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Remanufacturing an Opportunity


7/1/2003
By Melanie Deitch

Remanufactured engines have become a harder sell in a shrinking market, so its essential to find a trusted supplier and embrace niche markets.
 

In the quest for pushing profits, improving customer loyalty and carving out a niche for your store, remanufactured engines are still a viable option.

But its a tough market. Original equipment manufacturers are building stronger, longer-lasting engines; manufacturers are offering extended warranties and rebates; and zero-percent interest rates and leasing options are more and more attractive to many consumers. Often times, its easier to buy or lease a new car rather than spending what could be thousands of dollars repairing an aging vehicle. Therefore, all of these factors leave engine rebuilders working in a shrinking.

But while there is a place for profit in this shrinking market, there is yet another problem a shrinking number of suppliers from which to source engine parts. So where can you get these remanufactured engines? Some suppliers like Recon Automotive sell only direct to the mass merchandiser or warehouse distributors. However, there are some businesses that do sell directly to the installer or the DIYer. (And with the immense complexity of vehicle systems today, the majority of do-it-yourselfers still take their purchased remanufactured engines to a professional installer.)

According to Steve Markley of Egge Parts, an engine parts and kits manufacturer, Egge sells to anyone in the aftermarket, DIYers and DIFMers. Mostly, he said they sell to engine builders and WDs, but they are looking to reach out to the jobbers as well.

He commented that even though the engine rebuilding market is difficult, it can still be profitable. "I know its hard for counter guys because theyre used to having the catalogs themselves and solving the problem," Markley said. "But we really are experts well direct them the best way."

CARVING A NICHE FOR YOUR STORE
As a result of the challenges of this market, some custom engine rebuilders have turned their focus to the growing niche market of high-performance engines. Its obvious from the long lines at the movie theaters for 2Fast 2Furious (the sequel to The Fast and The Furious, a movie about racing sporty cars) that the trend for suped-up sports cars isnt a passing phase.

With custom engine markets that include high-performance, restoration, diesel, marine and import, there is room for profit. Stores can still develop a sales opportunity in remanufactured engines with the right connections and just a bit of determination.

The restoration market can be quite profitable Markley stated. "Its a stand alone market," he said. "Its not quite as competitive, so you dont have to give the parts away to get the sale."

Markley offered the following advice to counter pros: Learn to develop the resources for selling engine rebuilds, and develop a relationship with that manufacturer. Get to know your customers needs, and gather as much information and specifications as possible for what you need. Follow up on the availability of the parts to ensure that the manufacturer hasnt run out of what you need. And always avoid over promising buy yourself some time and allow time for shipping.

Eventually, Markley said, you can not only "make a profit off of that part, but you will impress that customer, and maybe theyll stop shopping just price and come to you even when its for something easy."

Finding a quality supplier is also important. A warranty on a rebuilt engine is an example of the kind of service one should expect from the manufacturer providing the engine.

"Look for a quality manufacturer, and look for the service you can get from that manufacturer," said Keith Ottinger, vice president of sales and marketing for Recon. "Look for manufacturing certifications like QS9000, etc. And many manufacturers have about a three-year warranty."

PUSHING REBUILT PARTS
But once youve identified and developed a working relationship with a parts supplier and your customers, another challenge you will face in the rebuilding market is marketing and selling the customers on the idea of choosing a remanufactured engine over a new replacement engine (or a new OEM vehicle.)

First, the stores need to promote and advertise to the customers that they have a choice in choosing to purchase a remanufactured engine. Many consumers dont even realize that remanufactured engines can be a money-saving option.

But jobbers arent alone in the fight to coerce consumers into considering a rebuilt engine. The Engine Repower Council (ERC) works just for that purpose, to improve the image and the publics awareness of the option to purchase rebuilt engines. The ERC focuses on the environmental and the cost-saving benefits of rebuilds.

Environmentally, reman engines emit fewer pollutants, get better gas mileage and save the energy that would normally be used to process a discarded engine or vehicle.

Economically, remans save consumers the cost of a new vehicle and the financing charges or increased insurance premiums.

There are also other benefits such as improving the quality of the vehicles engine and other components, and the rebuilt engine most likely come with a warranty varying anywhere from one to three years or 12,000 to 36,000 miles.

Although the rebuilding market is challenging, there are definite benefits to learning how to sell it. The market has a need and a niche that your store can fulfill. Use your sources and help rebuild your potential for making profit in a way that gets your stores name remembered.

SOFT HARD PARTS SALES?

Many businesses across the industry complain about soft engine parts sales. What about your store? To get a clearer picture of the overall engine parts market, we asked Counterman readers about their engine kit sales over the last three months.

  • Flat
Three-quarters of respondents said their sales haveremained unchanged.

  • Up
Thirteen percent noted an increase of 20 percenton average.

  • Down
Twelve percent reported a decrease of 30 percenton average.

And whats the most popular type of engine kit sold? Readers indicated that re-ring kits and master kits are selling the best, distantly followed by camshaft kits.




IS YOUR STORE SAFE FROM VIRUSES?

by Mark North

Mark North is Systems Administrator for Babcox, the parent company of Counterman magazine. He holds IT certifications from both Microsoft and CompTIA.

Just a simple chain email can leave your store wide open to viruses and spam.

Viruses are, unfortunately, a fact of life for anyone with a computer. Protecting your business computers from these viruses is now a necessity.

Lets start by examining what a virus really is and what you can do to protect your computer.

The word "virus" is typically used in a generic fashion to describe anything that infects a computer, whether spread via e-mail or downloaded from a website. For the purists however, a true virus falls into the "self-replicating" category and is a piece of code that infects or attaches itself to another file (such as a Windows operating system file).

Similar to viruses are worms. Worms are also self-replicating, but are able to stand by themselves while replicating and dont need to attach to another file. Worms often have their own built-in e-mail capabilities and can send copies of themselves without using your e-mail client.

Next are the Trojan horses, which cant replicate themselves, but must be downloaded or e-mailed by someone. Trojans are programs that masquerade as harmless applications or games or utilities while wreaking havoc on your system. Keep this in mind the next time someone e-mails you something that claims to be able to improve your computers performance or is supposed to "do something really cool" when you double-click it.

Protecting My Computer
Let me start by saying that the real focus should be on how to protect your data because in protecting your data, youll also be protecting your computer. After all, a virus can toast your operating system, yet only an hour or two with the manufacturers recovery CDs will have you up and running again. But what about all of those word processing documents, spreadsheets and financial records? These are what you stand to lose if your computer becomes infected.

To protect these files, you should make frequent backups onto removable media such as CD-RW or Zip disks. Most newer computers now come with CD-RW drives or Zip drives that are capable of storing backups of your most-prized files. Floppy drives will work for some people with few and small files, but their storage limitations will likely render them useless in the future. Software is available to make backing up files less painful, but is not necessary if you keep your files neatly organized.

Antivirus Software
Maintaining backups however, is only part of the strategy. Running a good antivirus program is absolutely essential these days. If you have Internet access and you swap e-mail with anybody, you will encounter a virus. In my experience, this is not just likely it is inevitable.

Good antivirus software will not only scan all of your e-mails for viruses, but will also log onto the manufacturers website at regular intervals to download antivirus updates. It will perform occasional system scans to ensure that nothing has slipped past between updates.

There are many such antivirus programs available, but make sure that you understand their basic operation and can verify that they are working. You should feel comfortable enough with your antivirus software to know how to check up on it from time to time.

What about those free online scans? I would avoid those for two reasons: First, theyre not capable of watching your computer at all times. Secondly, theres no such thing as a free lunch even on the Internet. You run the risk of loading "spyware" onto your computer when you open it up for such scans. (Spyware is another topic entirely, but can be described simply as software that is installed onto your computer often without your consent or knowledge for the purpose of monitoring your surfing activities.

Good antivirus software will allow you to enjoy the Internet without risking viral catastrophe.

Most antivirus software will give you a years worth of free updates. Beyond that, youll have to pay for annual renewals. The cost for these renewals is modest typically less than $20. Renewals are easy to do and you really cant opt out; otherwise, your protection will be compromised.

Heres some other things to keep in mind:
Treat e-mail attachments with caution, especially if theyre from somebody you dont know. If you do know the sender, save the attachment to a safe place on your computer and run a manual antivirus scan against it. If you dont know the sender, you should probably just delete the e-mail. Additionally, and this isnt a hard-and-fast rule, many virus-laden e-mails have very poor grammar and/or misspellings in the body of the message or in the subject line. Watch for those!

  • Attachment file extensions are often indicative of an virus. If the attachment comes with a file extension such as .EXE, .BAT, .COM or .PIF, beware! These are executable files. Although executable files are not inherently harmful, you should be cautious when dealing with them in e-mail. Even more dangerous are .VBS files just delete them!
 
  • If somebody gives you a floppy disk, CD or Zip disk, make sure to run a manual antivirus scan on it before opening any of its contents. The same goes for any files that somebody may send you through any of the various online file transfer services or chat engines (e.g. ICQ; IRC; AOL Instant Messenger; etc.)
 
  • New viruses are discovered almost daily. There is always a small risk of infection before a new antivirus update becomes available. Although this period is brief, its still possible to become infected by a very new and very fast-moving virus (e.g. the "I Love You" virus). The larger antivirus software manufacturers websites will often have downloadable tools for removing such infections, if necessary.
 

Virus infection can be prevented through simple measures. Armed with basic knowledge of what viruses are and how they operate, you can easily avoid dangerous practices (like sending chain e-mail and opening attachments from strangers). Through proper use and maintenance of a good antivirus program, your risk of infection is even lower.

If you find yourself infected, dont panic! Your antivirus software manufacturer is probably on the case already and will quickly provide you with an antivirus update and removal tool.

Knowing how to protect yourself from viruses is key to safely using the Internet and e-mail. If all else fails, youll have those current Zip or CD-RW backups of your valuable files to save the day.















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