In our 2019 Distribution Preview in the January issue of Counterman, aftermarket leaders reflect on the highlights and accomplishments of 2018, and discuss their plans, goals and expectations for the year ahead.
Here’s our Q&A with Dan Askey, president of NAPA Auto Parts:
Editor’s note: At press time, NAPA had not reported its fourth-quarter and full-year financial results.
CM: What were some of the highlights for NAPA in 2018?
DA: When we look at the first nine months of the year, I think there were several highlights. Most notably, our comparable sales strengthened through the three quarters, which is always good to see.
In terms of the areas of our business driving this growth, our electrical business and our filtration business were solid. The engine-management business was really good, and our commodity business was good as well. Those categories outperformed. Likewise, sales through our NAPA AutoCare program grew stronger as the year progressed and was a positive driver for our overall commercial business.
Lastly, we’re very pleased with our retail performance in 2018. Through three quarters, our retail business – both basket size and total dollars – are up nicely compared to last year. That’s two years in a row that we’ve had back-to-back increases on the retail front, so it seems like the time and energy that we’re putting into revamping our stores is paying off with solid returns.
CM: What does NAPA have planned for 2019?
DA: A major focus in 2019 will be our 2020 NAPA Expo. We’re going to be spending a lot of time on promotions on the shop side of the business, centered on getting people excited about the 2020 NAPA Expo. We’re expecting north of 20,000 people to show up for the event, which will take place in April 2020 in Las Vegas.
Through Christmas, we have more than 10,000 people enrolled, and we’re very happy with that, considering online registration opened in November.
Another big focus is supply chain management – putting the right part in the right spot in the supply chain. That’s always at the top of the list as we work to further enhance the NAPA value proposition to our customers.
We are looking forward to an exciting year in 2019.
CM: How are you feeling about the business environment for the automotive aftermarket in 2019?
DA: The fundamentals are still very strong. Fuel prices remain low, consumer confidence is high and unemployment remains low. Even though miles driven aren’t going up a lot, they’re still going up, so that’s encouraging.
I think the big change for 2019 is that the VIOs in our sweet spot are growing. They grew 2 to 3 percent in 2018. As we look at the car parc, we should see similar growth over the next few years, so we’re finally coming out of the trough that everybody has been talking about.
When you look back at 2012, 2013 and 2014, new-car sales were much improved, and now those cars are out of warranty and starting to get into the aftermarket, so that’s good. The unknown is the reliability of these vehicles – what’s going to break on them, what’s the next big opportunity in the aftermarket on these vehicles when they hit 80,000 or 100,000 miles.
CM: What are some of the macroeconomic and/or regulatory issues that could have an impact on your business in 2019?
DA: I think the big one staring us in the face is the tariffs. Right now the 15 percent additional tariff has been rescinded temporarily, and if that stays away, obviously that will be good.
Macroeconomic issues aside, there are a couple of other challenges that we all have to be aware of. One of them is emerging technology. I’m not even talking about autonomous driving and EVs – clearly a consideration for the industry. For example, I’m talking about the advanced driver-assistance systems (ADAS) we’re seeing on vehicles today and the opportunities for repair there. We’re also seeing a lot of growth in diesel pickups – lots of opportunities here.
Another one I keep coming back to is the workforce. I think our biggest challenge is technician training, recruiting and retention. If we don’t have the people in the stores who can look the parts up, and we don’t have the people in the shops who can diagnose and repair the vehicle, that’s a problem.
Years ago, we always used to say that the best parts people want to work for the best parts house that has inventory, because they never want to say “no.” I think the same can be said today for technicians: The good technicians want to work for the shop that’s investing in equipment, technology and training. So I think it’s really important that the shops continue to invest in training, recruiting and retaining their technicians. NAPA is helping in each of these important areas.
Finally, we support the continued effort to ensure vehicle data is available to all shops, and vehicle owners have a choice of who gets the data, including the good work C.A.R.E is doing to drive awareness and ensure the free flow of vehicle data.