Transcript Slide 1

Contents
Executive Summary
pg. 3
Special Questions
 Warranty and the Aftermarket
pg. 8
Detailed Results
 Market Conditions
 Outlook
 Issues
pg. 16
pg. 23
pg. 29
IMR Repair Shop Survey
pg. 32
Appendix
 Respondents’ Product Segments
 Full Answers to Selected
Questions
 Methodology
2013 Q2 Aftermarket Supplier Barometer
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pg. 36
pg. 37
pg. 48
Executive Summary
Key Findings
2013 Q2 Aftermarket Supplier Barometer
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Aftermarket outlook continued to improve
Respondents indicate increased optimism from the lows seen in 2012
Have our
expectations
been
reduced?
2013 Q2 Aftermarket Supplier Barometer
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AASA Barometer Dashboard
Market Conditions
2013 Q1
2013 Q2
Change*
Direction
57%
52%
-5%
↓
Independent Aftermarket Average Growth
Rate
+2.3%
+1.5%
-0.8%
↓
OE Service (OES) Average Growth Rate
+0.5%
+0.2%
-0.3%
↓
Increased Gross Margin *
29%
--------
+11%
↑
Increased Prices *
37%
--------
+6%
↑
2013 Q1
2013 Q2
Optimistic Towards Business Outlook
40%
Adding to Inventories
Experienced Growth in Sales
Outlook
Change
Direction
50%
+10%
↑
30%
34%
+4%
↑
Increase in Production Capacity
37%
39%
+2%
↑
Companies who are Hiring
43%
47%
+4%
↑
+2.5%
+2.8%
+0.3%
↑
New Order Volume Average Growth
100%
80%
60%
40%
20%
0%
-20%
-40%
Status
Sales
Status
Up 50% or better
+40% to +49%
+30% to +39%
+10% to +29%
Up less than 10%
No Change
Down less than 10%
-10% to -29%
-30% to -39%
-40% to -49%
Down 50% or more
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
0%
New order Volume
2013 Q2
2013 Q1
10%
20%
*Note: Please note that survey responses regarding price and GM are delayed by one quarter in order to comply with antitrust ‘safe
harbor’ guidelines; change and Direction are calculated from 2012 Q4 to 2013 Q1
2013 Q2 Aftermarket Supplier Barometer
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30%
40%
50%
AASA key takeaways: Increased optimism despite
slowing sales
Optimism continues to improve with half of respondents indicating
a more positive outlook in the second quarter; those with a more
negative outlook decreased 8 percentage points from the first
quarter (pg. 24)
However, respondents experiencing sales growth dropped 5
percentage points from Q1 (pg.17); independent aftermarket
and OES sales average growth rates slowed to +1.5% and
+0.2%, respectively (pg. 19 – 20)
Is this renewed optimism in the aftermarket, despite mediocre
sales, due to the a brighter future or are many suppliers simply
positive as it looks like they can hit their planning targets next
quarter? Inventory additions, capacity production, hiring and new
orders all increased slightly in Q2 (pg. 25 – 28).
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AASA key takeaway: A failing warranty system
provides an opportunity for supply chain collaboration
Warranty cost reduction is an
issue for the aftermarket
• 43% of respondents indicated
that warranty cost reduction is
of high importance to their
company (pg. 9)
• The concern is greatest with
“general service parts”,
“cooling/HVAC” and
“engine/driveline” product
segments (pg.10)
Where “blame” is placed, there
are clear benefits for the
aftermarket from a better
warranty system
Collaboration among suppliers,
retailers, distributors and
installers is the only way to
improve the warranty system
• Many companies lack a
standard review process for
warranty returns (pg. 11)
• Some respondents feel that
the cause of unnecessary
warranty returns is because
seeking a satisfied end
consumer at all costs of
winning out over a willingness
to fix a flawed and costly
system (pg. 14)
• There are hidden costs to
warranty that if reduced could
benefit suppliers and the
entire supply chain (pg. 12)
• Increased training regarding
the warranty policies would
provide an opportunity for
supply chain partnership
• Programs for better education
to service technicians provide
an opportunity for fruitful
collaboration with channel
partners
• Overall, the entire industry
needs to accept responsibility
for the issue in order to
ensure that the amount of
abuse in the warranty system
is reduced.
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Special Questions:
Warranty and the Aftermarket
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Importance of “reducing warranty costs” averaged 6.3 for
respondents
However, for 43% of respondents reducing warranty was rated as a very important issue
to their company
43%
Average: 6.3
Base: n = 79
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Importance of warranty cost reduction ranked highest for
“General Service Parts”, “Cooling/HVAC” and
“Engine/Driveline” product categories
Several product
categories indicated even
more concern with the
problem. With these
product categories
averaging nearly 7 and
above for the importance
of warranty reduction,
there is clearly some
segements who feel the
negative impact of
warranty costs on their
business.
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Approach to warranty review process is split among
respondents
Roughly half indicate that their company has implemented an extensive warranty review
process while others have limited or no warranty review
What type of internal warranty review process do you use, if any?
Extensive Warranty Review Process
Limited or No Warranty Review Process
“100% inspection.”
“Limited evaluation process in place, as it was expensive
to run and customers demanded credit for parts
regardless of data.”
“Complete inspection and evaluation – including lab
testing as needed.”
“Limited; making sure part is ours usually.”
“Every part returned as warranty is checked by the quality
department for defects.”
“None.”
“Very detailed analysis of returned parts, customer
satisfaction improvement and updating design, and
manufacturing to continually improve.”
“Samples of warranty products are brought back to our
return center and tested.”
“We have a minimal evaluation process. We track by
customer and then view the customer warranty to give
feedback as to findings.”
“We have an ‘autopsy’ room where every warranty
item is reviewed for a cause. Credit is issued in most
cases, unless there is blatant abuse. But we like to know
the root cause.”
For full results, see Appendix
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Average hidden cost of warranty return was 10.1%
These additional costs contribute even further to the aftermarket warranty burden; with
direct and indirect costs, warranty reduces industry profits by $3.9 billion*
Average:
10.1%
Base: n = 77
*Source: 2013 AASA Pulse KPI Benchmarks ~= 3.5+ billion value of parts warranty returns and 10.1% of
indirect costs
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Respondents indicated that “installation errors” and
“insufficient training” were the largest contributors to
warranty returns
*Note: Scale is from 1 to 10 where 1 is “No contribution” and 10 is “Large contribution”
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However, “customer satisfaction” and poor incentives at
channel partners are also key contributors in the issue of
warranty returns
What other factors do you think contribute to warranty returns? What are examples
of “abuse” of the warranty system that you have seen recently in the aftermarket?
“Customer satisfaction” at the expense of the
supplier
Lack of Motivation and Education at Channel
Partners
“Customer satisfaction is the driver of our warranty
expense. Our customers will do whatever is necessary
to make the end consumer happy including giving
them a completely new part even when it is not
deserved.”
“High turnover at retailers and continued lack of
education.”
“Manufacturers are receiving warranty returns for
good product from retailers using customer
satisfaction as a reason.”
“No questions asked [at] counter return; zero financial
impact to retailer on warranty.”
“No policing at WD or retail level; all of the
overhead is pushed onto the supplier.”
“Overall power of distributors/retailers and their lack of
motivation at the purchasing level to take
action/work with suppliers to ‘fix’ the problem.”
“Marketing of ‘lifetime warranties’ contribute to customer
confusion on what really is covered; therefore, store
personnel “keep customer happy” by giving
warranty on a worn or misapplied part.”
“No oversight with no closed loop process for feedback
to improve.”
“Resellers merely take anything back, no questions
asked, charge it to the manufacturer.”
“Too easy for the retailer to say ‘yes’.”
“The use of warranty for customer satisfaction.”
For full results, see Appendix
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To improve the aftermarket warranty system, most agreed
that collaboration across the value chain is crucial
Whoever the “blame” falls on in regards to unnecessary warranty costs, increased
knowledge, collaboration, and training for the aftermarket are the only way forward to
reduce this growing issue among suppliers
What can be done to improve the system and prevent unnecessary warranty costs?
“Their systems often times do not capture issues or
provide option for employees, those that do have
sometimes poor compliance. The entire industry
needs to own this issue.”
“Better education at the installer level to improve
problem diagnosis.”
“Our customers have to take ownership over their
customer’s neglect. Our customers believe that if
they tell their customer no they will lose that
customer to a competitor. This will not change
until the industry changes.”
“Clear warranty process for customers to follow and
a clear explanation of warranty by product line.”
“Training at the installer level and enforcement of
policy.”
“Better communication at all levels, starting with
the point of sale.”
“Get the channel partners more involved through
training.”
“Installation and diagnostic training.”
“Eliminate lifetime warranty and broad customer satisfaction
policies”
For full results, see Appendix
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Detailed Results:
Market Conditions
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Sales performance stayed tepid; declined slightly from Q1
Decline
Growth
While roughly half (52%) experienced growth, sales performance continued to be
weaker than the highs seen in 2010- 2011; 23% of respondents saw sales declines
Base: n = 87
Note: “No change” is shown as neutral (as a zero value) on the chart to allow a visual depiction of trends
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Majority of respondents (64%) expect growth in sales in the
third quarter of 2013
Only 7% expect declines
Expect
increases: 71%
Expect
declines: 7%
Base: n = 87
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Respondents’ independent aftermarket sales grew on
average by 1.5%
Although majority indicate growth, the low average (+1.5%) indicated that growth has
slowed for the aftermarket
Average:
+1.5%
Base: n = 82
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Quarter
Average
Growth
2012 Q4
+1.9%
2013 Q1
+2.3%
2013 Q2
+1.5%
OES average growth rate dropped to +0.2%
Majority (56%) indicate OES sales down or unchanged, contributing to further
weakness in growth
Average:
+0.2%
Base: n=74
2013 Q2 Aftermarket Supplier Barometer
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Quarter
Average
Growth
2012 Q4
+1.7%
2013 Q1
+0.5%
2013 Q2
+0.2%
Price Cuts
Price Increases
Q1 pricing environment increased slightly as 37% increased
prices and 9% decreased
Base: n= 91
Note: “No change” is shown as neutral (as a zero value) on the chart to allow a visual depiction of trends. Price is delayed a quarter due to privacy laws.
2013 Q2 Aftermarket Supplier Barometer
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Please note
that survey
responses
regarding price
and GM are
delayed by one
quarter in order
to comply with
antitrust ‘safe
harbor’
guidelines
Gross margin performance increased slightly in Q1
Decline
Increase
Those indicating gross margin growth increased from 18% to 29%; while those
indicating declines decreased from 29% to 23%
Base: n=90
Please note
that survey
responses
regarding price
and GM are
delayed by one
quarter in order
to comply with
antitrust ‘safe
harbor’
guidelines
Note: “No change” is shown as neutral (as a zero value) on the chart to allow an effective visual depiction of conditions. Gross Margin was a new question in 2011 Q2, therefore only
limited historical data is available
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Detailed Results:
Outlook
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Respondents continue to indicate a more positive outlook
Negative
Positive
Outlook continues to improve from the lows seen in Q3 of 2012 with 50% indicating
optimism from Q1 vs. only 16% who become more pessimistic in Q2
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 88
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Respondents indicated a slight increase in inventory
additions in Q2 versus Q1
Cuts
Additions
34% added to inventories while 23% cut
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 85
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Capacity trends have remained steady over the past five
quarters
Cuts
Increase
More (39%) added to production capacity in Q2
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 84
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Hiring increased slightly with 47% indicating growth from Q1
Job Cuts
Hiring
Only 8% of respondents indicated “Job cuts”
Base: n=85
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New orders average growth decreased year-over-year,
dropping from +3.7% in 2012 Q2 to +2.8% in 2013 Q2
Quarter
Average
Growth
Orders Up
2012 Q1
+5.1%
2012 Q2
+3.7%
2012 Q3
+2.5%
Orders
Down
New orders are still relatively low, but improvement continues from the low seen in Q4
2012 Q4
+1.6%
2013 Q1
+2.5%
2013 Q2
+2.8%
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n=80
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Detailed Results:
Issues
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“Lack of pricing power” and “Weak sales” moved to top
concerns for Q2
“Extended payment” continued to remain as a key issue facing suppliers
More
Important
Less
Important
Note: Top Issues in 2013 Q1
1. Extended payment / terms of
sale
2. Economic conditions
3. Aftermarket demand drivers
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Increased competition from low cost suppliers, economic
uncertainty and rise in gas/oil prices impacted suppliers
business in the past quarter
What events or changes have impacted your business in the past three months? (Open-ended)
Increased Competition
Economic Uncertainty

“2nd tier suppliers”

“Slow economic recovery.”

“New entrants [in] online channels.”

“Poor demand.”

“Completion from off-shore manufacturers”

“Weaker then expected market conditions in the
first half of 2013.”

“Global unrest, inability of government to deal with
offshore threats…”
Rise in Gas / Oil Prices

“Hyper competitive pricing at the street level.”

“Fuel price increases and new car sales increases.”

“Low price supplier competition.”


“The rapid influx of low cost competitors.”
“Gas prices going up is damaging to the whole
Aftermarket…”

“Higher gas prices, lower consumer confidence.”
For full results, see Appendix
2013 Q2 Aftermarket Supplier Barometer
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IMR Repair Shop
Survey
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Shop sales increased quarter-over-quarter
2013 Q2 Aftermarket Supplier Barometer
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Channels purchased from in past 12 months
Note: Respondents could
pick multiple categories;
therefore, total will add up to
more than 100%
Retail
WDs
Dealers/OES
Note: The information in this section comes from IMR’s monthly Repair Shop survey research. IMR’s data includes
significantly more on shop insights, category insights and shop demographics. IMR offers a 10% discount on their
services to AASA members. See www.automotiveresearch.com for more information.
2013 Q2 Aftermarket Supplier Barometer
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Appendix
• Respondent’s Product Categories
• Full Answers to Selected Questions
• Barometer Methodology
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Respondents’ product categories
Base: n = 74
Note: Respondents could pick multiple categories; therefore, total will add up to more than 100%
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What events or changes have most impacted your business
or business conditions in the past three months? (1/2)
“1) pressure from payment terms on our ability to get price
increases. (2) lower retail (DIY) sales than prior year”
“2nd tier suppliers”
“Aging vehicle population, new entrants, online channels”
“Availability & acceptance of off-shore product”
“Biggest impact to our business is driving behaviors,
economic conditions, and payment terms with retailers.”
“Competition from off shore manufacturers”
“Competitive price pressures / decreases”
“Competitor closed their doors”
“Continued aggressive solicitation of consumer repair
business from OES segment. Robust new car sales have
not changed dealers' focus on repair service growth.”
“Currency (Yen and Euro)”
“Customers managing their inventories extremely tight”
“Extended terms.”
“Fuel price increases and new car sales increases.”
“Gas prices going up is damaging to the whole
Aftermarket...”
“General economy”
“General improvement of economic environment”
“General Motors ‘Service Lane’ program, which is driving
the dealers to buy direct from GM CCA and cut out the ACDelco WD's.”
“Global unrest, inability of government to deal with offshore
threats to US businesses and lack of US job growth”
“Going from flat sales to strong orders in a short period of
time has hurt order fill.”
“Higher gas prices, lower consumer confidence”
“Hyper competitive pricing at the street level; too many
suppliers selling into a soft market”
“Improving economic conditions”
“Indecisiveness of suppliers”
“Industry consolidation”
“Internal ERP issues”
“Lack of heat in which to drive sales”
“Lack of pricing power”
“Lack of pricing power”
“Low price supplier competition”
“Macro and industry environment improving, consumer
confidence up, anticipate higher raw material costs as the
worldwide economy gears up”
“Many A/M suppliers continue to cave into the unfair or
unrealistic demands of retailers and distributors. This gives
them more power - plain and simple.”
“More interest from the retail channel”
“OE product lifecycles”
“OE production volume increases - no capacity to run parts
from the aftermarket.”
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What events or changes have most impacted your business
or business conditions in the past three months? (2/2)
“OEMs not adding new programs.”
“Our largest aftermarket customer has indicated that their
own sales have dropped recently; affects us by 10% of
sales, some of which have been made up by stronger OE
sales.”
“Overall economic improvements in the USA”
“Poor demand”
“Positive attitude of customers = inventory expansion &
growth”
“Price of oil”
“Primarily the weather (mild winter and severe spring) and
the economy.”
“Reduced OE/OES demand from mining industry channel
partners”
“Reduction in miles driven”
“Roller coaster demand”
“Slow aftermarket sales”
“Slow economic recovery.”
“Slow GDP growth”
“Some re-stocking by customers has resulted in modest
growth of order intake”
“Stabilization of costs”
“The lingering winter has impacted our climate control
business and we are optimistic sales will pick up”
“The rapid influx of low cost competitors along with tough
economic conditions and higher gas prices”
“Freight and fuel prices”
“We were acquired in a sale.”
“Weak sales, weather”
“Weaker then expected market conditions in the first half of
2013.”
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What other factors do you think contribute to warranty
returns? What are examples of "abuse" of the warranty
system that you have seen recently in the aftermarket? (1/3)
“Installer claiming warranty on parts that the car owner
never viewed as defective.”
“Installers use 2nd line products and send them back in
branded boxes when they fail.”
“Junk yard units being returned for cash warranty. •
Garages use the life time warranty as a way to make
money / charge their customers. • Units pass test but
customers still want a new unit. • Remove new core units
(end of life) and return to a store for warranty.”
“Lack of technician capability.”
“Largest contributor is installation error.”
“Lifetime warranty and broad customer satisfaction policies”
“Limited checks & balances at the point of return Customer
Satisfaction (Retail)”
“Main factor is abuse”
“Manufacturers are receiving warranty returns for good
product from retailers using customer satisfaction as a
reason vs. sending truly defective product back under
warranty which is a small percentage of overall returns.”
“Marketing of ‘lifetime warranties’ contribute to customer
confusion on what really is covered; therefore, store
personnel ‘keep customer happy’ by giving warranty on a
worn or misapplied part.”
“Minimal returns on our line”
“Appearance of reman parts contribute to excessive
returns”
“Basically catalog errors”
“Channel partners are not interested in reducing NTF”
“Customer satisfaction is the driver of our warranty
expense. Our customers will do whatever is necessary to
make the end consumer happy including giving them a
completely new part even when it is not deserved. In light
of the very challenging market conditions for our products,
our customer believes this will help them retain market
share, when in fact increasing warranty rates are a drag on
market share.”
“Customers will take one part out of a kit and return the
rest. Cut a portion of the product to use and return the
rest.”
“Damaged package (when damage is due to sellers’
markings or tags)”
“Errors in actually diagnosing the vehicle problem correctly.”
“High turnover at retailers and continued lack of education.
E-cat errors”
“Incorrect problem diagnosis”
“Inefficient sales forecasting by customers”
“Installer abuse”
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What other factors do you think contribute to warranty
returns? What are examples of "abuse" of the warranty
system that you have seen recently in the aftermarket? (2/3)
“Misdiagnosis”
“Missing components, cutting off a portion they need and
returning the rest”
“Most listed above...one is product returned in package with
someone else's product”
“Neglect and abuse over the three year product warranty
period”
“No policing at WD or retail level. all of the overhead is
pushed onto the supplier”
“No questions asked counter return, zero financial impact to
retailer on warranty”
“None”
“None - most product returned is ‘no defect’”
“Not a problem in our category”
“Other system related issues; not a defect of the water
pump or fuel pump but bad system issues (poor quality
gas, water /coolant contamination, failure of an adjacent
part in the system, i.e. thermostat, water pump) Countless
other examples.”
“Overall power of distributors/retailers and their lack of
motivation at the purchasing level to take action/ work with
suppliers to ‘fix’ the system. Maybe AASA should address
this as a project!”
“Parts changers, not technicians diagnosing the ‘root
cause’”
“Parts used as a test equipment”
“Poor installation instruction sheets.”
“Poor knowledge, poor training & poor / no oversight with
no closed loop process for feedback to improve”
“Product that goes beyond shelf life and is not properly
monitored by our customer.”
“Resellers merely take anything back, no questions asked,
charge it to the Manufacturer.”
“Returning obsolete as a function of warranty is a blatant
abuse.”
“Returning special order items as defective”
“Sabotage of part...”
“Technicians will play the warranty system so as not to
have to charge a customer for their (technician) mistake.
High tech turnover drives the lack of mechanical skill.”
“The biggest abuse is as pointed out above- Obsolescence
/ Stock Adjustments being called ‘Warranty’”
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What other factors do you think contribute to warranty
returns? What are examples of "abuse" of the warranty
system that you have seen recently in the aftermarket? (3/3)
“The use of warranty for customer satisfaction”
“Too easy for retailer to say yes”
“Using part to "problem solve".”
“We do not have a stock adjustment program, so
customers tend to return obsolete/slow moving stock
through warranty returns.”
“We have limited life time warranty which complicates our
results.”
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What type of internal warranty review process do you use, if
any? (1/3)
“100% at incoming inspection on returns”
“100% inspection”
“A failure analysis to determine root cause”
“All labor claims are reviewed. Regular defect returns are
not reviewed, but that is changing. We are developing a
new plan to review all high value parts.”
“All parts are examined for defect etc., however this is
getting to a big problem”
“Checked against our specifications and tested where
applicable”
“Complete inspection and evaluation - including lab testing
as needed.”
“Detailed cause and effect including historic tracking, lot
control by production date, corrective action, return of
product for review, etc.”
“Each and every return”
“Engineering inspection and testing”
“Engineering review”
“Every part returned as warranty is checked by the quality
department for defects”
“Every part within a warranty claim is reviewed by a product
engineer for a manufacturer defect.”
“Field salesmen review in field.”
“Formalized testing procedure”
“If customer has life time warranty it is accepted. Product is
still evaluated and data is shared with customers to help
educate and drive customer awareness. • Customers with
labor claim polices – claim is only accepted on product
related or manufacturing related failures. Customer abuse
is denied.”
“Inspect by ISO responsible”
“Inspect for material and manufacturing defects”
“Inspect warranty bins before credit is issued. Trying to get
resellers "skin in the game“”
“Inspection and verification of all parts returned.”
“Inspection of all returns on credit line and product line
audits in quality/engineering labs”
“Limited evaluation process in place, as it was expensive to
run & customers demanded credit for parts regardless of
data.”
“Limited; making sure part is ours usually.”
“NA”
“New policy in development”
“No comment.”
“None”
“None”
“Parts are tested on return.”
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What type of internal warranty review process do you use, if
any? (2/3)
“Periodic audits externally.”
“QC”
“QC/ISO CAR process”
“Quality manager utilizes 6 sigma processes”
“Review by part number to check for potential issues”
“Review of every part number by date code and reason”
“RGA must be requested before product returned. RGA not
issued until preliminary reason for return is determined. If
product is suspected to be defective extensive testing
occurs after receipt of return.”
“Robust; QC inspects every part returned, fully tests and
advises disposition.”
“Sales review in the field.”
“Sample size product testing”
“Samples of warranty products are brought back to our
return center and tested.”
“Sampling of warranty returns to gauge abuse. Monitor
outliers and engage in training (both technical and
customer service) to improve results.”
“Test each part and track by customer”
“Testing and Engineering play a key role”
“Testing, and complete tear-down analysis to attempt to
determine cause for removal.”
“Varies by product line. Customers with high warranty rates
get more in-depth review to determine if there is abuse.
Customer Service and Sales Force review warranty claims
with customers.”
“Very deep analysis”
“very detailed analysis of returned parts/customer
satisfaction improvement and updating
design/manufacturing to continually improve.”
“Warranty is monitored every day and if warranty increases
an 8D is performed to reduce warranty cost and find out the
real cause of the warranty increase.”
“Warranty sampling review and categorization of warranty
returns”
“We are in the process of re-evaluating our entire return
process and procedures.”
“We discuss every month.”
“We established a cross functional team to address rising
warranty rates & costs. All high warranty items are being
reviewed.”
“We evaluate every return to ensure that it meets with our
warranty policy- Replacement of related components and
proper servicing procedures.”
“We go through a formal review/inspection after the field
person authorizes return.”
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What type of internal warranty review process do you use, if
any? (3/3)
“We have a minimal evaluation process. We track by
customer and then view the customer warranty and give
feedback as to findings.”
“We have an "autopsy" room where every warranty item is
reviewed for cause. Credit is issued in most cases, unless
there is blatant abuse. But we like to know the root cause.”
“We have an analysis performed for only damage to the
engine related to our product.”
“We have one, but are basically powerless based on size
and influence of customer.”
“We inspect 100% of warranty returns”
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What can be done to improve the system and prevent
unnecessary warranty costs? (1/3)
“A complete tracking process of issues beginning at the
reseller level. Their systems oft times do not capture
issues or provide option for employees, those that do have
sometime poor compliance. The entire Industry needs to
own this issue.”
“Adopt the MAC policies regarding warranty.”
“Ask retailers to adjust policies to avoid customer abuses”
“Better cataloging. Stronger jobber and distributor warranty
policies.”
“Better communication at all levels, starting with the point of
sale.”
“Better education at the installer level to improve problem
diagnosis.”
“Better investment in QC and improve communications on
forecasts with customers”
“Catch the abusers and correct this problem”
“Clear warranty process for customers to follow and a clear
explanation of warranty by product line.”
“Closer to the end customer evaluation rather then up at
manufacturer level. It is only dealt with at manufacturer
level.”
“Cost share of warranty costs with distribution on nondefect returns”
“Counter personnel need to become more involved instead
of just taking everything back and returning to vendor.”
“Customer satisfaction no longer returned under warranty
for known good product and increased parts counter
education”
“Discount in lieu of warranties”
“Eliminate Lifetime warranty and broad customer
satisfaction policies”
“Eliminate lifetime warranty and lower customer satisfaction
abuse”
“Form an industry council that includes all stakeholders
including OEMs and dealers”
“Get buy-in from customers to improve system. Have
offered to pay all costs of improvement but there has been
little motivation for purchasing departments to support
warranty reduction.”
“Get the channel partners more involved through training.”
“Go to flat allowance as a percent of sales. Ex. 1% of net
purchases”
“Having a tracking program to measure returns/warranty by
type to take corrective action”
“I think we have a pretty good system but educating our
customers about shelf life and inventory turns may help.”
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What can be done to improve the system and prevent
unnecessary warranty costs? (2/3)
“Improved channel visibility from WD to installer: sales,
returns, warranty claims that are measureable.”
“Improved product quality. (given but needs stating) ‘In lieu
of’ discounts shift warranty management closer to
installation point cutting time, processing and handling
costs”.
“In lieu of warranty allowance offerings”
“In most cases, a clear understanding of the installation
procedure and a method to communicate where installation
documents are not ignored.”
“Increased monitoring”
“Installation and diagnostic training.”
“More inspection and returns to offender.”
“Not a big issue”
“Not sure.”
“Off-invoice warranty! It works because now everyone has
skin in the game”
“Our customers have to take ownership over their
customers’ neglect. Our customers believe that if they tell
their customer no they will lose that customer to a
competitor. This will not change until the industry changes.”
“Reduce over-ordering”
“Reduction of warranty periods and holding the customer
accountable.”
“Resellers need to be held accountable for no apparent
defect warranties”
“Retailers in the Automotive Aftermarket need to stand firm
when product failure was caused by something else. More
training for the counter personnel and store management
would enable better dialogue with the consumer. Retailers
need to not be afraid to say no.”
“Review the catalog”
“Since most "warranty" claims are related to end-customer
accommodations rather than true defective product,
offering a discount in lieu of warranty claims would provide
a fund to customers who feel the need to accommodate
their customers claims. Then the expense would at least
be ‘known’ based on a percentage of sales.”
“Technical information and training needs to be improved
on installer and counter person level”
“Technician training and tighter controls on accepting abuse
within the channels.”
“Training at the installer level”
“Training at the installer level and enforcement of policy.”
“Training of service providers. Strict adherence to warranty
policy”
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What can be done to improve the system and prevent
unnecessary warranty costs? (3/3)
“Training, tougher review process at customer locations”
“Training. Call out the abusing shops or dealers”
“Work through the supply, delivery up to installation process
and make sure that process is working.”
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AASA Supplier Barometer methodology notes
•
The AASA Supplier Barometer survey
presents the latest information on aftermarket
supplier sentiments and market trends.
•
Comments are edited only for spelling and
diction and may contain grammatical errors
due to their verbatim nature.
•
The purpose of the survey is to provide
members with general information on
business conditions and market trends and to
allow high-level benchmarking of sector
performance. The information and opinions
contained in this report are for general
information purposes only.
•
Note that responses to questions related to
price and gross margin trends are delayed by
one quarter to comply with anti-trust safe
harbor guidelines.
•
Responses to this survey are confidential.
Therefore, only aggregated results will be
reported. Individual responses will not be
released and will be destroyed after results
are compiled.
•
Participation is only available to AASA
supplier members. There were 88 survey
responses in this quarter’s report.
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Contact Information
Paul McCarthy
Vice President
Industry Analysis, Planning and Member Services
Office: +1 919.406.8812 | Mobile: +1 248.914.2567
Email: [email protected]
Bailey L. W. Overman
Analyst/Coordinator
Industry Analysis and Member Services
Office: +1 919.406.8823
Email: [email protected]
AASA | Automotive Aftermarket Suppliers Association
10 Laboratory Drive | Research Triangle Park | NC | 27709 | USA
www.aftermarketsuppliers.org
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