it does best – make innovative, competitive and appealing offers to vehicle owners as well as putting on a great show – in every sense of the word.
xenconsultancy.com

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  • posturing and electricity 

    The automotive aftermarket can always use a boost, and there is nothing quite like a motor show to get anyone – everyone – to talk about our industry.
        
    Yes, there’s a world of difference between repairing vehicles and the spangly glitz of the super-rich posing beside the very latest in super-expensive automotive ‘art’. Yet, for every single billionaire there are quite literally tens of thousands of vehicle users.
        
    We have a new automotive industry-specific word – electrification. Not the type of thing that is used to power trains but rather the addition of a tail pipe emission free’ energy source to compliment or even replace the internal combustion engine. The context? The Geneva Motor Show. Indeed, at almost every motor show if one did not have electricity/global warming/ecology associated with each new vehicle reveal, it simply wasn’t news. To see the ‘on the spot’ news coverage from the show could have left us thinking that anything with a piston engine of any sort is utterly irrelevant. However that is not the case.

    Zero emission
    ‘Zero emissions’ has a very specific meaning when it is measuring what comes out of an exhaust pipe. If there is no exhaust pipe, or all it does is eject water, the vehicle is officially described as ‘zero emission’. Forget the fact that energy storage system raw materials are mined all over the world, processed all over the world, built into energy storage packs, fitted to vehicles which are  exported all over the world. Forget the energy used to make a single kWh. Even ‘free’ energy sources need machines to exploit it, which of course require energy to produce.     
        
    The automotive sector all over the world is under attack, and is vulnerable: It is a statement of fact, not a complaint. Some – not all – vehicle manufacturers have abused emission testing, to the point the general public don’t quite know who can be trusted. Governments all over the world see a significant opportunity to not merely fend off lobbyist pressure but actively court it, in the name of ‘saving the planet’.  Empty gestures and half formed policies abound.
        
    Rightly or wrongly, the automotive sector is in quite a fix. OEMs in Europe face from this year paying €95 for each gramme of CO2 for each car built over a fleet average limit (95 grammes of CO2 per km). This is not a one-off, but part of an international rolling vehicle emission reduction policy. More emission cuts will come, and well before 2030.
        
    As Governments complete this social engineering, new forms of user taxation will take place in the none too distant future to recover revenue lost from reduced direct sales of fossil fuels (petrol, diesel, LPG or LNG).

    Who wasn’t there?
    Just in case anyone missed it, even without Brexit the global economy is on the downward slope into recession. The automotive sales slump in China has triggered cutbacks in number of vehicle manufacturers, ranging from ‘let’s keep the lights on for now’ (Ford) through to ‘let’s take action to downsize in an orderly fashion’ (almost everyone else).
        
    In the case of Europe, conforming to the new WLPT emission test combined with the utterly chaotic roll-out of Real Driving Emissions (RDE) has caused vehicle supply issues and unwelcome additional costs due to the convulsion caused by
    re-homologating existing vehicles to the new test methods. As a result some manufacturers chose to spend limited promotion budgets in more effective ways. This meant paying for expensive stand space at a motor show was not a priority. As a result, JLR, Ford, Volvo and Hyundai were not present.
        
    So, our online friends pushed out countless stories about ‘electric’ and ‘lack of support’. In the moment. So, what really went on?

    Most significant
    Why is Volkswagen’s MQB Evo platform delayed? To make way for its MEB platform, as the Group spends its way out of trouble. However, this is where it gets interesting. MEB is engineered as an ‘electrified’ platform, ranging from pure EV through to hybrid drive and PHEV. The MQB Evo platform has a raft of hybrid drive technology ranging from 48V ‘mild’ to more potent hybrid powertrains. However, after the scandal of emission test rigging, along with a steady stream of further negative revelations, the upshot is ‘electricity’ has to eclipse all chat of fossil fuel burning powertrains, if only for PR.
        
    The Volkswagen brand had the ID.buggy concept, a pretty pointless homage to Beetle- based dune buggies, on view alongside previously shown I.D concepts. Politely, the I.D series lack definition which is surprising given they have been rolled out for quite a few years, leaving rather too much to the imagination. The same could be said of the Skoda Vizion iV concept, another MEB platform car.
        
    The star was the Seat el-Born, which had real cut lines, real doors, real trim. It mattered little that the model on display was as much a ‘model’ as the Volkswagen and Skoda versions, because this was real. Seat is used as the lead division for each of the smaller volume platforms, and
    el-Born latterly made history as the birth of a volume EV from VWG. A shot in the dark? Time will tell and the odds are stacked against success, but as a premieres go there are few as significant. The fuss? From MEB, MQB Evo to MLB Evo right across VWG, hybrid drive is going to appear like a rash by 2021 – and it’s already underway.
        
    Geneva is a showcase for smaller companies, many of which take expensive cars, add expensive procedures with the result looking like an aftermarket catalogue on drugs. Carbon fibre? Why yes, we’ll add that to a two tonne SUV and pretend it does anything but look pointlessly terrible. Yes, there’s still big money with no sense of taste.
        
    Rolls-Royce effectively had an exquisite line-up on the opposite side of the hall to parent BMW. They offer LEDs which can be implanted to the headliner to give a starry night from the comfort of the car interior. But what’s this? The BMW 8 series, a glorious car exactly and precisely produced at the absolutely wrong time, is available with headliner LEDs configured to the favourite constellation of the purchaser. BMW really should take care not to dilute its premier brand, nor boost sales to match Bentley with a probably ruinous effect on residuals. Luxury is not all about shifting metal.
        
    Meanwhile Aurus had the ‘large’ car on display as used by President Vladimir Putin (5.7 tonnes with armour) along with the ‘small’ car (2.7 tonnes without armour). So far, this project has cost more than £80 million, with a limited production of the ‘large’ car at 10 units and the ‘small’ car to be made in a limited series of around 500 units. In other words, handmade, almost every aspect uniquely engineered. An interesting discussion quickly demonstrated that Aurus have better connection to super luxury than some very old brands.
        
    This year we had not one but two land mark events. Peugeot revealed the new 208, which will underpin many more PSA vehicles including the next generation Vauxhall Corsa. This has a 50 kWh pure EV powertrain as well as internal combustion engine powertrains – PSA already meet the new fleet average CO2 target, to the point they can sell carbon credits to those manufacturers who can’t meet the target. What will be the highest volume selling powertrain – EV or internal combustion engine?
        
    The answer was to be found at Renault with the unveiling of Clio V, powered by petrol, diesel and a mild hybrid drive options. The pure EV role was filled by the Zoe. The immediate death of the petrol and diesel internal combustion engine has been somewhat exaggerated.
        
    Amid some fanfare, the EU have managed to get another trade deal in place, with Japan. This means Japan-based vehicle manufacturers no longer have to pay steep tariffs to get non-EU built vehicles inside Europe. The deal has an impact on the UK, which has the biggest concentration of Japan-headquartered vehicle manufacturing plants, but Brexit had almost no effect on the decisions. All of the UK based car plants need stable tax regimes and clear incentives to ensure continued investment, and the EU-Japan trade deal has made those pre-requisites irrelevant. The Honda Urban EV prototype was apparently near production quality, in the sense it was not at all. Another plastic model which did little to define the concept first seen more than two years ago.

    Geneva finds its feet
    In 2018 the show reached a low point, the prelude to termination, In 2019 it arose gloriously as a design-led event, where the Swiss fascination for automobiles mixed perfectly with staging the best design show anywhere in the world. Shifting metal in bulk is no longer its primary task. Oh, and yes, the internal combustion engine will continue to exist, and will continue to get cleaner. That, ladies and gentlemen, means adaption – and success – for the aftermarket instead of oblivion.  


  • A tale of two garages  

    It was the best of times, it was the worst of times. Well, it certainly was for a member of the Aftermarket team recently, who had a small automotive hiccup in the family.
        
    You wouldn’t expect that the need for a fresh set of sparkplugs in a top-selling mass-market runaround could expose the existential crisis facing some garages who are facing extinction as their ability to service cars fades away, but that is what we found. Luckily for our colleague, and for the sector we also found a business who was the very opposite of that type, one that was totally on the ball. A lot can be learned from this second garage in terms of what to do. Even more can be learned from the first garage, in terms of how not to run your business.
        
    The only upside was that that business had a local doppelganger who was paying heed to the kind of advice peddled here in Aftermarket every month. There is a happy ending, dear reader, but first you have to travel through the heart of darkness that can be found in a business where trundling along towards obsolescence is seen as sound business planning.

    Safe mode
    Let’s find out what happened to our colleague: “We have a couple of cars in our household,” she told us, “one is a BMW 3 Series, which I drive, and the other is a an up-until-now spritely 2014 – registered Vauxhall Corsa, which is one of the most popular cars in the UK, and has been in the top 10 highest sellers year-in-year out for decades.”
        
    As an aside, according to the sales figures for 2018 as published by the Society of Motor Manufacturers and Traders (SMMT), the Vauxhall Corsa was the third highest selling car of the year, with 52,915 sold during the year.  
        
    Anyway, back to the story. After years of problem-free  motoring in the Corsa, a few weeks ago it switched into safe mode – with its service spanner light beaming orange on the dashboard. There were no warning signs prior to this.
        
    “As soon as we realised we promptly took it  to a local independent garage.”
        
    This is where things started to go sideways: “After a brief peek at the car, the technician announced they couldn’t access the information and that the vehicle can only be dealt with by a main dealer… which was easier said than done, as the car was only capable of travelling at  5mph and the nearest main dealer was more than six miles away.”
        
    Now, as she was part of the Aftermarket team, she already knew there was something not quite right here: “When asked the reason why the garage couldn’t access the information, the technician claimed that the manufacturer was withholding access for certain faults, so no other independent would be able to rectify the problem with the vehicle.” The technician then sent our team member off to find the nearest Vauxhall dealer, a business that runs the Griffin franchise alongside a mainstream French brand, in the next town.
        
    Now, we know that the Block Exemption Regulation is not a free invitation for everyone just to dig their hands into the big info bin at the vehicle manufacturers, that access might require payment, but withholding access from the independent sector? That would be newsworthy.
        
    At this point, our staff member was more concerned about getting the car fixed than she was about the intricacies of European competition law. Like any motorist with a poorly car being overtaken by cyclists, she just wanted it fixed: “The thought of the long slow drive to the nearest dealership, who incidentally said they would not have availability to take the car until the following week, was beginning to cause much anxiety.”
        
    Bad news all round at this point. Fortunately for our colleague, this is where the story takes a happier turn, with the entrance of the second independent garage: “Halfway on the arduous journey home we discovered another independent garage offering diagnostics on every vehicle marque. So on the off-chance this garage could help we dropped the Corsa there and they assured us they would do their best to help. An hour later we received a call from the garage to say that they have gained access to the vehicle and that it requires a new coil and set of spark plugs. Within a couple of hours the car was fixed and back to its spritely-self. Not only that, it is booked-up with this second independent garage for its MOT next month.”

    Consequences
    As we said, we did not mean to perform a regional mystery shop on random garages across Kent, but here we are. Let’s ask our accidental shopper what she though about the businesses she visited: “The first garage should have updated its equipment, especially bearing in mind that a Corsa is one of the most common vehicles on UK roads, then perhaps they would have kept the business. They also lied to us about the reason they were not able to fix the vehicle.”
        
    Long term, this was probably the most serious transgression made by the first garage during the whole experience: “By not being honest they lost the trust of the customer and looked as though they did not know what they were talking about. The first independent garage has now lost any future business from us, which includes family and friends too. All because they weren’t honest.”
         
    Let’s look at the outcome for garage number two: “The second garage has proven itself to be knowledgeable and efficient and has gained not only the trust of the customer but also additional trade from the customer’s friends and family.”
        
    As for the franchised dealer: “There’s nothing to say about them. They could not even fit us in, which again does not endear them to the customer when they are in great need of reassurance and support from a professional business.” Quite.
        
    As our mystery shopper points out, this is a market where you can lose your customers very easily, but you can also win them pretty easily, as long as you have made the required investment in training, tooling and access to data: “The independent garage sector is a highly competitive market where customer trust is key, along with the right equipment and training.”

    One last word from our colleague, who as a stalwart of the magazine is fiercely loyal to the sector: “I also want to point out that apart from having failed to have the ability to access a five year old mass market runaround, the first garage attempted to take business away from other independents as they tried to  send  the car straight to the main dealer. Whatever happened to solidarity in the world of independent garages?”
        
    What indeed?

    Conclusions
    Let’s look at what we have learned from the misfortunes of our team member. The immediate takeaway here really is the need for honesty. If you don’t have the ability to work on a car for any reason, just tell advise the customer and direct them to someone who can help. You never know who you are talking to, and what they know, and this is a classic example of why honesty is always the best policy.
        
    The deeper takeaway though is the need to invest and train, and to train and invest. In the February issue of Aftermarket, in Big Issue, we asked if our readers had paid attention to the sales figures in 2016, as this might give them a clue as to where they need to point their investment. The one thing we know for sure is that the first garage visited did not look at the top sellers for 2014, as if they had they might have realised that a Vauxhall Corsa from that year might come through the door sometime after 2017.
        
    Even if you are not marque-sensitive, all vehicles are becoming more complex, and having the right tooling, and the ability to properly use it is absolutely essential. If you can’t interrogate the third most popular car in the country, and you have to send that car down the road, you are heading for the scrapheap, whether or not you were honest with the customer or not. We know it takes money to train and buy equipment, but there is so much support out there, it would be foolish not to reach out to get a grasp on tomorrow.
        
    You don’t even have to look far to get support. You do not have to get up and walk to your computer, or even lift your hand to pick up your mobile phone. You just have to turn the page.
        
    Every issue in Aftermarket, we have a whole section devoted to business. We have another section covering training courses, and another covering technical advice. In most of the features there will be advice on the kind of tooling required, and on the new tech heading your way. Also, as much as we hate to admit it, we are not the only place to access this information. Many sector suppliers offer training, and there are specialised training companies and courses. You can attend live training courses via the IMI, or the RMI via its Academies, or you can access training online.  We have even heard that there are other magazines covering the sector, although we think that may just be a rumour…
        
    The point is, there has never been more information available, online and in print. As our regular business contributor Andy Savva, The Garage Inspector, is prone to say: “There has never been a better time to run an independent garage.” He provides business training, and as part of that training  he will advice businesses to invest in kit, and invest in people. He’s not the only one either. Leaf through and you will see a host of famous names who offer technical content in this magazine. In no particular order, except perhaps alphabetical, you have John Batten, Peter Coombes, Ian Gillgrass, Hannah Gordon and of course Frank Massey. All are either regular technical contributors, or have written for us in recent months. If you go back further there are even more names providing priceless technical content. That’s just Aftermarket. Many of our contributors run courses, and they are not too shy to talk about it, so read their articles and find out. Many of our advertisers also provide training, either at their own facilities or at various trade events like Automechanika Birmingham or Mechanex. We will tell you and point you in the right direction.
        
    Despite this, despite the investment being made by thousands of garages that receive and read Aftermarket, there are still those who don’t keep up with the technological direction of travel, let investment slide, and decide against that extra round of training that will help them keep their competitive edge. If you are intending to shut down, we can understand it, but if not, if yours is a going concern where you are looking to operate through 2019 and beyond, then you need to keep up to date with technology, and make sure you are taking all the relevant training.

    Summing up
    We call this an accidental mystery shop, and in a way it was. We are sharing the experiences of our team in a friendly way to show what a customer might experience, to point you in the right direction. Don’t forget though, there are millions of potential customers out there, and for them it is not a theoretical exercise. They will make a judgement call on your business based on your performance. If you provide a poor service they will make their voice heard by disappearing from your forecourt, never to be heard from again. A garage that can deal with their customers competently and honestly will have them return again and again. You can count on it.

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