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Who Will Be the First?


3/1/2004
By Jon S. Owens

Pricing pressures are putting the market in an uneasy position, one that creates unrealistic expectations in the customers mind.
 

How are you feeling? Based on what we hear around the market, business is good right now. In the past, good business cycles meant we could lower our fears and raise our glasses (maybe even our prices).

But despite the good times, not everyone feels like celebrating. There is a general uneasiness about this current good cycle. It really shouldnt be this way. The stars are aligned for the aftermarket in an almost too perfect convergence. As the vehicle population continues to grow, so too do the number of vehicles in their prime aftermarket service years. The number of miles driven annually also continues to rise. More cars, more people to drive them, more miles driven and a decent economy all equal high times for the aftermarket.

So why the uneasy feeling? For me, it boils down to one factor: Price pressure and its effect on profit. No matter how much you sell, nothing matters unless youve earned a fair profit at the end of the day. Otherwise, why bother?

The pressure to continue to perform at the markets expected high level of service is overwhelming. There are more and more different types of cars to fix. Where do we get the information needed to fix them? Where do we get the people needed to fix them? We simply dont have enough qualified technicians to do all of the work thats out there. Nor do we have enough qualified people in our stores to serve the shops. Do you smell opportunity? The OEs do. But, it doesnt stop there. What about the qualified people we already have?

The qualified people of the aftermarket at the store and technician level desperately need help. They need help in finding more qualified people to ease the burden of work, thereby freeing up their own time so that they can be trained on whats new. This is the vicious cycle that threatens to undermine our success. In recent conversations with WDs and store personnel, a common theme has arisen. They need more help from manufacturers for sales representation and training. Factory-direct sales people are mostly a thing of the past, but it appears that the distribution side of the market would like to see it come back.

But, at what price? Manufacturers claim that theyve been beaten down to the bare minimum profit and can no longer afford to support the market with a people-heavy sales force. Whats clear in my mind is this: Someone in this market needs to start charging appropriate prices for goods and services. Were cannibalizing ourselves and our market by not allowing the natural progression of price increases from the manufacturer on down to take hold. There, I said it.

We cant change the consumers expectations, but we can change their expectations on what premium services are worth. This cant be done until we stop advertising the impossible $29.95 brake job. Thats got to stop, as do all other loss leader mechanical services. Dont tempt customers with prices that dont net you a profit. When that happens, no one wins. Who will be the first to blink? I dont know, but it better happen fast or the good times will become fewer and farther between.















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