The Uptime Blog
Every year Polk Automotive analyzes the trends in U.S. car and light truck registrations to gauge the age of vehicles on the roads. This year, like every year since 2002, they reported that the average age of all light vehicles on the road has risen. Today, the average age of America’s auto fleet is an impressive 11.4 years of age, up from 11.2 last year.
This is great news for the automotive aftermarket whose livelihood relies on the sale of replacement parts and service repair. Older cars mean more work and more profits. But while it is certainly notable that the age continues to climb and drivers are keeping their cars and light trucks longer, we wondered what other telling trends were behind the numbers. We learned a few interesting facts.
Baby Boomers are Still Setting Trends
According to a study by the University of Michigan’s Transportation Research Institute, Baby Boomers may be aging along with their cars. As a group, they still drive significant changes in all sorts of demographics, including vehicle purchases.
The study reports that older drivers are more likely to buy new vehicles. Even though auto dealers continue to court the Gen X, Gen Y and Millennial market, it’s the graying baby boomers that have the desire and means to purchase new vehicles. It turns out that nostalgia for the era of the car is a powerful influence.
What about younger drivers? In another study University of Michigan researchers found that younger individuals – those same Millenials that auto makers are targeting for advertising, actually purchase fewer new vehicles than expected. They found that a higher proportion of internet users (the digital natives) were associated with a lower licensure rate. Fewer younger registered drivers mean less reason to purchase.
Are Auto Makers Making Better Cars?
In an age of disposable everything, it looks like automobile manufacturers may be doing the unthinkable – making better, longer-lasting cars.
M. Simon, technical contributor for Manufacturing.net contents that “Engineers Killed Detroit”.
“Cars that are engineered to last longer require that you buy fewer of them in a lifetime. Remember when a car that ran for 100,000 miles was a good car? I do. Now a 200,000 mile or 250,000 mile life is considered a good car. Engineers (aided by competition) did that. And not just American engineers. Engineers all over the world.”
John Tammy at Forbes suggests that “The Unions Didn't Bankrupt Detroit, But Great American Cars Did”. He suggests that today all cars are engineered well. They are built to last. They are reliable, affordable and don’t break down that often like they did in the 1970’s era. Tammy says “In short, cars are simple, prosaic, and easy in a modern sense to manufacture well”. If you believe his position, reliable automobiles have become a commodity, contributing to the longer life of cars and trucks.
Aftermarket Vendors Vying for Parts and Service Business
No matter what the reason for the continued aging of American’s vehicles, one thing is certain. Automotive aftermarket vendors should be prepared to capitalize on the revenue opportunity that is presently available, even though there will be competition from other providers and strong economic obstacles.
Ratchet and Wrench reports that the auto service industry is actually experiencing a downward revenue trend. “In the last five years, overall industry revenue has declined at an annual rate of 2 percent to $30.3 billion. This decline was largely due to declines in the overall economy, which caused a decline in disposable income and corporate profit, effectively stifling the use of vehicles and the need to repair them”.
With tight competition, savvy aftermarket parts and service providers eager to tap into potential revenue streams are searching for the best path to take and have discovered that service operations hold the best opportunities. In Aberdeen’s recent State of Service Management: Outlook for 2013 report, sampled organizations stated that on average service margins were 10.7% higher than those from products.
Where the Opportunity Lives
As product profit margins shrink and service profit margins grow, more companies are placing higher value on the service model and transforming their service centers into profit centers. PTC’s Service Lifecycle Management approach is leading the adoption of service related attitudes with products like Enigma’s InService EPC which helps execute those service management strategies that lead to profitability.
Aftermarket parts and service providers not focusing on service profitability run the risk of being left behind. As Ali Pinder, Research Analyst for Aberdeen Groups says in a recent blog post “This ability for service operations to produce profitable growth has raised the importance of service in the eyes of the executive team, from a cost containment tool to a growth engine for many businesses”.
On the first Tuesday of November, 2012, voters in Massachusetts overwhelmingly approved a ballot initiative called “Right to Repair.” The Right to Repair law promises access to diagnostic, service and parts information for car owners and service stations/independent repair facilities (IRFs). Perhaps it’s not surprising that manufacturers (OEMs) opposed the measure, claiming it adds cost, complexity and uncertainty to the already fragmented environment of automotive service and support. OEMs claim that:
- Costs will increase as OEMs must standardize and reveal more vehicle data to ensure compliance with new laws throughout the life of a vehicle
- Complexity will increase as OEMs must open up additional channels of support to IRFs that are not necessarily “trusted” by the OEM
- Uncertainty will increase as OEMs lose the visibility they get from dealers about how vehicles are behaving in various environments, which raises warranty, performance and liability concerns
Consumers may see new car prices increase to accommodate OEM costs associated with Right to Repair compliance. This is especially true when considering that certain aspects of Right to Repair are retroactive to the 2002 model year and all aspects are fully imposed on 2018 vehicles. (Click here for another view on the impact of Right to Repair.)
While the margin of victory for Massachusetts’ Right to Repair law was huge, 86% in-favor and 14% opposed, the fact it was passed isn’t surprising given that the name sounds so patriotic, Right to Repair. After all, to vote “no” sounds like you’d be voting against choice and Americans cherish their freedom of choice above almost all others.
The Right to Repair law is more complex than the title makes it sound, however now that the law has passed the difficulty of OEM compliance is irrelevant because failure to comply carries some very expensive penalties. Therefore the challenge for OEMs is to figure out the most cost-effective way to comply with Right to Repair.
The most pressing task for OEMs is to figure out how to get the required service and parts information up on the web, in a way that makes it accessible to IRFs while also protecting their intellectual property. To this end, an electronic parts catalog (EPC) that combines diagnostic, parts and repair information integrated with ecommerce and order management technology would do the trick. Such a solution would allow IRFs to access required information and also open up a new revenue stream for OEMs where IRFs are directed to a nearby (or preferred) dealership to procure the parts they ordered. In this way, OEMs could actually augment their franchised dealer’s parts business by expanding their role as a distributor.
The use of single sign-on (SSO) for the EPC would improve tracking of IRF access to ensure Right to Repair compliance and also automate many aspects of parts procurement. One area of interest might be the ability to download electronic control unit (ECU) and programmable control module (PCM) software updates/revisions, which are often tracked with unique part numbers, and then to help the IRF automatically upload those revisions into the vehicle. Throughout this process, franchised dealers could expand their business as regional consultants and training facilities for the IRFs working on the OEM’s vehicles.
Finally, an online EPC can collect a lot of data about who is accessing the web-based system and what problems, parts and documents are being researched the most – including an analysis of pricing requests/quotes. In a very short period of time this becomes a treasure trove of information about the OEM’s vehicles and Big Data analytics can be employed to reveal even deeper insights about warranty, performance and liability concerns.
Clearly the Massachusetts’ Right to Repair law is ushering in dramatic changes for the way OEMs support dealers and IRFs alike. However OEMs that view Right to Repair as an opportunity, rather than an obstacle, can find themselves ahead of their competitors in more ways than one.
Tags: electronic parts catalogue, service technicians, automotive, FTFR, No Fault Found, warranty, EPC, InService EPC, John Snow, electronic parts catalog, epc software
According to an article in USA Today there’s a: serious shortage of skilled auto mechanics looming. The article says, “There is already competition among auto dealers in many parts of the nation to hire or retain good technicians. The bigger worry is whether there will be enough younger workers in a few years as a wave of midcareer mechanics hits retirement age. “We're finding we're going to run short of technicians in the very near future,” says Rich Orbain, manager for General Motors' Service Technical College.”
The article makes clear that the biggest risk to consumers is not for routine maintenance but rather for more complex tasks that require troubleshooting and fault isolation. Advanced diagnostic systems may tell a technician which systems have gone wrong but won’t necessarily explain why. As a result, inexperienced mechanics may resort to pop-and-swap repair procedures where they simply replace parts one-at-a-time until the diagnostic system says that all is well. The problem with this approach is cost–lots and lots of additional cost.
- For vehicles under warranty, the original equipment manufacturer (OEM) absorbs the cost of all the “good” parts that were replaced.
- For vehicles not under warranty, the customer pays.
- Replaced parts are typically tested by the OEM (or component vendor) to identify which ones are faulty and which ones have “no-fault-found” (NFF).
- Parts that can be repaired/refurbished are then sold on the secondary market.
Given the potential costs associated with a bad diagnosis, today’s master mechanic is the equivalent of a high-tech field engineer. They must have expertise around powertrain technology spanning 30 years or more, including: carburetors, fuel injection, ignition systems, turbo chargers, manual transmissions, automatic transmissions (mechanical and electronic), hybrids, all-electric and advanced diesel engines. A modern vehicle may have over 20 computer chips managing different systems, each of which uses software that must “play nicely” with other software systems. (Eliminating the key from the ignition—replacing it with a “push to start” button—is the final evidence of cars becoming rolling computers.)
So what is to be done? According to the research, in the near future there won’t be enough mechanics with the skills required to fix cars. The complexity of modern vehicles means that small, independent service stations won’t be able to afford specialist mechanics and diagnostic tools and so more and more repair work will go to dealers or large maintenance outfits (e.g. Sears Auto Centers). But even these well-stocked locations won’t be able to hire master mechanics because they won’t exist. People aren’t choosing auto repair as a career path.
The only way to solve this problem is for OEMs to take ownership of the solution. If OEMs can find a way to simplify access to accurate service, parts and diagnostic information then less experienced technicians can still get the job done. Service and parts information is usually delivered to dealers and mechanics as a series of separate manuals and catalogs. OEMs have been playing around with electronic parts catalogs (EPC) for years but most of them outsource it to 3rd party suppliers (like ARI and Snap-on), effectively divorcing themselves from the solution. Unfortunately, 3rd party EPCs don’t have the know-how to fully integrate an OEMs diagnostic, service and parts information so dealers have a fully automated workflow—the way they do in the airline industry. As a result, pop-and-swap maintenance, NFF and warranty costs continue to increase. And the whole time this is happening, the OEM’s reputation is getting more and more tarnished.
Toward the end of the article, Jose Ramirez, an instructor at Los Angeles Trade Technical College highlights the challenge of working on modern cars, “Sure, a car's computer may spit out a ‘trouble code’ to report what system is malfunctioning. But that's not enough. It's a matter of how to diagnose that trouble code. You have to play around with it."
“You have to play around with it.” Is that really what the OEMs want their customers to hear? For those OEMs willing to take control of their service and parts market, Enigma stands ready to help.
The Aging Vehicle Population
Drivers are keeping their vehicles longer; a lot longer. In fact, according to R.L. Polk & Company research, the length of vehicle ownership as well as the overall average age of vehicles has risen. Today, the average age of autos on the road has hit a record 11.1 years (10.8 years for cars and 10.4 for light trucks). Not surprisingly this trend has been tied to the economic downturn as more and more owners are extending the life of their cars and trucks through ongoing maintenance and repair. This continues the trend of aging vehicles seen in a 2009 Polk study that pegged those numbers at 9.4 years for cars and 7.6 years for trucks.
However, the real question is what those figures mean for automotive OEMs and their dealers.
The Aftermarket Opportunity
The aging auto trend is expected to continue. Freedonia Research agrees in their “Automotive Aftermarket in North America to 2014”, which estimates that “The aftermarket for light vehicle components in North America will increase 2.9 percent annually through 2014.” This means that service and parts continues to be a growth business, and OEMs need to position themselves and their dealers to capitalize on the opportunity.
As autos age, each vehicle requires more service. And since parts and service carry higher profits, this is a very lucrative endeavor. A few OEMs, like Enigma customer Ford Motor Company, are capitalizing on this opportunity —increasing earnings by improving customer and dealer support—but the question remains, why aren’t more OEMs doing this?
So how do OEMs garner more from the profitable automotive aftermarket? By streamlining the aftermarket processes for diagnosing, and repairing cars and trucks (and any other type of vehicle).
Claiming a Sweet Victory
First, OEMs can rein in the parts inventory and leakage challenges with service parts planning and inventory management. Second, they can automate scheduling to optimize human capitol. OEMs and dealers have already implemented these first two steps, delivering respectable results. But it’s a third component, which is less obvious but more influential that can really give OEMs a competitive advantage and that is an electronic service and parts catalog (EPC).
A fully integrated, online/offline EPC helps OEMs quickly assemble, distribute and update the technical information needed to properly service and support today’s complex vehicles. An EPC that supports bi-directional communication (from-to OEMs and dealers) provides more than just parts and service procedures, it becomes the heart of an advanced customer support strategy that accelerates repairs, improves quality and reduces cost.
Such an EPC is richer and more beneficial than manuals, bulletins and parts lists alone. The sum is truly greater than the parts. When an OEM implements an advanced EPC it provides immediate value to dealers. It delivers more detailed and accurate information to make the dealer’s job easier while positioning the OEM as the most reliable resource. It also saves dealers money by bettering the first time fix rates. And, it improves staff productivity by consolidating all service and support information and data into one source that can be accessed with just a few mouse clicks.
The real bonus though is what an EPC yields an OEM. It builds dealer loyalty and increases preferred vendor status, which leads to more parts revenue. By making it easier to do business with the OEM, and simplifying maintenance decisions, a well-executed EPC strategy will help improve influence and control of parts purchasing in the critical post-warranty period of auto ownership.
Forward thinking OEMs have been turning to Enigma to help them capitalize on the aftermarket opportunity, which has been driven by aging vehicles. Ford Motor Company, a longstanding automotive icon and leader, recognized the potential of increased revenue from longer auto ownership and elected to implement Enigma software early in the aging auto trend, and is now enjoying increased parts revenue and stronger, healthier dealer loyalty.
Aging autos serve up a sweet aftermarket opportunity, so grab a big spoon and dig in, there’s still time. Learn how Enigma can help you turn sweet opportunity into tasty profit.
According to a recent Carlisle & Company report, when it comes to satisfying the needs of automotive parts managers, “the industry is collectively raising the bar for average OEM parts performance.” Furthermore, “the gap between the “best in class (BIC)” and “worst in class (WIC)” performance has been shrinking.” However, the detailed survey data shows room for improvement because OEMs received high scores (close to 100%) for supply chain issues but much lower scores for sales and marketing issues. According to Carlisle, “Clearly, the industry is doing a better job of meeting our customer’s expectations with respect to supply chain than with sales and marketing issues.” The question is what to do about it?
Carlisle doesn’t address how to resolve the sales and marketing issues; however, our experience with OEM customers indicates that sales and marketing problems are often related to cumbersome, out-of-date parts and service catalogs. It should be obvious that fast delivery doesn’t help the dealer if the wrong parts were ordered. When OEM products have multiple option packages, or multiple product lines, it’s critically important to give Parts Managers accurate information. This becomes even more important as the complexity of the OEM’s product increases, because the dealer needs to know if any components have been revised, superseded or made obsolete by the supplier. (When the latest electronics components are factored into this discussion accurate information cannot be over emphasized, especially when software is tracked and managed like a discrete part.)
Parts managers tend to be happiest when supply chains are running predictably, service is happening quickly and costs are being kept low. Making sure managers and technicians quickly find the right parts for a specific problem is critical to achieving that goal—and Enigma InService® EPC can help. While other solutions focus on automating inventory and logistics (the supply chain) Enigma focuses on automating the delivery of accurate information (online or offline). After all, it’s hard to make good decisions off bad data. Overcoming the parts manager’s sales and marketing issues will require both approaches, but the result will be a dramatic improvement in customer and dealer satisfaction—for any industry.
Unless car dealers pay an extra $1,200/year, Reynolds & Reynolds will hold their data hostage. Reynolds makes dealer management systems (DMS); a DMS helps dealers manage customers, parts inventory and service schedules. Dealers often allow trusted vendors and automotive OEMs to access the data within their DMS. They do this to simplify part sales using various online marketplaces and to accelerate sales reporting back to the OEM. (Dealers get incentive payments from OEMs when they “wholesale” parts.)
In a story from Automotive News, Reynolds admits they’re restricting the dealer’s strategic partners from accessing the DMS data. “Reynolds said data security is the reason that it has begun prohibiting third-party vendors from directly accessing the DMS of its dealer customers unless they have been certified by Reynolds. Without Reynolds certification, a third-party vendor can take as much or as little data from a dealer's DMS as the vendor chooses, without any way of verifying what was taken, [Reynolds spokesman Tom] Schwartz said. Reynolds refuses to allow that to protect consumers. ‘The data belongs to the dealers. We all agree on that,’ Schwartz said. ‘But we can't have people rooting around in a dealer's DMS. That creates a liability.’”
In other words, Reynolds is claiming to protect the dealers from themselves. This sounds similar to Big Brother from the book Nineteen Eighty-Four and raises the question, isn’t it up to the dealer to evaluate things like risk and liability? As one customer was quoted as saying, “It’s my data and our server.”
However, Reynolds does offer a solution. They’re willing to sell dealers an add-on software module, for $100/month, to ensure the security of the DMS data when accessed by an outside vendor. Reading the story carefully, it seems the real issue is that Reynolds doesn’t want companies that use competing products (specifically those from their direct competitor, ADP) to be able to access the data stored inside the dealer’s DMS. Reynolds wants to play a role in any parts or service transactions, so they’re squeezing their customers to get a piece of the action.
Why do I bring this up? Because dealers (and OEMs and vendors) can’t maximize profits unless software products exchange data seamlessly. For example, integrating an electronic parts catalog (EPC) with a DMS allows the dealer’s service advisors to quickly identify required parts and procedures, determine inventory availability and issue a repair order (RO). However, without integration the service advisor will be required to use multiple systems, which is inefficient and error prone.
The thing is, if Reynolds would make it easier (not harder) to extract relevant information from the DMS, they would build stronger relationships with customers, rather than alienating them. According to this article, for one dealership “the crackdown is the final straw in his decision to change DMS vendors when his five-year Reynolds contract runs out in a year.” Clearly this can’t be considered a “win” for Reynolds. For companies like Reynolds, limiting access to data may seem like a profitable strategy but it carries long-term risks that outweigh any short-term gains.
Making dealers pay a fee to let others access their data is basically holding their business hostage. Regardless of the “higher purpose” (in this case, security) no dealer should allow a self-proclaimed Big Brother to dictate what they do with their own data. As Reynolds and the dealers fight for the right to control data access, let’s hope the true reason for integration—efficiency, consistency, quality, cost—doesn’t get lost in the fray.
Here in Massachusetts the legislature is debating a bill called Right to Repair (RTR). Basically RTR says that automotive OEMs will not hinder the consumer’s ability to get their car fixed wherever they want. The implication is that OEMs are obstructing independent repair facilities (IRFs) from getting the maintenance manuals, parts catalogs, diagnostic codes and equipment that are needed to fix your car. And, since it’s your car, you should be able to get it fixed wherever you want.
On the surface RTR sounds very reasonable, after all the United States was founded on the belief in personal freedom—in this case the freedom to choose who fixes your car. But something doesn’t feel right about how this bill is being “advertised.”
To ensure passage of RTR, I’ve seen a huge amount of advertising—basically lobbying the public and the lawmakers to accelerate approval. And the ads are so biased that it’s almost impossible to discuss RTR without sounding like you’re against personal freedom (and that’s un-American).
The RTR lobbying campaign describes itself as protecting the little guy (IRF). However as each of the videos below will show, getting automotive repair information doesn’t seem to be a problem for IRFs.
Since it seems that IRFs can get the information they need, I’m left with more than a few questions:
- Who’s paying for the RTR lobbying campaign? (I want to know the real motive because I’ve seldom seen an expensive lobbying effort that is meant to benefit the public.)
- Why don’t the OEMs have an anti-RTR campaign underway? (Is it because they will be labeled un-American and “anti-consumer”?)
- How can the intellectual property of the OEMs be protected? (Low-quality parts and repairs can have a significant impact on OEM brand perception and loyalty—people rarely complain about service or parts but frequently complain about their cars.)
- What about the concern regarding security systems raised by law enforcement in this blog, is it real? (Contrary to the exaggeration in RTR lobbying efforts, OEMs haven’t said that IRFs steal cars.)
- What about the safety risks raised by the Mass Auto Coalition, are they real?
I have even more questions but that’s a start. It’s interesting to note that a personal friend, who’s also a mechanic, says he’s never had difficulty getting the information he needs to fix a car. However, his IRF prefers to focus on basic maintenance and repairs and let the franchised dealers handle the complex stuff. His shop doesn’t encounter enough complex problems to justify the specialized training and equipment and he has all the business he can handle.
So who’s really behind the lobbying effort for Right to Repair? And who will really benefit if it passes? Let the conspiracy theories start now!
Service organizations lose business for many reasons; while some are related to technology, some are not. Customer retention is a tricky problem, but at its heart is the customer’s perception that they are not getting satisfactory service—they lose trust and question the value of the service they receive. Knowing this, once a customer has entrusted a service organization to fix their equipment, the first order of business should be to maintain that trust. No matter if the customer’s equipment is a car, locomotive, MRI scanner, or semiconductor tool, customer satisfaction is the key to repeat service business.
To highlight this point I turn to Carlisle & Company, a research firm that specializes in the automotive (and related) sector. According to one of their recent blog posts, “Five years ago, in 2006, [Carlisle & Company’s] Service Customer Sentiment Survey proved what customers really want – it came back to trust, value, cost, and convenience.” Carlisle followed that up with a three-part series called, “Just for Dealers: So, What Can You Do to Survive in a Collapsing Customer Pay Parts Market? - Part 1, Part 2, Part 3.” While these blogs are targeted at automotive dealers, the ideas can be adapted to any service organization in a competitive market place. Part 3 of the series describes the importance of customer retention, “In plain English, a very satisfied customer is 15% more loyal than a merely satisfied customer. In even plainer English, a very satisfied customer will, for all practical purposes, remain loyal and “your” customer for as long as you continue to make him/her “very satisfied.” Once you slip and deliver merely “good” service, not “great” service, there is a chance that the customer will defect. Call it a 15% chance. That’s a roughly right number.”
However, there’s more to excellent service than a technician’s “bedside manner.” Customers expect service technicians to accurately explain any equipment problems and quickly describe the time, parts, procedures and cost to complete the repair. Given the variety and/or complexity of equipment that technicians must service, this requires an incredible amount of knowledge—or access to system that locates the right service procedures and orders the right parts quickly and easily. Often, unsatisfactory service calls have less to do with the quality of the service technicians and more with their lack of access to updated parts and service information; they can waste a lot of time searching through mountains of technical documentation for accurate, updated information and then procuring the right parts.
OEMs play a big role in helping service organizations perform to the highest standards. They are uniquely qualified to provide technicians with the information necessary to respond accurately and decisively. Furthermore, there are compelling reasons for OEMs to care about their customers’ quality of service. For OEMs that provide service level agreements (SLA), very satisfied customers typically make fewer support calls and so are more profitable. Very satisfied customers also demonstrate greater loyalty for service and parts (as noted above). Finally, very satisfied customers create a perception of quality and value for the OEM’s brand.
Enigma’s InService EPC application helps service organizations improve their first-time-fix-rates (FTFR) and build customer loyalty. It’s the only tool on the market that helps OEMs support technicians by delivering complete, accurate parts and service information—filtered by equipment configuration (or serial number), updated dynamically (on-the-fly), deployed online and/or offline, and able to be integrated to ERP, EAM, ECM, SCM and order management systems. Enigma helps every service technician act like an expert, ensuring they don’t get lost (or lose a customer), by safely guiding them through mountains of technical content.
Six years ago, Ford Motor Company decided it needed a better way to distribute parts information to its dealer network. Working with Enigma, Ford used the Enigma 3C Electronic Parts Catalog (EPC) to launch a new offering, Ford Catalog Advantage (FCA), Ford Motor Company’s Genuine Parts Catalog. FCA has delivered so much value that recently Ford renewed its contract with Enigma.
FCA provides up-to-date parts information, both online and offline, to more than 1,800 Ford, Lincoln and Mercury dealerships in North America. The benefits? Ford has reduced the cost of delivering parts information to dealers and distributors, eliminated delays for implementing updated information, increased the accuracy of parts orders and improved service bay productivity at Ford dealerships.
Here’s what some Ford dealers have said about FCA:
“[FCA] is one of the best tools I’ve seen come out in a long time. It really is beneficial to the dealership for customer satisfaction.” — Tim Worthington, General Service Director, Hines Park Lincoln
“The integration [of FCA and Ford's Workshop Manuals] has in fact helped the relationship between our parts department and technicians… As our technicians use this tool more often their efficiency will improve by eliminating any wasted time looking at pictures in the parts department; they will be able to spend more time in their stalls working on vehicles!” — Paul Cole, Service Director, Santa Margarita Ford
"[With FCA] parts are scrubbed against the VIN number, so we don’t have as many returned parts, and the technician doesn’t end up waiting for a part that may be wrong. It saves us time, it saves the technician time, and ultimately it saves the customer time.” — Dan Barr, Parts Manager, Hines Park Lincoln
“[FCA] makes life a lot easier and can make you money in the long run. This system probably saves me an hour a day.” — Scott Stern, Drivability Technician, Hines Park Lincoln
Enigma EPC applications benefit both OEMs and service organizations:
- Parts and service information is frequently revised, and changes need to be quickly distributed to service technicians in the field and at dealerships.
- Technicians can’t afford to spend valuable time searching through shop manuals and catalogs, copying down part numbers (possibly making errors), then spending time with customer support or a parts manager to order the (hopefully correct) parts.
With FCA, Ford has found a way to ensure service technicians find and order the right parts. FCA also improves service bay productivity, allowing more cars to be serviced, which means more aftermarket parts can be sold via the dealer. And faster service with the right parts yields happier customers, which helps brand perception.
For related thoughts on this topic see an earlier blog we wrote, “Helping Automotive OEMs Help Themselves."
It’s well-known that the Japan earthquake and ensuing tsunami and nuclear reactor disasters have impacted the global automotive manufacturing sector. In addition to direct damage of several Japanese auto manufacturing plants, many Japanese automotive component manufacturers were hit. Even some factories that are far from the disaster sites have either ceased or reduced operations because of power, transportation and/or supply chain disruption. Because most automotive OEMs across the globe depend on Japanese components, especially electronic components, the crisis affects more than Japanese brands. For specifics on which OEMs have reduced or halted production as a result of supply chain issues, see this MotorTrend article.
The triple disaster affects the manufacturing, distribution and supply of new cars; what remains to be seen is how it might affect the supply chain for aftermarket parts. In an article titled “Quake portends upcoming shortages of various aftermarket parts,” Aftermarket Business reports, “In the end, virtually every major OEM will be affected by this disaster by mid-to-late April. It is not a matter of if, but when,” according to Michael Robinet, IHS’ director of global automotive forecasting.
“Certainly the costs of human suffering are more important at this early date, and the long term effects on the global economy – and the automotive aftermarket industry specifically – are difficult to predict,” says Steve Handschuh, president and chief operating officer at the Automotive Aftermarket Supplier Association (AASA).
At this stage there are many more questions than answers:
- If new car production slows down dramatically for an extended period, what will be the ripple effect months later on OEM dealership revenue (both aftermarket service and new car sales)?
- What ripple effects might be felt in dealership service bays?
- How long will current inventory of affected spare parts hold out before service bays feel the impact?
- If there are parts shortages there will likely be price increases, due to the laws of supply and demand; will service bays pass on those costs to their customers? If so, will consumers delay getting repairs?
- Can OEMs find alternate sources for aftermarket parts and components? How quickly and at what cost?
- When it comes to sourcing new parts, will OEMs have any advantages over knock-off parts retailers like AutoZone and Pep Boys?
- If new parts are sourced, how quickly can OEMs inform their dealers and update their parts catalogs with supersession parts information?
We’re curious to hear our readers’ opinions on this topic, so we encourage you to comment.
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