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Which do Techs Want More: Name Brand or Price?


11/1/2004
By Gary Goms

Of course your professional accounts want top quality. But they also want a low price. All things being equal, which will they choose?
 

Does having a brand name mean that a product is always better? Not necessarily! Many years ago, I had to re-do several timing chain replacements out of my own pocket because the metal in the timing chain links hadn't been properly hardened. The brand name product was obviously flawed since both timing chain installations failed within a few months of their original installations. Given that most timing chains routinely lasted from about 80,000-100,000 miles at that time, the life expectancy of these brand-name chains fell far short of the mark, both in durability and reputation.

Needless to say, the jobber's offer to simply replace the timing chains with another of the same brand didn't offer much consolation. Not wanting the same problems to greet me three months later, I opted to buy a different brand of chain out of my own pocket and replace them at my own expense. A very costly lesson, to say the least, but one that endures to this very day when I choose a brand name replacement part!

PERFORMANCE AND RELIABILITY
The performance and reliability of brand-name replacement parts is one of the key management issues in today's independent repair shop. Aside from placating irate customers, the primary reason that shops hate comebacks is because repairing modern vehicles has become a very time-intensive process. Whereas it cost me about two hours each to replace those defective timing chains from 25 years ago, it can cost at least one day's labor just to replace the rear timing chain on a new Ford Explorer considering that the engine must be removed to gain access to the rear timing chain cover.

Computerized management systems in the modern shop make it possible for shop managers to track the performance and reliability of a particular brand name part. Fleet shops, for example, must mathematically quantify a brand's performance and reliability in order to justify future purchases. Since most fleets service large groups of identical vehicles driven under identical conditions, such quantification is relatively easy to achieve. Police and emergency vehicles come to mind since both are very tough on routine replacement parts like batteries, serpentine belts and brake friction.

The performance of a particular part is usually evident in the number of complaints associated with that part. Police fleet service departments are the first to hear about performance when a brake pad fails to stop a vehicle in a timely manner or when it begins to fade during high-speed braking. In the same breath, battery reliability comes into play when it comes time to start an ambulance or fire truck. The vehicle either starts or it doesn't, regardless of the brand name on the battery.

Computerized management systems have also made it possible for independent repair shop owners to quantitatively assess the performance and reliability of the parts they buy. Since most good shop managers bill a comeback complaint to their shop's "public relations" account (as well they should), it's easy to track comebacks as a percentage of total sales.

Unfortunately, most independent shops don't buy specific part numbers in the volumes that a fleet agency would, so independents tend to base their future purchasing decisions on a relatively small number of failures. This is an important issue for aftermarket manufacturers and suppliers since as few as three consecutive brake squeal complaints associated with a particular brand name might encourage that installer to begin experimenting with other OE and aftermarket-branded brake linings.

PRICE-POINT MATH
In a well-managed independent shop, the average cost of parts is about 20 percent of the total amount billed to the customer. The remaining 80 percent represents gross profit in the form of retail mark-up on parts and labor charges. Consequently, a price-point savings of $2 (or 10 percent) on a $20 part represents only 2 percent of a $100 service invoice. So, mathematically speaking, if the cheaper part fails once every 50 installations, the failure rate wipes out the 2 percent per invoice savings.

OEM BRANDS
In order to maintain high customer satisfaction rates, quality-conscious independents are buying an increasing number of their parts from OE-branded sources. In the most critical areas like vehicle emissions and driveability services, many independent installers feel that the OE-branded component restores the vehicle to original standards of performance much better than the aftermarket component. While spark plugs and oxygen sensors are the primary example of the trend back to OE parts, many aftermarket installers are expanding their OE buying to remanufactured parts like air conditioning compressors and automatic transmissions.

Of course, the downside of buying OEM can be higher purchase cost and less liberal warranty standards. Nevertheless, increased cost appears to be the least-important issue in an independent installer's mind, especially if increased performance and reliability result in a near-zero comeback rate.

COMMODITIZATION
At the other end of the purchasing scale, many installers are beginning to look at items like lubricants, fluids and filters as commoditized parts.

Lubricants, for example, are manufactured to OEM ratings and standards. Since a quart of brand "A" oil must meet the same standards as brand "B" oil, they're usually considered interchangeable. Similarly, installers realize that most automotive filters are supplied by only a few major filter manufacturers. Consequently, filter "A" and filter "B" may be identical filters packaged in differently branded boxes, which makes the installer much less brand sensitive.

Remanufactured parts may also be considered a commodity because, here again, a few remanufacturers might be boxing the same part under many different proprietary labels. Of course, this creates the suspicion among independent shop owners that aftermarket manufacturers and remanufacturers inspect and grade products for distribution much like a farmer grades eggs to sell at a produce market.

As the theory goes, while manufacturer "A" makes the same product for distributors X, Y and Z, distributor X receives the better-grade product, while distributors Y and Z receive the middle- and lowest-grade products, respectively. As unseemly as this theory may sound, many independent installers use it to explain wide differences in the quality of parts produced by the same brand name manufacturer.

The issue may be better explained by noting that while many brand names manufacture their own fast-moving part numbers, they outsource the manufacturing of many slower-moving numbers. To better illustrate this, when a Honda specialty shop experiences a high failure rate on outsourced water pumps, the blame will obviously be attributed to the brand name rather than the outsourced manufacturer.

In other cases, a product may simply be mis-manufactured or fitted with faulty components. Many years ago when I worked for a dealership, a huge run of fuel pumps was produced for a popular vehicle that, due to a manufacturing mistake, produced only half of the specified fuel pressure. Obviously, since the vapor return orifice was drilled too large, I could perform a field "fix" by simply blocking off the vapor return line. Did this reflect poorly on the OE-branded part? Not really, because a single instance of a simple manufacturing error didn't diminish the overall performance and reliability of the product line.

THE "NAME" OF THE GAME
Are brand names as important as they used to be for the independent shop? The answer is yes, in as much as some brand names have become the standard for an entire industry. In other cases, it's clear that some brand names are losing their allure as outsourced manufacturing supplies a more significant percentage of their product lines. It's also clear that OE-branded parts are beginning to make inroads since they are perceived to be qualitatively superior to aftermarket replacements, especially in the emissions and drivability-related areas. Last, many shop owners are beginning to see brand name products like oil, fluids and filters as commoditized parts with little differences in performance and reliability. So the importance of name brand is increasing in some product lines, while the importance is decreasing in others. As always, meeting the demands of an ever-changing market is the prerequisite for commercial success.















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