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.