Transcript Slide 1

Contents
Executive Summary
pg. 3
Special Questions
 Rising Interest Rates and Their Effect
on the Aftermarket
 Un-tapping Unperformed Maintenance
pg. 18
Detailed Results
 Market Conditions
 Outlook
 Issues
pg. 24
pg. 31
pg. 37
IMR Repair Shop Survey
pg. 40
Appendix
 Respondents’ Product Segments
 Full Answers to Selected Questions
 Methodology
pg. 44
pg. 45
pg. 50
2013 Q3 Aftermarket Supplier Barometer
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pg. 9
Executive Summary
Key Findings
2013 Q3 Aftermarket Supplier Barometer
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Aftermarket outlook sentiment still positive but declined from
the high seen in the second quarter
2013 Q3 Aftermarket Supplier Barometer
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AASA Barometer Dashboard
Market Conditions
2013 Q2
2013 Q3
Change*
Direction
52%
62%
+10
↑
Independent Aftermarket Average Growth
Rate
+1.5%
+2.8%
+1.3
↑
OE Service (OES) Average Growth Rate
+0.2%
+0.9%
+0.7
↑
2013 Q2
2013 Q3
Optimistic Towards Business Outlook
50%
Adding to Inventories
Experienced Growth in Sales
Outlook
Status
Change
Direction
40%
-10
↓
34%
39%
+5
↑
Increase in Production Capacity
39%
38%
-1
↓
Companies who are Hiring
47%
47%
-
-
+2.8%
+2.2%
-0.5
↓
New Order Volume Average Growth
Sales
100%
80%
60%
40%
20%
0%
-20%
-40%
Status
6.0%
New order Volume
4.0%
2.0%
0.0%
2011 Q1
2012 Q1
2012 Q1
2013 Q1
2013 Q3 Aftermarket Supplier Barometer
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2013 Q1
AASA key takeaways: Decreased optimism despite
year-over-year growth
Optimism declined slightly with respondents indicating optimism
dropping 10 percentage points from Q2 (pg.32). New orders also
declined this quarter dropping 0.6 percentage points to an average
of 2.2% for the third quarter (pg.36).
However, sales performance increased with 62% reporting
growth (pg.25). Both independent and OES average growth
rate increased in the third quarter as well, although not to levels
seen in previous years (pg.27 – 28).
Deflated optimism despite growing sales reflects the sentiment
that the quarter started strong but did not finish at the levels
seen in June and early July. With capacity and hiring remaining
steady and the decline in new orders, we may face the continued
slow growth continuing into the fourth quarter.
2013 Q3 Aftermarket Supplier Barometer
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AASA key takeaway: An interest rate increase will
negatively impact the aftermarket
Rising interest rates could
challenge the current
supplier – channel partner
model
• “Distributors will push
harder on
manufacturers to ‘carry
their inventory’…”
• “…It would create a war
between the suppliers
and the customers.”
• “Increased friction
between customers
and suppliers as
negotiations begin with
regards to sharing these
costs.”
As the threat of rising
interest rates looms, most
agree the outcome will not
be positive for suppliers
• Rising interest rates
bring many threats to
aftermarket suppliers
including
• Increased pressure on
smaller suppliers
• Impact on cash flow
• Increase in prices
See page 10-17 for additional details
2013 Q3 Aftermarket Supplier Barometer
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However, a minority of
supplier respondents
voiced a more positive
view
• “I believe the market
would stabilize allowing
customers, suppliers,
channel partners to
continue to invest and
profitability grow.”
• “A gradual increase will
not have a drastic
impact…”
AASA key takeaway: Respondents indicated the most
important initiatives to reduce unperformed maintenance
were awareness campaigns and increasing vehicle
inspections
Most important initiative to reduce
unperformed maintenance
In 2012 it was reported
there was $66 billion
dollars in unperformed
maintenance.
40% of
respondents
believe
29% of
respondents
believe
Note: All responses shown, see page 23 for full results.
2013 Q3 Aftermarket Supplier Barometer
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• Industry-wide campaigns to
improve maintenance
awareness
• Increasing vehicle
inspection programs
Special Question:
Rising Interest Rates and Their
Effect on the Aftermarket
2013 Q3 Aftermarket Supplier Barometer
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Interest rate increase will negatively impact the aftermarket
The question asked:
There has been a lot of talk lately in the financial press about increasing long-term interest rates and how the next Fed
chairman will eventually have to move the U.S. to a normalized interest rate environment. If Fed fund rates returned to a longterm normal range of 5-6%, what do you think would be the impact on aftermarket suppliers, channel partners,
inventory in the aftermarket, payment terms and the aftermarket business model?
“Consolidation at all levels of the
industry will accelerated as
weaker players struggle with
bank financing.”
Increased Pressure
on Smaller
Suppliers
“5 - 6% is manageable but it will
impact financially weak
suppliers, WD's and service
providers. A lot depends on
how quickly the rates go up.”
“Prices throughout the
channel will rise”
Increase in Prices
“Decreased cash flow at
all levels with most
profound impact on small
suppliers in vendor
factoring programs”
“Cash is king, without it the kingdom suffers! All
businesses (Small, Medium and Large) are
watching their cash flow reserves evaporate.
Increasing interest rates anytime in the near future will
further impact these reserves and thus limit growth.”
2013 Q3 Aftermarket Supplier Barometer
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“Will require changes with their
customer programs to reduced
terms or higher prices.”
Impact on Cash
Flow
As the threat of rising future interest rates looms, most agree
the outcome will not be positive for suppliers
“Strategies hooked to cheap money” will no longer be applicable
One supplier respondent summarized the consensus view point well:
“I believe there will be financial challenges to businesses in the
aftermarket with a rising long-term interest rate environment. Too
many companies have created strategies hooked to cheap money,
and that will radically change the cost position in a normalized interest
rate environment. The days of free money will eventually go away
and businesses will have to support the real cost of funds in their
business models.
Many companies are going to shocked by that cost.”
AASA encourages you to read through the full range of
responses found on the next slides.
2013 Q3 Aftermarket Supplier Barometer
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Rising interest rates could challenge the current
supplier - channel partner business model
“Distributors will push harder on manufacturers
to "carry their inventory" either through extended
payment terms, consigned inventory and/or
shorter replenishment cycles”
“Decreased cash flow at
all levels with most
profound impact on small
suppliers in vendor
factoring programs.”
“Negative, especially payment
terms. Customer channel will
need to negotiate reduction in
terms or share cost of
factoring.”
“Most companies have already
reduced inventory and operating
expense and there would be no
way to absorb the additional cost. It
would create a war between the
suppliers and the customers.”
“Increased friction between customers and
suppliers as negotiations begin with regards to sharing
these costs.”
“Payment terms are unlikely to change as customers
view what they have achieved as ‘captured ground.’
The increase in interest rates will have to be
negotiated just like raw material increases or other
increased costs of doing business.”
2013 Q3 Aftermarket Supplier Barometer
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However, a minority of supplier respondents voiced a
more positive view
“This won't happen until 2015 at the
EARLIEST. Suppliers need to negotiate
interest rate clauses in their contracts to
handle. Any supplier who is damaged
by interest rate increases has only
themselves to blame, given the amount of
time available to correct the situation.”
“If loan costs increase, new car sales will
be negatively impacted, short term gains
for auto-aftermarket.”
“I believe the market would stabilize
allowing customers, suppliers, channel
partners to continue to invest and
profitably grow.”
“NO Impact - we still have to run the
business and maintain production and
inventory levels.”
“A gradual increase will not have a
drastic impact. A sudden return to the old
normal would be devastating but is highly
unlikely.”
“Moderate impact.”
AASA encourages you to read through the full range of
responses found on the next slides.
2013 Q3 Aftermarket Supplier Barometer
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If Fed fund rates returned to a long-term normal range of 5-6%, what do you think
would be the impact on aftermarket suppliers, channel partners, inventory in the
aftermarket, payment terms and the aftermarket business model? (1/4)
“1) Prices throughout the channel will rise, 2) Distributors
will push harder on manufacturers to "carry their
inventory" either through extended payment terms,
consigned inventory and/or shorter replenishment
cycles. 3) Consolidation at all levels of the industry will
accelerated as weaker players struggle with bank financing.”
“5 - 6% is manageable but it will impact financially weak
suppliers, WD's and service providers. A lot depends on
how quickly the rates go up.”
“A gradual increase will not have a drastic impact. A
sudden return to the old normal would be devastating but is
highly unlikely.”
“Add to down market”
“After the responding to the dynamics of transition to a 5-6%
rate range, I believe the market would stabilize allowing
customers, suppliers, channel partners to continue to
invest and profitably grow.”
“Big impact on companies with extended payment programs.
Will require changes with their customer programs to
reduced terms or higher prices”
“Big problem with those who are factoring”
“Cash is king, without it the kingdom suffers! All businesses
(Small, Medium and Large) are watching their cash flow
reserves evaporate. Increasing interest rates anytime in the
near future will further impact these reserves and thus limit
growth.”
“Companies would have to get more money for the product
or else they would go out of business. With the extended
terms given to a large number of aftermarket retailers and
others the interest expense would exceed the companies
bottom line. Many of the channel partners would not have
the funds to reduce the length of the terms and they would
be very reluctant to raise prices. Most companies have
already reduced inventory and operating expense and there
would be no way to absorb the additional cost. It would
create a war between the suppliers and the customers.”
“Cost of money will increase the cost of inventory and
thus a reduction in orders for stock.”
“Decreased cash flow at all levels with most profound
impact on small suppliers in vendor factoring programs”
“Huge backlash on extended terns which are low cost today”
“I believe there will be financial challenges to businesses in
the aftermarket with a rising long-term interest rate
environment. Too many companies have created strategies
hooked to cheap money, and that will radically change those
cost position in a normalized interest rate environment. They
days of free money will eventually go away and businesses
will have to support the real cost of funds in their business
models. Many companies are going to shocked by that cost.”
“If loan costs increase, new car sales will negatively
impacted, short term gains for auto-aftermarket, long
term losses due to shrinking number of cars in the sweet
spot”
2013 Q3 Aftermarket Supplier Barometer
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If Fed fund rates returned to a long-term normal range of 5-6%, what do you think
would be the impact on aftermarket suppliers, channel partners, inventory in the
aftermarket, payment terms and the aftermarket business model? (2/4)
“Impact would be negative. We would like to see rates
remain at current levels.”
“Increase cost of goods, payment terms would need to
be shorter”
“Increased friction between customers and suppliers as
negotiations begin with regards to sharing these costs”
“Increased pressure on terms”
“Inflation”
“Inventory in the aftermarket, payment terms”
“Inventory risk continues to be pushed to suppliers so
the impact on working capital will flow to AR and the push to
keep terms lower to ring-fence carrying costs”
“It will be very bad for those on factoring programs.”
“It will have a major impact to those who have excessive
extended terms with factoring”
“It will increase costs for those with financed
receivables/payables”
“It would be a killer no matter how you slice it. Obviously the
key issue is how interest rates pertain to factoring. If interest
rates go up, one of two things will happen - the house of
cards falls and the retailers pay the price. Or the Retailers
just pass on the added cost to the manufacturers - which is
also not good...”
“It would slow down the economy and the aftermarket
business.”
“Less borrowing and more extended payment terms. Less
investment in new inventories.”
“Moderate impact”
“More pressure on payment terms, and more emphasis on
inventory optimization and tools”
“Negative effect on economy overall slowing everyone's
business”
“Negative, especially payment terms. Customer channel
will need to negotiate reduction in terms or share cost
of factoring”
“NO Impact - we still have to run the business and
maintain production and inventory levels.”
“NO impact...need to get there to stabilize the economy and
stop artificially reducing the value of US currency.”
“None”
“Not significant at the 5 to 6% range”
“Obviously a lot of risk to the business tied up in factoring.
Factoring (or easy money) has made us lazy in terms of
the amount of inventory in the market.”
“Our competitors will weaken. Channel partners will become
more demanding. Inventories will shrink, payment terms
will become harder to give.”
“Payment term requests will increase even more.....”
2013 Q3 Aftermarket Supplier Barometer
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If Fed fund rates returned to a long-term normal range of 5-6%, what do you think
would be the impact on aftermarket suppliers, channel partners, inventory in the
aftermarket, payment terms and the aftermarket business model? (3/4)
“Payment terms are unlikely to change as customers
view what they have achieved as "captured ground."
The increase in interest rates will have to be negotiated
just like raw material increases or other increased costs
of doing business.”
“Prices would rise.”
“Pricing will have to go up or terms will have to be reduced.”
“Purchases at all levels could decline as financing
becomes more expensive. Inventories will be reduced
further.”
“Serious cash flow issues”
“Short term inflation within the channel due to extended
terms. Manufacturers will have to recoup this direct cost of
terms.”
“Suppliers will be in a lesser position to fund customer cash
needs through extended terms.”
“The cost of money will go up and "360 Terms" should
tapper-off, but we are assuming the Fed will raise rates, to a
"long-term normal range of 5-6%" what if this is the new
normal? U6 is at 14%, the lowest participation rate in
decades, our economies next recession is getting
closer every day.”
“The increase in rates would take a lot of margin out of
the manufacturers pocket.”
“The OES part of the Pie will increase, as Aftermarket
Resellers will trim inventory at the DC, and smaller
resellers will go out of business, although the response of
the lending community could soften making it easier to
obtain loans. That would be the only saving grace. I don't
see this happening however, especially for smaller
businesses.”
“There will be a big impact on retail auto with extended
terms. Higher interest rates will increase costs to their
vendor who will then seek price increases.”
“They're screwed. They should have never adopted this
model of extended terms.”
“This won't happen until 2015 at the EARLIEST.
Suppliers need to negotiate interest rate clauses in their
contracts to handle. Any supplier who is damaged by
interest rate increases has only themselves to blame,
given the amount of time available to correct the
situation.”
“This would greatly affect the extended terms situation.
Factoring would dry up and there would be an immediate
pull-back on inventory levels.”
“Troubling given the extended terms tied to LIBOR ---- will
get very difficult to continue to support Factoring type
offerings.”
“Unknown”
“We will an overall constriction of business, lower inventory
levels to improve cash flow, more customers requesting
longer payment terms”
2013 Q3 Aftermarket Supplier Barometer
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If Fed fund rates returned to a long-term normal range of 5-6%, what do you think
would be the impact on aftermarket suppliers, channel partners, inventory in the
aftermarket, payment terms and the aftermarket business model? (4/4)
“While business models may vary among channel partners,
the cost of capital is usually a factor in investment options
like level of inventory that is practical. As interest rates rise,
payment terms and inventory levels will adjust over time to
accommodate those shifts.”
“Will create difficult transitional period for the
aftermarket, including higher costs of factoring
programs.”
“With the crazy terms that some customers require, a rise in
interest rates could be the end of some companies”
“Working capital cost will soar”
2013 Q3 Aftermarket Supplier Barometer
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Special Questions:
Un-tapping Unperformed
Maintenance
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In 2012, unperformed maintenance in the automotive
aftermarket totaled $66 billion dollars
Although a slight decline from 2011, unperformed maintenance has totaled over $60
billion for the third year in a row
2013 Q3 Aftermarket Supplier Barometer
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For 66% of supplier respondents the opportunity of reducing
unperformed maintenance is an important issue
66%
2013 Q3 Aftermarket Supplier Barometer
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Respondents believe the best way to reduce unperformed
maintenance is to create end consumer awareness of the
dangers of not performing regular maintenance
What should the aftermarket as a whole, individual companies, and aftermarket
associations, be doing to reduce unperformed maintenance?
“Continue educating end consumers
about the importance of maintenance…”
“Create a communications plan "We've
got your back", where the repair garage
is an extension of the security that a
family feels instead of an adversary.”
“Educate, educate, educate: regular
maintenance = longer car life (i.e.. best
consumer value) - the more "outlets"
banging the drum is good for all.”
“Help push the message down to the
consumer via informative platforms
within mainstream media outlets.”
“Communicate the negative impacts
(safety, costs concerns) of unperformed
maintenance.”
“Education of consumers.”
For full results, see Appendix
Note: All answers reflected this sentiment, but the majority did
2013 Q3 Aftermarket Supplier Barometer
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However, 40% of supplier respondents indicated that “None”
of their marketing budget was dedicated to reducing
unperformed maintenance
For 21% of respondents,
10% or more of their
marketing budget is
dedicated to reducing
unperformed maintenance.
2013 Q3 Aftermarket Supplier Barometer
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Respondents indicated that the most important initiatives to
reduce unperformed maintenance were awareness
campaigns and increasing vehicle inspections
AASA supports addressing the issue of
unperformed / underperformed
maintenance through continued
consumer education and through
reasonable, safety-friendly and costeffective vehicle inspection programs
throughout the country.
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Detailed Results:
Market Conditions
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Sales performance experienced an incline with 62% of
supplier respondents enjoying growth
Decline
Growth
Only a fifth of respondents reported declines, lowest in five quarters
Base: n = 92
Note: “No change” is shown as neutral (as a zero value) on the chart to allow a visual depiction of trends
2013 Q3 Aftermarket Supplier Barometer
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Majority of respondents (58%) expect growth in sales in the
fourth quarter of 2013
Only 9% expect declines
Expect
increases: 58%
Expect
declines: 9%
Base: n = 90
2013 Q3 Aftermarket Supplier Barometer
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Respondents’ independent aftermarket sales grew on
average by 2.8%, an increase from Q2
Although majority, 65%, reported an increase from 2012, nearly a quarter of
respondents reported declines
Average:
+2.8%
Base: n = 88
2013 Q3 Aftermarket Supplier Barometer
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Quarter
Average
Growth
2012 Q4
+1.9%
2013 Q1
+2.3%
2013 Q2
+1.5%
2013 Q3
+2.8%
OES average growth rate increased to +0.9%
41% indicated increases from 2012, but still not at levels seen in Q4 of 2012
Average:
+0.9%
Base: n=82
2013 Q3 Aftermarket Supplier Barometer
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Quarter
Average
Growth
2012 Q4
+1.7%
2013 Q1
+0.5%
2013 Q2
+0.2%
2013 Q3
+0.9%
Q2 pricing environment improved as 27% increased prices
and 8% decreased
Price Cuts
Price Increases
Although the pricing environment is still increasing, it did slow from Q1 with those
reporting an increase dropping 10 percentage points
Base: n= 87
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 Q3 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 decreased slightly in Q2
Decline
Increase
Those indicating gross margin growth decreased from 29% to 24%; while those
indicating declines remained steady at 22%
Base: n=87
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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Respondent’s outlook steadied with most (47%) indicating
“No change”
Negative
Positive
Respondents who indicated optimism in Q3 decreased 10 percentage points
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 88
2013 Q3 Aftermarket Supplier Barometer
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Respondents indicated a slight increase in inventory
additions in Q3 versus Q2
Cuts
Additions
39% added to inventories while 22% cut
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 92
2013 Q3 Aftermarket Supplier Barometer
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Capacity trends have remained steady over the past six
quarters
Cuts
Increase
More (38%) added to production capacity in Q3
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n = 92
2013 Q3 Aftermarket Supplier Barometer
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Hiring was steady with 47% indicating growth from Q2
Job Cuts
Hiring
Only 5% of respondents indicated “Job Cuts”
Base: n=92
2013 Q3 Aftermarket Supplier Barometer
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New orders average growth decreased year-over-year,
dropping from +2.5% in 2012 Q3 to +2.2% in 2013 Q3
New orders are still relatively low with a decline of 0.6 percentage points from 2013 Q2
Note: “No change” is shown as neutral (as a zero value)
on the chart to allow a visual depiction of trends
Base: n=86
2013 Q3 Aftermarket Supplier Barometer
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Detailed Results:
Issues
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“Extended payment / terms of sale” moves to top issue for
2013 Q3
“Economic conditions” and “Aftermarket Demand Drivers” emerge as other top issues for
the quarter
More
Important
Less
Important
Note: Top Issues in 2013 Q2
1. Lack of pricing power
2. Weak Sales
3. Extended payment / terms of
sale
2013 Q3 Aftermarket Supplier Barometer
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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)
Economic Uncertainty & Weak Sales
Issues with Customers

“Economic Conditions.”

“Consolidation of some customers…”

“Economic conditions remain soft. Fuel prices
rising.”

“Customers changing their procurement process
and subjecting the suppliers to annual auctions.”

“Weaker Sales resulting in overall weaker demand
for Performance Chemicals in the aftermarket…”

“Customers managing their inventory more tightly.”

“Retailers cutting back on purchases versus prior.”

“Weaker retail sales.”

“The Retail segment being down or flat. Growth
was projected. Having to make up for it elsewhere.”

Weather

“Weaker sales resulting in overall weaker demand
for Performance Chemicals in the aftermarket.”

“WEATHER- Lack of heat!”

“Climate!! A cooler than normal Summer killed our
A/C service business...”
“The economy is still weak.”
For full results, see Appendix
2013 Q3 Aftermarket Supplier Barometer
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IMR Repair Shop
Survey
2013 Q3 Aftermarket Supplier Barometer
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Shop sales increased quarter-over-quarter
2013 Q3 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 Q3 Aftermarket Supplier Barometer
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Appendix
• Respondent’s Product Categories
• Full Answers to Selected Questions
• Barometer Methodology
2013 Q3 Aftermarket Supplier Barometer
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Respondents’ product categories
Base: n = 86
Note: Respondents could pick multiple categories; therefore, total will add up to more than 100%
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What should the aftermarket as a whole, individual
companies, and aftermarket associations, be doing to reduce
unperformed maintenance? (1/3)
“Advertise”
“Advertising and CSA education”
“Best is Vehicle Inspections, Regulatory requirements to
have a safe/repaired vehicle on the road”
“Better planning”
“Communicate the negative impacts (safety, costs
concerns)of unperformed maintenance”
“Communication thru media, ads, public service
announcements, thru the retailers to encourage people to
repair their vehicles so they last longer etc.”
“Consumer education”
“Consumer education”
“Continue car care awareness campaigns”
“Continue educating end consumers about the importance of
maintenance. Provide improved tools for consumers to
better understand maintenance procedures and why they
are important.”
“Continue education and training”
“Develop Public Service Announcements (TV commercials,
radio scripts, print and e-copy) covering safety implications
of NOT doing maintenance. Idea would be to get FREE
placement in media since it would be a Public Service.
Inspection programs are NOT that effective.”
“Continue the message concerning Preventive Maintenance
to the Shop Owner/Technician Level. Too many shops are
still focused on repair because they believe the car owner
can't afford or won't pay for preventive maintenance.”
“Continued education”
“Create a communications plan "We've got your back",
where the repair garage is an extension of the security that a
family feels instead of an adversary.”
“Determine and communicate the economic impact to
consumers for the underperformed maintenance- if they as a
whole have not performed s significant $ of work for the last
15 years is that maintenance cost effective?”
“Doing all the right things.”
“Educate consumers on the long term costs of
underperformed maintenance. If a consumer does not
perform the routine maintenance to avoid near term costs,
what will the future costs be?”
“Educate the service technicians and explain the risk/cost of
underperformed maintenance.”
“Educate, educate, educate: regular maintenance = longer
car life (i.e.. best consumer value) - the more "outlets"
banging the drum is good for all”
“Education of consumers”
2013 Q3 Aftermarket Supplier Barometer
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What should the aftermarket as a whole, individual
companies, and aftermarket associations, be doing to reduce
unperformed maintenance? (2/3)
“Even if you offered free repairs, you aren’t going to get most
of that business, its like the dentist or doctor, we are all
suppose to go once or twice a year, but many don’t.
Anything beyond a modest effort in the form of awareness is
a waste of money.”
“Gaining legislation for federal and/or state vehicle
inspection programs”
“Get aftermarket customers, even if they order e-tail, to
create a system to track maintenance.”
“Help push the message down to the consumer via
informative platforms within mainstream media outlets.”
“Increase consumer awareness from an industry standpoint”
“Industry wide focus/promotion of the downside of
unperformed maintenance”
“It is difficult to do anything in light of eroding margins. We
must first restore margins and then funds may be available.”
“Keep talking about it to all channel levels”
“Make the installer aware to do a more complete job of
inspection. Advertise the underperformed maintenance as a
safety issue for all Americans.”
“Media campaigns.”
“National Ad Campaigns”
“Negative impact of postponing repairs”
“Not sure”
“Not sure......”
“Plan the budget for the unperformed maintenance.”
“Promote safety and long-term savings.”
“Promotion of impact of underperformed maintenance”
“Remember that, while maybe directionally a good thing,
reducing unperformed maintenance has the potential to
reduce parts sales... And that sales related to unperformed
maintenance are potentially a one time gain.”
“Revisit or consider a regulatory requirement for inspection
and maintenance”
“Simple awareness of why maintenance is important and in
the long run can save money and possible inconvenience
from a mechanical breakdown.”
“Social media education”
“Spread the word!”
“Start with educating the consumer on low cost things that
he can do to keep her/his vehicle maintained - get back to
the basics, and then build from there. With the consumer
strapped for cash - he's avoiding anything that he can put
off.”
“Stress the importance of general maintenance and the cost
of unscheduled maintenance.”
“Stressing the importance of preventative maintenance”
“Stressing the safety aspect of not doing the repairs.”
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What should the aftermarket as a whole, individual
companies, and aftermarket associations, be doing to reduce
unperformed maintenance? (3/3)
“This needs to be driven at the Association level. "Soup is
good food" only works if you're Campbell's. A filter company
that is not the market leader is only benefiting the Market
Leader if it is touting to pay attention to proper vehicle
maintenance.”
“Training service providers on selling [preventative
maintenance]”
“Unsure”
“Well, oddly enough, unperformed maintenance can actually
help our business.”
“Work closer with OEMs instead of against them.”
“Work with OE manufacturers to set up standards for vehicle
maintenance.”
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What events or changes have most impacted your business
or business conditions in the past three months? (1/2)
“Availability of raw materials.”
“Availability of technical resources (Engineering, Sales,
Quality)”
“Bankruptcies and additions of competitor manufacturing
capacity are putting price pressure on our business”
“Big increases in Chinese imports”
“Climate!! A cooler than normal Summer killed our A/C
service business...”
“Competition stepping up aggressive programs”
“Competitor price reductions”
“Consolidation of some customers; lack of increase in South
America and Mexico”
“Continued cyclical downturn of OE HD Mining industry
demand”
“Continued expansion of the acceptance of overseas "knockoffs", and the continued price erosion that has resulted.”
“Customer acquisitions/consolidations. Program group
membership changes.”
“Customers changing their procurement process and
subjecting the suppliers to annual auctions.”
“Customers managing their inventory more tightly”
“Economic Conditions”
“Economic conditions remain soft. Fuel prices rising.”
“Extended payment term requests”
“Extended Payment Terms and Late Payments.”
“Extended Terms”
“Extreme price pressure at the service providers.
Consumers are also tight with spending due to higher fuel
prices and economic slump.”
“Fed quantitative easing continues to lift confidence and
spending above what would have been the case. Gas prices
down helps too. Still consumers very cautious - "recovery"
insufficient”
“General political and economic instability in the Middle East
and Venezuela is negatively impacting sales.”
“Government Regulations/Health Care Slow recovery”
“Imports”
“Inconsistent order patterns have continued throughout
2013. Additional consolidation of WD
s and jobbers will have a much greater impact on the
aftermarket as available cash becomes tight.”
“Increased cost of crude oil and extended payment terms”
“Increased demand causing order fill performance to suffer”
“Increased demand for quality products”
“Industry consolidations, overseas competition”
“Inflation, medical expenses, mix changes.”
“Internal system upgrades”
“Lack of a key component in order to produce a finished
product.”
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What events or changes have most impacted your business
or business conditions in the past three months? (2/2)
“Low cost country products, economic conditions that impact
consumer confidence and spending and that cause delays in
performing maintenance”
“Lower comp sales than expected”
“Margin erosion and mediocre sales”
“More aggressive terms from our customers.”
“Need a good sale person”
“New products are driving sales increases”
“Nothing significant”
“Obama Care Issues”
“OE production demand is using up a lot of the supplier and
OE production manufacturing capacity. No capacity to make
aftermarket product.”
“Offshore competitors”
“Positive economical market environment.”
“Price cutting in the market”
“Regulations and potential increases in healthcare cost”
“Retailers cutting back on purchases versus prior.”
“Secured national distribution customer. OES sourcing
strategies.”
“Soft demand”
“Soft market, weather”
“Summer driving activity seems to have impacted
automotive aftermarket favorably.”
“The economy is still weak.”
“The increase in large consulting companies doing business
in the aftermarket”
“The loss of key people going to competitors, and nobody
within the organization with the capacity to replace them has
the potential to be detrimental to our business.”
“The Retail segment being down or flat. Growth was
projected. Having to make up for it elsewhere.”
“Unpredicted and unanticipated sales spikes in certain
product categories. Competitor exited the marketplace”
“Weaker retail sales”
“Weaker Sales resulting in overall weaker demand for
Performance Chemicals in the aftermarket. In addition,
inventory management practices of customers has
intentionally reduced inventory in the supply chain.”
“Weather”
“Weather conditions, rain”
“WEATHER- Lack of Heat!”
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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 94 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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