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Jobber News WSI OPENS MEGA STORE IN CALGARY â€¢ WINTER TIRE USE SURGING: SURVEY

JANUARY/FEBRUARY 2017

Serving the Automotive Aftermarket Since 1931

HOT WINTER PRODUCTS: LIGHTING, WIPERS, AND BATTERIES BUILDING PROFIT CENTRES FOR JOBBERS

6 TH

ANNUAL SHOP SURVEY

MARKET TRACKER: NEW OPPORTUNITIES IN A CHANGING MARKET

IS TELEMATICS THE NEXT

game changer?

Canada Post Canadian Publications Mail Sales Agreement No. 40063170

01_JanFeb2017_cover.indd 1

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contents | january/february 2017 » vol. 85 no. 01

Jobber News Serving the Automotive Aftermarket Since 1931

regular features

6 OVER THE COUNTER 6

WSI opens mega store in Calgary; YES Workshop: Industry mentor Ray Proulx offers young executives insight; Kevin McGladdery receives 2016 salesperson of the year award; Bob Cushing receives hall of fame award; Winter tire use surging: survey; VW to lay off 30,000 workers by 2020.

COVER STORY

FRICTION REPORT

6TH ANNUAL SHOP SURVEY:

Is telematics the next game changer?

Aftermarket brake quality continues to trend upward There are a number of trends impacting the aftermarket marketplace that will have a direct impact on Canadian jobbers’ profits and sales when it comes to brake friction and rotors.

The automotive aftermarket continues to evolve at a rapid pace, due to technological advances that have led to the emergence of numerous innovative business models. Automobiles are now becoming smartphones on wheels – and with telematics looming on the aftermarket horizon, customer service expectations are going to be even higher.

in this issue

MARKET TRACKER |

New opportunities in a changing market

The North American aftermarket is experiencing a major generational shift as Boomers retire and Millennials come into their peak adult earning/driving years. In addition, e-commerce is beginning to show signs of slowing down, while miles driven continue to climb, thanks largely to lower gas prices.

departments 5 UpFront

Changing times

26 Social Media 101

Ten secrets to great Facebook content

28 Money & Management

MARKET WATCH | HOT WINTER PRODUCTS

Lighting, wipers, and batteries building profit centres for jobbers

Twitter: @JobberNews |

The jobber business is changing rapidly

Cover image: Gerenme, iStockphoto.com

www.facebook.com/pages/AutoServiceWorldcom/244916465611841

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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Protect your business’s future with a buy/sell agreement

29 Advertisers Index 30 Business Management

With vehicles today better built and replacement intervals extended, jobbers find themselves looking for new profit centres to fill the gaps. Advancements in lighting, wipers, and battery technology offer jobbers opportunities to build sales in these categories.

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upfront |

Jobber News

with steve pawlett, editor » spawlett@jobbernews.com

FOUNDED 1931

Jobber News is Canada’s longest-established publication serving the distribution segment of the Canadian automotive aftermarket. It is specifically directed to warehouse distributors, wholesalers, machine shops, and national accounts. Editor | Steve Pawlett (416) 510-6839 E-Mail: spawlett@jobbernews.com Associate Editor/Web Editor | Adam Malik (416) 510-6763 E-Mail: adam@newcom.ca Contributing Editor | Martha Uniacke Breen E-Mail: mubreen@sympatico.ca Contributing Writers | Andrew Brooks, Mark Borkowski, Tom Venetis Art Director | Barbara Burrows Managing Director, Auto Div. & National Sales Kathryn Swan (416) 510-5221 E-Mail: kathryn@newcom.ca National Sales | Juan Diez (416) 510-5203 E-Mail: juan@newcom.ca Quebec & Eastern Canada Sales Director Denis Arsenault, (514) 947-7228 E-Mail: denis@newcom.ca Advertising Production Manager, Print/Digital Alicia Lerma (416) 442-5600 ext. 3588 E-Mail: alicia@newcom.ca Print Production Manager | Phyllis Wright (416) 510-6786 Circulation Manager | Lilianna Kantor (416) 614-5815 E-Mail: lily@newcom.ca

Jobber News is published by Newcom Business Media Inc. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior consent. Canada Post Canadian Publications Mail Sales Product Agreement No. 40063170 “Return Postage Guaranteed” Send change of address notices, undeliverable copies and subscription orders to: Circulation Dept., Jobber News, 80 Valleybrook Drive, Toronto, ON M3B 2S9 Jobber News Magazine (ISSN#0021-7050) is published monthly by Newcom Business Media Inc., 80 Valleybrook Drive, Toronto, ON M3B 2S9 From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us.

Chairman and Founder | Jim Glionna President | Joe Glionna

CHANGING TIMES

e live in a time of great change. Many recent business innovations are having such a profound effect on traditional business models that they have been labelled “disruptive.” Some of these so-called disruptors revolutionizing the business landscape include Uber, Airbnb, 23andMe, Spotify, Lyft, and Dropbox, to name a few. Telematics is another disruptor that will likely be a major game-changer for the automotive aftermarket. Being able to communicate with customers through their vehicle to arrange service or offer coupons and Telematics incentives will offer both challenges and opportunities to those willing to embrace this new technology. But, is another according to the results of our 6th Annual Shop Survey disruptor that (page 16), many are ill prepared for this change, and will likely be a others believe dealerships will have the upper hand major game- with this technology and will use it to continue to draw changer for customers away from the aftermarket. In addition to learning to adapt to these gamethe automotive changing business models, we also must adapt to the aftermarket. shifting demographics of our customer base. We are now officially living in a geezer economy, where there are more people over the age of 64 than there are people under the age of 14. It also means our customer base is now made up primarily of Millennials, and they are a very different breed than the Boomers we have been accustomed to. Millennials are customers between the ages of 19 and 34, and who would most likely describe themselves as either DIYers or DIFMs. Boomers today are in the 52- to 70-year-old age range, with the median age range around 63. In the next 10 years, this generation will all be more or less retired. An interesting fact about the Millennial customer group is that it will continue to grow thanks to immigration, so you will want to be sure you understand how and where to communicate with this group, using social media channels, for example, in order to grow your business. According to research by the NPD Group (see Market Tracker, page 10), your new target customer has not known a time without cellphones or the Internet. Terrorism is a familiar part of the Millennial worldview. As a result of these key influences, they have a “work to live” mentality, rather than the Boomer “live to work” philosophy, and instant gratification is their prime motivator. According to the NPD Group’s research, many Millennials own vehicles that are 10 years or older, and they expect to spend upwards of $2000 per year on maintenance. Understanding this new customer base and how best to communicate with them will definitely boost your bottom line. Whether they are going off to college, starting a job, or starting a family, they are coming into their peak driving years. With the price of gas down (relatively speaking) and miles driven still increasing, the future looks promising for those jobbers savvy enough to adapt to these generational and technological disruptors.

Vice President, Operations | Melissa Summerfield Controller | Anthony Evangelista Director of Circulation | Pat Glionna Corporate Offices Head Office 451 Attwell Dr., Toronto ON M9W 5C4 Phone: 416-614-2200 Fax: 416-614-8861

Regional Office 80 Valleybrook Dr., Toronto ON M3B 2S9 Phone: 416-442-5600 Fax: 416-510-5169

“We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage”. Association of Business Publishers 205 East 42nd Street New York, NY 10017

ISSN 0021-7050 Online 1923-3477

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New Columnist Joins Jobber News I am very pleased to announce the addition of Bob Greenwood to the Newcom Automotive Team. Bob is a well-known business management expert in the automotive aftermarket. He has over 40 years of business management experience within the independent sector of the automotive aftermarket industry in North America, consulting independent retail shops on all facets of their business operations. Greenwood is one of 150 worldwide AMI-approved instructors. His business management development courses for automotive shop employers/managers, jobbers, and jobber sales representatives are recognized as being the most comprehensive, industry-specific courses of their kind in North America. You will find his monthly column on the back page of Jobber News. nJN

www.autoserviceworld.com

2017-01-18 12:59 PM

over the counter |

VW To Lay Off 30,000 Workers By 2020 Emerging from the aftermath of the Dieselgate emissions cheating scandal, the VW Group has signed a new internal pact to secure its future – which includes laying off 30,000 members of its global workforce. In a statement, the carmaker said it was taking measures to return the Volkswagen brand to “a path of profitable growth” after suffering 14 months of crippling costs associated with steps it took to deceive emissions tests. In the pipeline since June, the manufacturer and its trade union’s agreement will save the VW Group a projected €3.7 billion (US$3.96 billion) a year, the release said.

WSI OPENS MEGA STORE IN CALGARY Warehouse Services Inc. has announced a significant expansion of its Calgary location. This expansion is an important milestone in the continuing growth of WSI in Alberta. “Due to the tremendous success since our arrival in the Calgary area there was a need for WSI to increase its operations,” explains Scott Scherr, owner of WSI. Building on its success, WSI has reopened in a new location that is three times the size of its previous two locations. This expansion has allowed the firm’s parts inventory to grow substantially. “Combining the two WSI Calgary locations into a bigger and better megastore has allowed us to bring all of our best talent and resources together

BOB CUSHING RECEIVES HALL OF FAME AWARD

The car brand hopes the agreed tactic will double profit margins from 2% to 4%. However, it will come at the cost of jobs for 5% of the entire workforce worldwide, with 23,000 members of staff being made redundant in Germany alone as a result.

into one team and in one place,” adds Scherr. This new expansion has made WSI the largest allmakes, all-models AC Delco distributor in Alberta. “With our focus on delivering exceptional customer service, the increased inventory, and wide range of products and enhanced offerings, WSI is excited to be a large part of the Calgary area automotive and industrial aftermarket now and into the future,” says Scherr. With a large fleet of delivery vehicles and drivers at its disposal, WSI is capable of fast, efficient delivery service to all parts of Calgary. The new facility will also enable WSI to continue with its goal of hosting more technical training clinics in the Calgary area. An open house was held at the new location on Wednesday November 16, 2016. nJN

Bob Cushing, executive vice-president, professional at Advance Auto Parts Inc., received the highly acclaimed Import Vehicle Community Hall of Fame award during an awards luncheon held at the 2016 AAPEX Show in Las Vegas, Nevada.

Bob Cushing, executive vicepresident, professional at Advance Auto Parts Inc., received the highly acclaimed Import Vehicle Community Hall of Fame award.

The Import Vehicle Community, a segment community of the Auto Care Association, honoured Cushing for his strong leadership, integrity, and decades of accomplishments that have improved the import automotive industry. “Bob’s commitment to building an organization and team that puts customers first has set a tremendous example for our industry,” said Ira Davis, chairman of Import Vehicle Community’s Executive Leadership Council, at the event. “We are proud, on behalf of all members in the import segment, to thank Bob for his leadership, perseverance, and accomplishments by naming him the 2016 Hall of Fame recipient.”

Cushing’s leadership roles include serving as president-CEO at Worldpac since 1999. He was promoted to the role of executive vice-president, professional at Advance Auto Parts in August 2016, and today oversees all Advance Auto Parts commercial business units including Advance, Worldpac, and Autopart International. Cushing is the 49th recipient of the Import Vehicle Community’s Hall of Fame honour. During his acceptance speech, Cushing attributed his success to building an organization highly focused on customers, the vendor community, developing strong customer relationships, and working closely with the dedicated teams at Worldpac and Advance. nJN

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2017-01-19 1:17 PM

KEVIN MCGLADDERY RECEIVES 2016 SALESPERSON OF THE YEAR AWARD Lumileds, a subsidiary of Royal Philips, presented its 2016 Manufacturer’s Rep Agency Salesperson of the Year Award to Kevin McGladdery of McGladdery Sales & Marketing Company, West Vancouver, B.C. The award was presented for excellent sales support and customer service during 2016. McGladdery’s dedication and hard work were instrumental in helping Lumileds to establish Philips automotive lighting products as the preferred brand at Lordco Auto Parts, the largest distributor and retailer of automotive parts and accessories in British Columbia. In awarding the Representative of the Year Award, Russ Stebbins, Lumileds Director North American Aftermarket, noted, “Kevin McGladdery has been an invaluable asset to the growth of our business in the Canadian market and has made a significant contribution to our sales program. Kevin has personally created unique programs for both

inside and outside sales teams, and his forward thinking has helped push the Philips lighting program to success. We look forward to working with Kevin and expanding our brand in Canada.” nJN

(Left) Roger Bird, Lumileds senior national accounts manager, and (right) Russ Stebbins, Lumileds director automotive aftermarket, present Kevin McGladdery with the 2016 Manufacturer’s Representative of the Year award.

GM RAMPS UP BOLT PRODUCTION General Motors Co. is ramping up production of Chevrolet Bolt electric cars at a factory north of Detroit and is on track to start delivering vehicles as promised by the end of the year, company officials said. Barring a last-minute stumble, GM will be first to offer an electric car with more than 320 kilometres (200 miles) of driving range at a starting price of less than $40,000 before tax credits. The $37,495 Bolt, with a 238-mile range, is a compact,

utilitarian hatchback with design features such as a thin front seat to increase rear-seat legroom, aimed at making the car attractive to drivers for ridehailing services. GM’s Maven car-sharing operation will receive Bolts to offer drivers who want to work for GM’s ride-hailing partner, Lyft. Company officials will not say how many customers have tried to order Bolts from dealers. GM is also hedging its bets on production targets after getting

burned in the past by overestimating demand for electric or hybrid cars. Sales of electric and plug-in hybrid cars represent just 1% of the U.S. light vehicle market, despite government efforts to promote cleaner cars. The Orion plant is working on one shift, building at a pace of about 90,000 cars a year. GM redesigned the Orion assembly operation to allow workers to build either Bolts or Sonics and can shift production depending on demand. nJN

GM will be first

to offer an electric car with more than 320 kilometres (200 miles) of driving range at a starting price of less than $40,000 before tax credits.

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over the counter | YES WORKSHOP: INDUSTRY MENTOR RAY PROULX OFFERS YOUNG EXECUTIVES INSIGHT With over 35 years in the the Canadian aftermarket, Ray Proulx, senior business development manager for KYB Americas, provided YES workshop attendees valuable insights into life in the aftermarket. “Things are changing very, very quickly, and the people who embrace change, I believe, will be the ones who will be succeeding tomorrow,” said Proulx at the workshop. Proulx has served as the chairman of the Be Car Care Aware committee for the past nine years. He currently serves on the board of High Fives for Kids, and has been very involved with the Terry Fox Foundation for the last 20 years. Proulx is presently the senior business development manager of KYB Americas, responsible for Canadian sales and marketing. “If you look at the aftermarket today, it’s not only the Canadian aftermarket: the footprint is getting bigger and bigger. Canadian distributors have relationships with U.S. buying groups, and now we are seeing U.S. buying groups with relationships with European buying groups,” continued Proulx. “The footprint is no longer just Canada. It’s no longer just North America; it’s a global footprint. When we do business with Canadian distributors, certainly there are U.S. programs and now there are European programs, and we have to look at all of the programs to make sure we position ourselves properly to be able to service the Canadian customer.” Proulx says the biggest impact that is affecting every level of distribution today is technology. “If you look at the technologies in a car today, they are changing and have been changing in the last five years more than they have in the last 50 years in our industry. It will continue to change. Now we are hearing names in the OE manufacturing community like Google and Apple. Five years ago, we would never have thought that those names would be in the OEM community,” explained Proulx. Proulx addressed the different levels of aftermarket distribution. “If you look at the manufacturers, it’s about having the right part for the customer, it’s about having OE quality to fit the platform, so that will be a challenge for manufacturers. For distributors, it’s to have the right part

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Ray Proulx, senior business development manager for KYB Americas and longtime member of the aftermarket fraternity, shared insights into life in the aftermarket.

on the shelf, to service and be able to support the technology today, tomorrow, and into the future. For jobbers, the biggest challenge is to have qualified people. You will need qualified people at the counter to ensure they can answer those types of calls that you get from the service provider. Technology will drive everything,” said Proulx. Proulx believes service providers have the toughest challenge. “They need to fix the cars, they need to have the technology, and they need to have the training, to make sure that they are able to work on the cars of today and into the future.” “Training is everything, so if you go back to the manufacturers in the aftermarket today, they are the ones that have to deliver that training. They are the ones that have to ensure they keep the jobbers in business today and into the future. Some do a really great job and some are really not doing a whole lot about it. That’s the scary part,” said Proulx. “Technicians will have to really step up and make sure they understand how to work on the cars of today and into the future. The biggest challenge for service providers is the dealerships. They have the technology, they have the equipment, they have the training, and they have the technicians in their bays today to work on those cars.” Proulx says dealerships today are very aggressive. They are going beyond the five-year bumper-to-bumper warranty period to keep customers coming back.

He says the challenge for the service provider is to do that same type of homework to make sure to keep their customers coming back to them. “The good thing about the service providers is they have the relationships with their repeat customers, their families, etc., and those are the customers that will be with the service providers for years,” added Proulx. According to Proulx, business is a learning school and you want to be learning every day. If you believe in what you are doing and you believe in your company and what they are doing, be part of that success, he advised. “You need to truly believe in yourself and what’s in your toolbox and what drives you. That will take you to the next level. You should also surround yourself with people who believe in you.” Workshop Keynote: Max Valiquette

For the workshop portion of the day, innovation and trend expert Max Valiquette spoke about business trends and the value of branding. Valiquette helps companies, organizations, and brands find solutions to their problems by better understanding their employees, customers, and communities. Named one of Canada’s Most Influential Marketers by Marketing magazine, he has worked with some of the biggest brands around the Max Valiquette, Innovation world, including Nike, Budweiser, and and Trends Expert, explored new cultural Scotiabank. trends and disruptive technologies. “We are living in an era of unparalleled and prolific innovation and the stakes are so much higher than they were before. We are innovating so quickly now that we don’t necessarily know what to keep up with,” said Valiquette. In his presentation, Valiquette explored shifting demographics, new cultural trends, and disruptive technologies. Some of the trends he focused on included Millennials, sharing culture through collaborative technologies, real-life technologies such as apps and 3D printing, and ongoing changes in the Internet. nJN

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:21 PM

Photo: Trend Objects, iStockphotos.com

WINTER TIRE USE SURGING: SURVEY Canadian drivers are adopting winter tires in record numbers, according to a new survey by Leger for the Tire and Rubber Association of Canada (TRAC). Outside Quebec, where winter tires are the law, 61% of Canadian drivers now use winter tires. The survey’s findings, when compared to an identical study in 2014, show double-digit or near doubledigit increases in all regions outside of Quebec. Winter tire use by region, excluding Quebec: w Nearly half (49%) of British Columbia drivers now own winter tires, compared to 38% in 2014. w Alberta’s usage rate is now 55% versus 45% in 2014. w In Manitoba and Saskatchewan, usage has climbed 11 percentage points to 50%. w 65% of Ontario drivers now use winter tires compared 56% in 2014. w In Atlantic Canada, where winter tire usage is traditionally second only to Quebec, usage has risen eight percentage points to 81%. Among the 30% of drivers still not using winter tires, the belief that all-season tires provide sufficient traction (48%) and cost (23%) are the most common barriers to adopting winter tires. To support consumer education efforts, TRAC has just released a new report

detailing winter tire use in Canada and the latest market and test data. The full 2016 TRAC Winter Tire Report can be viewed by visiting http://bit.ly/Winter-TireReport-2016. Rising usage rates for winter tires are the result of significant improvements in tire technology, particularly in tread design and rubber compounds. These advances have improved traction performance across all tire categories, but especially for winter tires. The softer tread compounds in today’s winter tires retain their flexibility even in extreme cold. At temperatures at or below 7 degrees Celsius, winter tires provide significantly better traction than all other types. The result is significantly greater control on all cold-weather road surfaces and shorter stopping distances. Factors driving winter tire usage include consumer education by industry and government and provincial financial incentives, such as Manitoba’s lowinterest winter tire financing program

and Ontario’s mandatory auto insurance premium discount. “Drivers adopting winter tires in record numbers is fabulous news, because it means Canada’s roadways in winter are becoming significantly safer,” says Glenn Maidment, president of TRAC. “However, the fact that three in ten motorists still do not own winter tires poses a threat to all motorists. This is why outreach to educate drivers continues to be needed. Every motorist needs to know that today’s high-tech winter tires radically outperform all-seasons in all cold-weather driving conditions, and offer potentially lifesaving benefits.” Since Quebec introduced mandatory use of winter tires in 2008, the provincial government has studied the impact on road safety and personal injury accidents. A study released in 2011 found that universal use of winter tires was responsible for a 5% decline in winter road-accident injuries. nJN Shield_White_2013

One new, one old headlight

Two new headlights

Version 1.1 – 25 October 2013

Correction In the J.D. Power Overall Market Facts published in the December 2016 issue of Jobber News, there was a statistical error on page 20 under the heading “Share of Service Occasions Performed by Vehicle Age.” It was incorrectly reported that Independent Shops experienced a slight increase in market share when in fact they had a significant decrease in market share, dropping from 25.2% in 2015 down to 20.7% in 2016. The paragraph should read: Dealerships saw an increase in their share of business coming in at 44.4% up from 42.3% in 2015. Independents saw a significant decrease in market share, dropping from 25.2% in 2015 to 20.7% in 2016. Interestingly, Independent outlets continue to lose market share with vehicles that are eight to 12 years old, dropping to 25% from 31.3% in 2015, and in the four-to-seven-year-old vehicle category, Independent outlets dropped almost three points, to 16.4% from 19.3% in 2015.

Small act, big effect

Two new headlights are safer than one You change your customer’s brakes in pairs. This small act creates a big effect on their safety. Changing their headlights in pairs has a big effect too – giving them better visibility and driving safety. Change in pairs, for safety you can see.

Safety you can see

www.philips.com/chips

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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2017-01-19 10:14 AM

market tracker | aftermarket outlook

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OPPORTUN I IN A CHANGING

MARKET private-label stuff even cheaper now. We have seen over half the categories we follow [register] a price decline with private label, which is up 5.5%.” Miles driven continues to trend up, especially going back to when gas prices came down a couple quarters ago. The North American market is trending at 3.2%, which translates to 100 billion miles more than the year prior. Savings at the pump in the first nine months of 2016 in the U.S. translated into $34 billion. This is something that should be helping the aftermarket industry, but sales are only trending at 1.6%. So where is this money going? A big one is health care spending in the U.S., according to Shipley. “Compared to

2010, consumers are spending 70% more on single coverage. I think we are seeing consumers delay maintenance.” The NPD Group research points to growth opportunities for both the DIY and DIFM channel in 2017. The DIFM market has stolen two points away from the DIY market. (About 75% of the market is on the DIFM side.) New car sales have pushed this trend. “Just in the DIFM market, we see an increase of about $15 million in oil changes alone due to the increase in mileage,” added Shipley. When asked if they are going to have more work done for them or do it themselves, most consumers said they were going to have more work done for them. Convenience is the number-one

Photo: mattjeacock – iStockphoto

he North American aftermarket is experiencing a major generational shift as Boomers retire and Millennials come into their peak adult earning/ driving years. In addition, e-commerce is beginning to show signs of slowing down while miles driven continue to climb, thanks largely to lower gas prices. These are just some of the many factors affecting aftermarket parts sales growth projections for 2017 and beyond, according to Nathan Shipley, director, automotive group for the NPD Group. “For 2016 so far, we have had some things that have helped us and some things that have not. We had a pretty good 2015, [but] that didn’t necessarily help us going into 2016. Miles-driven growth continues to be a hot topic, trending at plus 3% on a 12-month rolling basis. That is helping our industry, as is cheap gas,” explained Shipley to a packed room of AAPEX show attendees. The NPD Group tracks 29 product categories such as motor oil, batteries, wipers, lighting, chemicals, etc., but does not track parts like starters, alternators, or suspension parts. “When we look at year-to-date performance for 2016, we are up about 2%. And that’s coming off 2015, which was up 4.5% for the same time,” explained Shipley. For many years, the aftermarket sales story has been that dollar sales were outpacing unit sales. Premium products were all the rage. That story is now changing: private label is now seeing a strong push, resulting in higher unit sales but less revenue. “What’s been interesting in 2016 is that [for] five out of nine months we have been at or below 2015 levels. You don’t expect prices to go down, typically. So there have been some interesting things happening in this space, and this has been a big detractor to our growth in 2016,” continued Shipley. “We are seeing consumers shift this volume to the good grades from better and best. So, we are seeing a lot of volume shift over to the good grade. We are selling the cheap

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:23 PM

BY STEVE PAWLETT

N ITIES

Photo: mattjeacock – iStockphoto

reason, followed by “It’s too complex now,” or “I don’t have the right tools to do it anymore.” “If you are looking for opportunities to go after the DIFM market, this is one of them,” pointed out Shipley. When asked (if their car is under warranty now), when it’s off warranty would they change the outlet they take their car to for service, 16% said yes, 27% said I don’t know. “Combined, that’s over 40% of consumers that I would argue is an opportunity for you, if you are looking to go after all those new cars that have been sold in the last three or four years. This is a real opportunity to go after them.” Millennials like to learn online Millennials today, defined as those between the ages of 19 and 34, are most likely to describe themselves as either DIYers or DIFMs. They go back and forth between these two. Boomers today are in the 52- to 70-year-old age range, with the median age range around 63. In the next 10 years, this generation will all be more or less retired. Boomers grew up in the era of the Civil Rights movement, Vietnam, and

the Cold War, and followed a “live to work” mentality. They are also the biggest population cohort, perhaps, of all time to date. Yet today Millennials, as an aggregate group, are even bigger than the Boomers. One interesting fact the NPD Group research uncovered is that the Millennial group will get bigger before it gets smaller. How can a defined age group get bigger? Immigration. So, this group is going to get bigger before it gets smaller. From a technology standpoint, this group has not known a time without cellphones, or the Internet. Something called Y2K, 16 years ago, was a big deal for them. Terrorism is also a common theme in Millennials’ world view, as is student debt. They have a “work to live” mentality rather than “live to work” philosophy, and instant gratification is their prime motivator. “This is your new target customer,” said Shipley. Some 52% of consumers who fall in the 18- to 24-year-old bracket, and 42% of the 25- to 34-year-old bracket, don’t own a car. That’s something you can’t change, but what you can do is go after those that do own cars. Younger Millennials, on average, today own cars that are around 10 years old, while older Millennials – those coming out of school, getting their first job, and maybe buying their first home, are twice as likely to have leased their vehicle. This group is expecting to spend over $2,000 on car repairs in 2017. Whether this is because they own a really old car, or they are just new to car repair and don’t know what to expect, this is double the average of what consumers in general expect to spend. They also said they are 50% more likely to watch a video about repairs. They are going to either your website, or a retailer website, or YouTube, to learn about products and repairs. When you think about how many kilometres these consumers have driven, the focus, as an industry, needs to shift towards this group. The 20-to-34 age range and the 35-to-50 age range are coming into their peak driving years. Whether

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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it’s starting a job or running kids to preschool, this is where the focus needs to be. As Boomers retire they will be starting to drive less (since work is where we drive to most), so the shift has to be towards Millennials. When Millennials were asked about driving in 2017, those in the 18-34-yearold category said they were either going to college four hours from home, or just finished college and started their first job, or they got married, and their kids started pre-K this year. Shipley said it is important to divide this group up: Millennials on one end of the spectrum that have homes, may be married, and have children; and on the other side, Millennials who are just coming out of college and going to their first job. These are two very different consumers. Overall, the NPD Group forecast predicts the market is going to decline by 1.9%. “If you look at what happened to retail prices last year, we had five out of nine months where prices were lower than 2015. The forecast model says we will kind of do what we did in 2015. It’s very tough to continue to grow at 3 or 4%,” added Shipley. “Miles driven is going to stay positive, but it’s not going to be at the 3% rate. The U.S. government forecast for the next 20 years says we are going to grow at a rate of 0.92% per year for the next 20 years. What we are seeing today is that we are slowing down. “2016 has been an interesting year; retail pricing hasn’t been a good thing for us. The weather hasn’t been a good thing for us. New car sales helped some categories, but not all. “Whether you are trying to get consumers to do the work themselves, or you are trying to do the work for them, in 2017 there are real opportunities for both sides of the table. The consumers that own these 4- to 7-year-old cars that are coming off dealer maintenance programs are a big opportunity for the aftermarket. You need to look at how your company is evolving to focus efforts on targeting this younger group,” he said. nJN 11

2017-01-18 1:23 PM

market watch | hot winter products

ith vehicles better built and replacement intervals extended, jobbers find themselves looking for new profit centres to fill the gaps. Advancements in lighting, wipers, and battery technology offer jobbers opportunities to build sales in these categories. A few have decided the best way to remain profitable is to compete on price, and are working hard to secure profits through high-volume sales. Others have moved to carrying and selling higherquality, premium products that can command a better price and improve profit margins, even if the volume numbers are lower than in previous years. When it comes to lighting, batteries, and wipers, jobbers will find that opportunities are there for profitable 12

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sales and growth, if you can ensure you have the right products on hand and can position them to installers. “There are some 250 million cars on the road today, that are an average of 11.5 years old,” says Sylvania automotive marketing manager Brian Noble. “Most of these cars have halogen headlights. Going forward, we see the majority of the cars on the road still using halogen technology. HID peaked at somewhere between 5 to 10% of new cars a couple of years

“

ago, and now that market is shifting to LED headlights. Some new vehicles may completely move away from halogen, but the large majority of the market seems to be staying with halogen for the foreseeable future. LED is really replacing HID in the market. “The story is a little different for some locations of miniature bulbs on the car, where LED technology is replacing incandescent technology. Some brake lights and turn lights are moving to LED, but in many situations, incandescent does

The change in seasons as winter approaches is a great time to tie lighting into bundled seasonal promotions.

”

– ROB GILL, NORTH AMERICAN AUTOMOTIVE SALES MANAGER, GE LIGHTING

Photo: MorePixels – iStockphoto

lighting, wipers, & batteries

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:00 PM

BY TOM VENETIS

BUILDING PROFIT CENTRES FOR JOBBERS “

Battery inspection and maintenance should be a standard part of a vehicle maintenance program twelve months of the year, not just fall and winter.

”

Photo: MorePixels – iStockphoto

– RANDY ANDERSON, TECHNICAL SALES AND TRAINING MANAGER, CANADIAN ENERGY

a good job in a cost-effective manner. The reason companies will move to LED options is for style, but when it comes to filling a brake light with a lot of red light, incandescent does a good job.” Many vehicle makers and owners are attracted to LEDs because of the brightness of the light they throw, and the fact that while LEDs certainly last longer than halogen, they still need to be changed eventually. “Many consumers have the impression that LEDs will last ten years or more, and that the light output is better than existing halogen or xenon technologies,” says Alfredo de la Vega, Hella Inc. vicepresident, product management and marketing. “Certainly, LED can do that, but [it’s not true of] all LEDs in the market. As with any other products, there

are different types of products that are offered with the same benefit, but are very different in their performance. Some opt for a higher-voltage input to reach maximum light output, which reduces the lifespan of the product, or requires an elaborate cooling system.” Makers of aftermarket replacement lighting technology suggest jobbers should use the change from summer to fall and winter to push installers to inspect lights and replace worn systems. “The change in seasons as winter approaches is a great time to tie lighting into bundled seasonal promotions,” says Rob Gill, GE Lighting North American automotive sales manager. “You have longer, darker days where lighting will be used more. Jobbers can [recommend] lighting checks during inspections and

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

12-14_JanFeb2017_Market watch_lighting wipers batteries.indd 13

encourage lighting replacements before the start of the season. It is a great idea to package seasonal products for a bundled sale to customers, including wiper blades and windshield fluid, for example.” “Regardless of the season, it is always a good idea for motorists to properly maintain their lights, and a great opportunity for shops to promote lighting maintenance and safety,” adds Aubry Baugh, marketing communications manager, Lumileds, with Philips. “Winter driving, of course, presents a whole set of vision challenges, and drivers need every advantage they can get. It is important to note that light bulbs wear out, just as tires and wiper blades do. Bulbs age with use, time, and exposure to the elements, and this causes the light to deteriorate. At the end of their typical service life, two to three years, headlight bulbs get dimmer and can project up to 33% less light, thereby reducing visibility and creating a safety issue. Jobbers can encourage service writers to check the vehicle’s lights when it is in for service and ask the owner how they feel about the performance of their lights, in order to determine if a replacement or upgrade may be needed.” Sylvania’s Brian Noble offers an analogy that jobbers can pass onto service writers when it comes to helping make the vehicle owner understand the need to replace their lights, even when they believe the lights seem just fine. “Most people think that if a bulb is on, it is working just fine. This isn’t exactly true, and one that could be explained with a home light analogy: ‘Have you ever continues on page 14

2017-01-18 1:00 PM

market watch | hot winter products

“

We have seen that customers don’t mind paying a little higher premium for a superior working wiper that they will not have to worry about for an extended period of time.

”

– JUSTIN MACLAUCHLAN, BRAND MANAGER, PIAA CORP.

changed a 60-watt light bulb in your living room that burnt out and felt that the room was a lot brighter?’ Incandescent and halogen bulbs both dim over time. The household bulb can dim to the point of wearing out and breaking. A halogen bulb is similar in function.” Batteries It used to be that jobbers would see battery sales spike during fall and winter months, but then taper off during the remainder of the year. So where can jobbers expect to find improved revenue from batteries? One way is to stop thinking of batteries as simply a seasonal product and instead push installers to think of batteries as a wear item that needs to be inspected regularly, and replace batteries when they begin to show signs of age or are not performing optimally on battery tests. “Battery inspection and maintenance should be a standard part of a vehicle maintenance program twelve months of the year, not just fall and winter,” suggests Randy Anderson, technical sales and training manager with battery maker Canadian Energy. “Having the latest and up-to-date testing equipment and knowing how to interpret the results is key, as is dealing with a supplier who is able to provide the knowledge and training that will help ensure batteries are being diagnosed properly and replaced before there is a failure.” Shaun Keogh, vice-president, automotive division, with East Penn Canada, says jobbers need to educate service writers and installers on how to sell batteries. Often, service writers lose potential battery sales because they miss the critical aspects of the battery sales experience. One important step is asking the right questions. These include: Is their driving mostly highway or stop-and-go, 14

12-14_JanFeb2017_Market watch_lighting wipers batteries.indd 14

short trips, or heavy traffic? What kind of vehicle does the customer drive, and how are their driving habits? The next important step, Keogh says, is to have jobbers encourage service writers and installers to start with the premium product first, and not a lesserquality battery just because of its lower price-point. “Don’t just assume that every customer will make a decision based only on price,” Keogh continues. “Start your customers with a premium battery that offers the best value with longer life, higher performance, and more power and durability. Many times, customers want to hear what you have to say, or they wouldn’t be talking to you in the first place. Some may have preconceived notions of what differentiates the batteries in your automotive line. By knowing the real benefits of each product, you can make good recommendations. Often, a good recommendation will suggest a premium product.” “Today, the consumer is much better informed and their level of expectation

Don’t just assume that every customer will make a decision based only on price. Start your customers with a premium battery that offers the best value with longer life, higher performance, and more power and durability.

is much greater,” says Robert Brault, director, aftermarket program groups, with Exide Technologies Canada Corporation. “Technology is available to support our recommendations. Battery testing should be part of a vehicle inspection that is usually performed during an oil change service. If we make it a habit to test and provide results to the consumer, not only do we provide peace of mind, but we can anticipate non-start situations before they occur.” Wipers Like batteries and lighting, vehicle owners are open to paying more for a quality blade, where before any replacement blade would have been fine as long as it was cheap. “We have seen that customers don’t mind paying a little higher premium for a superior working wiper that they will not have to worry about for an extended period of time,” says PIAA Corp. brand manager Justin MacLauchlan. “In talks with consumers, using lower-end blades that wear out very fast and having to change them every season is very frustrating.” Makers of wiper blades are moving aggressively to offer a larger selection of premium, higher-end blades to jobbers, and in a greater number of styles to work with the kinds of blade technology coming on vehicles today. Jobbers will see a growing emphasis on beam and hybrid blades. Over 81% of the vehicles made in 2015 came equipped with beam or hybrid blades, most of those with a unique arm type that only works with beam or hybrid blades. Trico Products Corporation brand manager Dawn Gonzalez says that going out some three to five years, jobbers will likely have to carry a wider range of blade lengths than now. “Twenty-nine inch and thirty-inch blades have come equipped on popular BMW and Ford vehicles since 2012-2013 and will be the sweet spot for replacement. But [jobbers] will need to carry shorter blade lengths, fourteenand fifteen-inch, in more beam lines, as [vehicles] have been coming equipped with such blades since 2008.” nJN

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:00 PM

JN_JanFeb2017_ad pages.indd 15

2017-01-17 11:56 AM

cover feature | 6th annual shop survey

TELEMATICS THE NEXT GAME CHANGER?

he automotive aftermarket continues to evolve at a rapid pace, thanks primarily to technological advances that have led to the emergence of numerous innovative business models. Automobiles are now becoming smartphones on wheels, and with telematics looming on the aftermarket horizon, customer service expectations are going to be even higher. But according to our survey results, many members of the industry are unaware of this technology or what impact it will have on their business. Those who are familiar with telematics are either excited for this change, or concerned that dealerships will have the upper hand and will continue to draw business away from them. When we asked auto repair shop owners to rate the key factors that make a jobber their first call, inventory and availability of that inventory were number one with over 70% of survey respondents. The second most important factor affecting jobber choice was brands sold by that jobber. This was closely followed by online ordering capabilities, location, then quality of the counterperson. Price was in last place.

16-20_Cover story_shop survey.indd 16

Respondents said: I wish jobbers would just get rid of cheap offshore parts, period. I am much more interested in quality. The cheap stuff makes it hard to compete, because too many shops and over-the-counter sales are using the cheap stuff to beat our quotes. It’s tough out there these days.” “I’m not real happy with jobbers who will sell to anyone off the street for close to what our pricing is, because customers then think we are crooking them. Quite often, they are selling safety items such as brake pads, etc., to people who, they know full well, aren’t capable of doing the job right. Another issue is people who expect that if they supply their own parts, the shop should guarantee the job.” “I find a lot of counter personnel do not care, or know enough, to do their job properly. They need proper training.” “Knowledgeable staff, good inventory, and quality are the main resources I look for in a supplier.

Service is priority, and availability in shortest time!

Most shops buy from an average of three jobbers, while just over 10% buy from more than five jobbers. Over 50% of survey respondents say they buy up to 80% of their parts from their first-call jobber. This statistic reflects the old 80/20 rule, where 20% of the quality jobber shops out there are getting 80% of the business. This is the fifth year of our dealer purchase question; each year we have seen the amount of parts purchased from dealers increase, and this year is no different. Dealers have become much more competitive with jobbers and have continued

Photo: Gerenme , iStockphotos.com

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:02 PM

BY STEVE PAWLETT

to make inroads into their parts sales business over the past few years. This year’s survey shows they have gained almost four points, going to 35.71% from last year’s 31.95%. The main reason shops are doing this brings us back to the core value they are looking for: parts availability. When their preferred jobber, or the aftermarket at large, cannot supply a part – yes, there were also issues of price and quality

mentioned – they will go elsewhere. While some respondents reported improved aftermarket availability on dealer-only parts, other shops commented on pricing differences and the lack of availability of late-model applications, and many are concerned about the capability of the aftermarket to supply electronics going forward.

Their comments included:

Fit, form, and function issues, and non-availability from aftermarket forced dealer purchases. “Parts availability, poor quality jobber parts (too many comebacks); also, we work on a lot of AHS (Alberta Health Services) units and they request dealer parts.”

After several years of rapid growth, online ordering appears to be levelling off. Some 28.62% of respondents claim they now order 76 to 100% of their parts online, compared to 29.49% last year. This reconfirms a strong trend in online parts ordering that jobbers should be aware of. Having a website that is compatible with all communication devices is now becoming an issue, as more technicians become comfortable ordering parts from their smartphone while they are still in the service bay under the vehicle. Jobbers who have not put much focus on this aspect of their business may want to revisit their approach to online sales and improve on the usability of their website. There were also several complaints that

“The increasing complexity of newer cars often demands new car parts; the issues that are affecting vehicles are becoming more sophisticated, thus requiring new parts.” “Parts quality and availability. Manufacturers need to realize professional shops do not care about price as much as they do quality!” “Jobber pricing is sometimes way higher than dealer. Example: front hub and bearings for GM pickup trucks.” “We are repairing newer vehicles, and we have added OEM certifications to all of our locations.” “Fuel, air metering, and ignition parts are horrible from the aftermarket. As an example, if we put an aftermarket crank sensor on a vehicle, we usually have to replace it under warranty two times, then realize we need to just put on the dealer part.” “Better quality parts equal fewer comebacks.” “Some newer car parts are not available from the jobber.” “Dealerships respect the trade discount fairly evenly and are competitive.” “Our business is changing along with the parts we are selling, and the only place to purchase some of these parts is from the new car dealer.” “Dealers are prepared to meet the prices of jobbers.”

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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Jobbers do not have the parts available or even listed that are needed for some repairs. More often now, the dealer has a better price than the aftermarket. In some cases, the quality of the dealer part is superior to the aftermarket part. 17

2017-01-18 1:02 PM

Print is Not Dead... In Fact

It’s Growing

BORN: Germany, 1439 DIED: Circa 2000 ... or Did It?

Consider The Following...

‘‘

Print is not hanging on by its fingernails, IT’S GROWING. FIPP World Magazine Trends 2014-2015 Report

• 2015 reversed a decade of decline, with a projected 0.2% YOY growth. (FIPP Trends Report) • Printed UK magazine advertising delivered the highest ROI of all media channels, 11% higher than TV and 22% higher than online. (PPA Magonomics)

• In the US alone, 234 new titles made their debut, up 21% from 2013. (Guide to New Magazines, USA) • FOLIO Magazine’s annual survey of US city and regional magazines said 2015 featured more new launches than any year since 2009.

Publications Serving Niche Markets (like B2B) Provide Unique Content Readers Cannot Get Anywhere Else.* * Skip Zimbalist, chairman and CEO of Active Interest Media (AIM), which publishes titles like Backpacker, Black Belt, Arts & Crafts Homes, Better Nutrition, Ski Magazine, Vegetarian Times, Power & Motor Yacht, and Yoga Journal, told FOLIO’s recent Growth Summit that AIM is investing in circulation marketing including direct mail. “We have not found declining yields in mail over the last 10-15 years,” he said.

In Case You Weren’t Convinced Before, You Can Confidently Say:

is Far From Dead. It’s Alive!

JN_JanFeb2017_ad RIP Print Media.indd pages.indd 1 24

2017-01-17 10:46 11:57AM AM 2016-10-25

cover feature | 6th annual shop survey some sites weren’t up to date. Parts listed were often not available. This is the kiss of death for a first-call jobber. Along with convenience and time savings, respondents gave several interesting reasons for moving to online parts ordering: “We obtain our fast-needed parts locally, and place stock orders every week to larger wholesalers in Vancouver at increased discounts.” “Online ordering is available 24/7 with pictures of the item, so fewer incorrect orders.” “Over the last year, more and more of my parts ordering is done after shop hours from home.” “Inventory online is so bad that we can’t trust what it says.” “Online ordering after hours helps so we don’t forget.” When we asked shop owners if telematics was even on their radar, over 60% of respondents replied that it was not; many said they did not know what telematics was. Much like the advent of online ordering a few years ago, telematics is the new kid on the block and awareness is still relatively low. But what it has to offer both jobbers and repair shop operators will revolutionize parts sales and auto repairs as we know them today. When asked what impact telematics will have on their business over the next five years, 49% of respondents saw a small

impact while just over 25% saw a significant impact on their business.

Respondents said:

I expect to see more usage in the future, as technology increases and more cars have communication abilities, although we will have to crack ‘stealership’ coding to make it work.” “I think it will make things more efficient at all levels, once the bugs are ironed out.” “We are losing to the dealer now and we will continue to in the future.” “We are already doing a lot more customer contact through texts and email, so I don’t really see it changing anything; it’s just another communication option.” “I already handle customer communications via calls, texts, WhatsApp, FB Messenger, emails, pretty much whatever is convenient for the customer. This will just be continued growth.” “Scares the crap out of us!! Customers can hardly fix what they have now. How are they going to afford to fix the telematics car in our harsh climate?” “It is the wave of the future and the aftermarket better get involved or lose more to the dealer world!” “I will set it up so my shop is the first contact for my customers, with their permission.” “Dealers will have the upper hand, due to small shops not being able to afford to get into it.” “I’m optimistic. This is the future. Over the past year, we have booked appointments for service and interacted with some customers [purely] electronically. Even receiving payment the same way. Eventually, intellectual properties will be shared with aftermarkets and maybe we will all be able to share in the benefits.”

It’s positive for most who can afford the time and effort it takes to manage this information. Negative for a small shop like mine. I need to be in the shop repairing vehicles to pay the bills, not sitting in front of my computer, and I cannot afford to hire an employee to manage this. JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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We also asked shop owners to tell us what they look for in their first-call jobber. What respondents told us – 226 in all over a one-week period – was that parts availability is still the number-one factor in their decision on whom they call first. The second key factor was their relationship with the jobber, followed by the brands sold, and the skill level of the counter staff. Price remains a significant yet distant fifth.

2017-01-18 1:03 PM

cover feature | 6th annual shop survey Reasons given for changing jobbers included: “Better service. We are 150 km from the city. Our current supplier is out almost every month to pick up returns.” “Better line of brakes and better delivery service.” “Banner program/advertising/co-op funds.” “Salesperson.” “Inventory.” “We switched due to increasing issues in parts availability and delivery times.” “Last jobber was selling to walk-in customers for the same price.” “I switched based on rebate.” “Worked out a better price and better supply.” “Jobber screwed up more than one order in one day. Wrong parts, parts delivered late, counterperson forgot to process order.” “Switched due to lack of quality training. Very important to me to have good training and a banner program.”

The person answering the phone will either encourage or discourage you from continuing to call – knowledgeable counterpeople are very important. If you have to avoid speaking to a certain salesperson, then it’s time they hit the road.

When asked what advice they had for jobbers, many shop owners spoke of superior service, better warranties, quick deliveries, and qualified staff to help them. Respondents said:

Better warranty for parts. Parts quality seems to be slipping, and I hate billing customers twice for the same job.” “Great delivery service and good inventory.” “Do not blend in. Always keep moving forward and think outside of the box when it comes to marketing. If you blend in – you sell parts and that is it – then it doesn’t matter where we buy them.” “Have quality parts in all lines. Make it your commitment to supply the best quality you can obtain. I spend numerous dollars training my staff and supplying them with quality equipment. I keep my building in great shape. My shuttle is clean and well kept. If I put a poor-quality part on a client’s vehicle, it still makes my shop look inferior, no matter how well everything else is done.” “Stay on top of the little things. The big stuff can be worked out; it’s the little stuff, such as checking in every couple of weeks to see how things are going, staying on top of credits, etc.” “Make sure they follow up on what they promise to do.” “Easy-to-navigate sites for online ordering, competent counterpeople (not kids fresh out of school). Efficient delivery (and a call back if part is delayed). Competitive pricing.” “In my situation, the main warehouse that my supplier store draws from has less inventory than one of the other stores. This results in a lot of waiting time. Sometimes it is hard to be loyal.” “Be sure your pricing is in line with new car dealers, or at least close, and have proper catalogues for newer and Canadian vehicles.” “Don’t ignore the ‘little guys.’ If you add them all together they’re probably making you more profit than the big accounts you have.” “Quit offering specials; just give me a good price from the start.” “I don’t know about other garages, but when I am ordering parts and I am busy, I don’t want to waste my time with somebody making a joke or dragging the conversation on and on. Be professional, be efficient, and most of all know what you are talking about.” “Be easy to work with. Have reasonable pricing matrixes so we don’t have to make comparisons and shop around.” “Make sales calls to find out what they are doing wrong or right.” “Make manufacturers responsible to pay labour to replace their faulty parts. Maybe then they will start putting better quality in their products.” “Have their database for parts up to date.” nJN

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www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:03 PM

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11/18/16

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When the hard part repair just isn’t an option...

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JN_JanFeb2017_ad pages.indd 21

2017-01-17 11:57 AM

market watch | friction report

AFTERMARKET BRAKE QUALITY CONTINUES TO TREND UPWARD here are a number of trends impacting the aftermarket marketplace that will have a direct impact on Canadian jobbers’ profits and sales when it comes to brake friction and rotors. The first major trend is that the age of vehicles on North American roads continues to increase. A study put out by IHS Automotive finds the average age of light vehicles on the road today is some 11.5 years. There are several reasons for this: One is that vehicle owners are spending more on keeping their vehicles on the road longer. Breaking down the numbers some more, according to the IHS Automotive study, “New to five-yearold [vehicles] will grow 24% by 2020, while vehicles 6-11 years of age will decline 11%, and vehicles 12-plus years old will grow 15%.” The fact that the oldest category of vehicles is growing is a great trend for the aftermarket repair business. In fact, by 2020, the study estimates there will be approximately 76 million vehicles in 22

22-25_JanFeb2017_friction report.indd 22

operation that are 16 years old or older, up from just 35 million in 2002. According to the global business and analysis firm Global Industry Analysts, Inc., another reason vehicles are on the road longer is that today’s vehicles are being better built, with extended change intervals for many parts. Still, while vehicles may be better built, critical parts still need to be changed – including brakes. This offers an opportunity for jobbers to position premium brake friction and rotors to vehicle owners. “Longer replacement cycles and an increase in the number of miles travelled per vehicle are creating opportunities in the aftermarket. Vehicle maintenance

and component replacements are therefore receiving a boost. As the most crucial safety system, brakes represent the most often-replaced auto part. High replacement frequency of worn-out brake components, including rotors, brake pads, calipers, and parts, is spurring growth in the market. Stringent safety norms, growing consumer emphasis on personal safety, and focus on preventative maintenance, represent other major factors driving growth in the market.” Dean Weber, vice-president of sales with ProForce Automotive, says when it comes to replacement brake friction and rotors, consumers and installers will tend to focus on several key product points.

“

The installer wants a product that will produce low dust, low noise, reliable and smooth braking, and [products] that will work best with all types of vehicles.

”

– DEAN WEBER, VICE-PRESIDENT, PROFORCE AUTOMOTIVE

Photo: gilaxia – iStockphoto

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:06 PM

BY TOM VENETIS

Photo: gilaxia – iStockphoto

“ KEVIN FLEURY, SALES DIRECTOR, TRANSBEC INC.

As far as brakes go, the fastest growing segment that we see is coated rotors. Coated rotors are the new ‘it’.

”

“I think the consumer and the professional installer are still driven by a need for a product that offers reliable, quiet, and smooth braking, [as well as] low dust, durability, and value. We continue to see a huge growth demand for coated, anti-rust disks, and we are seeing more of a blended program in friction that matches OE formulation.” Vehicle owners are placing a greater emphasis on aftermarket brake friction, and rotors need to be equal or better than the friction and rotors that came with the vehicle. One reason is that many vehicle owners want the vehicle to perform as it did when it was first purchased. A lowerend brake friction and rotor will not suffice. Another reason is that the price difference between a quality, OE-equivalent premium aftermarket replacement and a white-box product is not as great as it once was; but the difference in quality between the two remains vast. “The automotive service provider is requesting a premium product that is

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

22-25_JanFeb2017_friction report.indd 23

going to perform as good or better than the OE product,” says Brian Kowalski, vice-president branded sales, Canada, with Raybestos. “Most automotive service providers that find a brand of friction and rotors that performs well and eliminates comebacks will stick with it.” Since vehicle owners continue to move to higher-quality aftermarket brake friction and rotors for their vehicles, brake friction and rotor makers are aggressively releasing new products to fill this demand. And many of the products coming to the market have unique formulations for specific sets of vehicles. “We are seeing a growing niche market demand for slotted/drilled, high-carbon rotors that are coming with an anti-rust coating,” says ProForce’s Weber. “These products are particularly popular with the sport market, with an emphasis on European vehicles and trucks, with the ability to improve heat dissipation and to provide superior-performance braking. continues on page 25

2017-01-18 1:06 PM

JAN2017_Newcom_ASPCouncil_2.pdf 1 1/13/2017 3:13:29 PM

The

AUTOMOTIVE SERVICE PROVIDER Council

CMY

Giving a voice to the automotive service and repair sector within the broader Canadian aftermarket sector. Stay up-to-date on ASP Council activities, follow us on Facebook and Twitter or sign-up to our mailing list.

The Automotive Industries Association of Canada www.aiacanada.com/signup-for-our-newsletter/ | @aiaofcanada

JN_JanFeb2017_ad pages.indd 18

2017-01-17 11:56 AM

market watch | friction report

“

The trend to premium aftermarket brake friction, and rotors that produce low noise, dust, and better braking, has moved more brake friction and rotor producers to offer new products to meet those expectations. – DOUG CURLIS, SALES MANAGER, PROMAX AUTO PARTS DEPOT

This all validates the trend towards OE premium products. I think we will continue to see changes in friction technologies due to the evolution of the automotive market with hybrid cars and self-driven cars. Cars will need to stop more quickly.” In addition, the reduction of copper content in brake friction is now moving forward in earnest to meet new regulatory standards. “This is being brought to the forefront with the passage of bills in California and Washington that limit the future use of copper in all brake friction products,” says Jerry Forystek, director of friction product development with Raybestos. “The copper laws take effect in 2021, when all products produced must be made with less than 5% copper. By January 1st, 2025, the copper content must be less than 0.05%, or virtually zero.” Starting in the new year, new brake friction products will be coming onto the market, as brake friction and rotor makers seek to meet the growing demand for premium aftermarket brake products. Many will be made to meet the demand for brake friction that has more stopping power, while at the same time reducing noise and dust. Federal-Mogul recently announced the availability of Wagner OEx brake pads that are made to reduce rotor wear and dusting. The pads have application-specific designs, with engineered slots and cuts for increasing airflow to allow for greater cooling of the brake. Doug Curlis, sales manager of Promax Auto Parts Depot, agrees that the trend to premium aftermarket brake friction and rotors that produce low noise, dust, and better braking has moved more brake fiction and rotor producers to offer new products to meet those expectations. “[With] our CarbonMax drilled rotor, coupled with our RotoMax coated rotor program, we feel confident that our two

programs offer what technicians need to offer their customers.” “The installer wants a product that will produce low dust, low noise, reliable and smooth braking, and [products] that will work best with all types of vehicles,” adds ProForce’s Weber. “They absolutely want a product that will ensure customer satisfaction the first time around. No one wants comebacks.” Where jobbers are likely to see a great deal of growth in the new year will be with coated rotors. Kevin Fleury, sales director with Transbec Inc., says that brake friction and rotors are now 50% of sales for jobbers today, so it is becoming important for jobbers to focus on premium products that can demand a higher price point to maintain profitability for the jobber and the installer. Coated rotors are one way of doing that. “Cars are better built today, engine parts are better built, as well as exhaust systems,” Fleury observes. “So, jobbers really have to fight today to maintain their brake business because everyone is going to brakes to maintain and grow their businesses. So as far as brakes go, the fastest growing segment that we see is coated rotors. Coated rotors are the new ‘it.’” Fleury continues that jobbers need to position coated rotors as more than a hunk of metal that one sells at a cheap price to secure a sale. “We are selling value and profitability. What I mean by that is, take two rotors and have the service advisor put those two rotors in front of the vehicle owner. You can say to that vehicle owner that both are good – the OE-spec one, for example, is very good, and so is the coated rotor. But the coated rotor will not rust prematurely. That is the key. You are looking for something where someone can go and increase the bottom ticket price. A coated rotor will not rust prematurely, the fins won’t swell up, and

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

22-25_JanFeb2017_friction report.indd 25

”

the side won’t flake off.” Another selling point for jobbers with coated rotors is the coated rotor can be paired with a premium brake friction product, selling the installer on doing a complete brake job. Going forward, an increasing number of brake friction and rotors are going to be paired to work best with each other. So jobbers will need to emphasize to installers the need to replace both for maximum advantage to the vehicle owner. “From the rotor perspective, customers are looking for an OE fit, form, and function from their products,” adds Rick Woodside, general manager, hydraulics, drums, and rotors. “Today, for the installer, it’s about ‘brake restoration,’ or rebuilding the systems with the correct components to ensure the best products are used and work together, to eliminate comebacks. The demands from the customer continue to be quality performing brake rotors that work in conjunction with the same level of quality [brake] pads. OE vehicles are more complicated than ever, and the brake components in the aftermarket must be of the same type of technology as the OE products they replace.” A number of interesting new technologies are coming out soon that will reach the market within the next few years. One example is Dayco’s Activac VGS braking technology, which Brian Wheeler, corporate communications manager, Dayco Products LLC, says will replace the current heavy, fuel-consuming mechanical and electrical vacuum pumps found on many of today’s engines. While this is strictly an OE product right now, it may begin to have an impact on the aftermarket in the future. “The new system includes an array of stand-alone components, such as aspirators, ejectors, flow control valves, check valves, and noise attenuators, all built to amplify or create a vacuum, while reducing vehicle weight. That push for light weight is critical for the automotive sector as automakers scramble to meet federally mandated miles-per-gallon standards in the years to come. Consumers also benefit from a lower and more consistent brake pedal force.” nJN 25

2017-01-18 1:07 PM

social media 101 | brake technology

Ten Secrets to Great Facebook Content Y

ou’ve set up and launched your Facebook page, invited friends to like and follow it, and started posting more or less regularly. But in order to turn it into a marketing tool that achieves your goals – positioning your company as an expert, driving business to your website, raising awareness of your brand, strengthening your relationship with existing customers and attracting new ones – you need great content. As part of your regular Facebook activities, be willing to do a bit of online legwork to find good sources for shared and linked content, from government and other general-information sites to suppliers’ websites and other Facebook pages. But that’s only part of what will build the success of your page. The key is compelling and fresh original content that not only keeps existing followers coming back, but attracts new ones and encourages a sense of community and connection with your audience. Here are ten proven tips to producing great content.

Post lots of photos and videos. Photos are hugely important in Facebook posts; short instructional videos are popular as well. But don’t just post pictures of product – let’s face it, automotive parts are not generally known for their beauty. Try to think of more creative ways to present them: a mechanic installing the part, or a colourful brake pad visible in an open wheel, for example. Another trick is to place the product in an attractive setting, such as outdoors, or with a sharp car in the background (but don’t let the background steal focus from the part!).

Keep the tone informal and friendly. Avoid marketing hype, which turns people off; the personal tone of Facebook is its biggest attraction. Use your name rather than just the company name in your posts, especially when responding to comments.

Offer value. Give visitors a reason to visit your page regularly. Regular promos such as “Discount of the Week” (or day, or month), exclusive to your Facebook followers (perhaps through a promo code they can mention with orders), will not only build traffic, but keep them coming back to see what’s on special next. Build a community by encouraging interaction. Along with regular timed promos, build traffic through contests, polls, and questions for discussion. Invite followers to like, share, and comment on your posts. When someone comments, answer them.

Show the human face of your company. Run a series of posts introducing the members of your staff, with a photo and a paragraph about each of them; mention hobbies or interests as well as what makes them a great asset to the company. Keep the interest broad. Go ahead and report on the company picnic or latest shareholders’ meeting, but don’t overdo it; posts like these will not have as broad an audience as items such as product tips, sales events, and incentives, along with links to blogs, forums, and articles of interest to your audience.

06 07 03 04 05 02 01 KEEP THE TONE INFORMAL AND FRIENDLY

SHOW THE HUMAN FACE OF YOUR COMPANY

KEEP THE INTEREST BROAD

POST REGULAR PRODUCT KNOWLEDGE INFORMATION AND UPDATES

Photo: VLADGRIN – iStockphoto

OFFER VALUE

BUILD A COMMUNITY BY ENCOURAGING INTERACTION

POST LOTS OF PHOTOS AND VIDEOS

26-27_February_social media.indd 26

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:08 PM

GULAR UCT EDGE ATION DATES

BY LUCIANA NECHITA, AIA CANADA, AND MARTHA UNIACKE BREEN

Post regular product knowledge information and updates. Either write original content (or have your product manager or other company expert provide it), or provide a link to supplier articles. This helps to position you as the go-to-source for product expertise.

Take a point of view. Don’t be afraid to express your opinion, or discuss a subject you feel strongly about. “ABC Auto applauds the Canadian government’s recent ban on asbestos, because…” However, it’s important to always present a professional image; restrict your editorials to business subjects, and maintain a sense of taste and tact.

Be ready to respond to negative comments. Being part of the Facebook community has both good and bad aspects. Occasionally, you may be subjected to negative comments, trolls, or “flaming.” It’s important to maintain your cool under such circumstances. Resist the urge to respond immediately, especially in anger, but don’t ignore the comment either. If it’s a customer complaint or bad “review,” ask how you can address the problem, whether with a refund or replacement or other means. If the company has made a genuine error, admit it, apologize and seek to redress it.

Use Facebook analytics. Right on your page, there are tools that will show you followers’ age, gender, location, and more. Along with likes, shares and comments, these can give you a clear idea of which posts are most popular and with whom. Check the traffic information too; if most people visit your site at 5:00 p.m., time your posts to go live then (either by actually posting them, or by using tools that can be set to post at that time). nJN Luciana Nechita is director of public affairs at AIA Canada; Martha Uniacke Breen is contributing editor of Jobber News

09 08 10 TAKE A POINT OF VIEW

BE READY TO RESPOND TO NEGATIVE COMMENTS

USE FACEBOOK ANALYTICS

JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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2017-01-18 1:08 PM

money & management |

PROTECT YOUR BUSINESS’S FUTURE WITH A BUY/SELL AGREEMENT

BY MARK BORKOWSKI Mark Borkowski is President of Mercantile Mergers & Acquisitions Corp. Mercantile is a mid-market M&A brokerage. Contact: mercantilemergers acquisitions.com

28_JanFeb2017_Borkowski.indd 28

client in business with two partners recently asked about ways to safeguard her business’s future. Although everything is going great right now, they want to make sure it stays that way if one of them wants to leave the business or can no longer participate – maybe because of illness, or if they pass away. These owners are putting their lives into this business, and they want to have a plan, rather than just hoping for the best when the worst happens. I recommended that we look at a buy/sell agreement for her and her business partners. Buy/ sell agreements are advance plans that answer questions about what will happen if one owner leaves the business. They spell out how the business will continue, who will fill the departing owner’s role, and who will own the former owner’s share of the company. To find out more about how these agreements protect business owners’ hard work, I talked with Jennifer Black of Dedicated Financial Solutions in Mississauga, Ontario. Jennifer believes it’s critical for business owners to know what their options are if one of them passes away or leaves the company, and to have an agreement in place before the need arises. “A buy/sell agreement formalizes, in advance, the decisions of the owners about the best course of action if one of them leaves the business,” Black says. “It covers what happens with business ownership if an owner dies, retires, or leaves the business for any other reason. Planning is the best way to overcome uncertainty about the loss of a business owner. By planning for various possibilities in advance, the partners have the opportunity to agree on what they will do if the situation arises.” Essentially, the remaining owners have four choices: w Wrap up the business; w Allow the heirs or beneficiary, if the former owner has died, to take over the owner’s role in the business; w Sell their own interests in the business; or w Buy the former owner’s shares, either from the owner or their estate. In terms of what to include in an agreement, Black says it depends on the circumstances, but

she generally advises that most businesses include: w The circumstances or events that may trigger a buy/sell transaction; w The timing and terms of the transaction; w The process the owners will use to value the business and its shares; w Who will buy the former owner’s shares and at what price; and w Where the money will come from to pay for the shares. I asked Black about the best way to ensure the remaining owners will be able to afford to buy out the departing owner. “I usually recommend that business owners have insurance to cover the cost of buying the former owner’s shares, if that’s the plan. It’s critical to have that funding for the share purchase in place; without it, the remaining owners may not be able to afford to buy the shares, or they may have to compromise the business’s finances to do so. Owners can try to set money aside, or they may be able to borrow the funds or sell some assets; but the most secure way to ensure they can fund any buy/sell obligations is to buy life and/ or disability insurance to cover it. Insurance is the most affordable way to guarantee the money will be there if needed.” We talked about who would own the policy. Again, it really depends on the business’s circumstances, so owners thinking about developing a buy/sell agreement should talk with their various business advisors, Black recommends. But it usually makes the most sense for the company to own the insurance policy (and pay the premiums), or for individual shareholders to own policies on each other. They also need to remember to plan for the business’s growth too – there are insurance products that provide coverage that grows with the business, for protection now and in the future. Formalizing ownership transition decisions with the other owners through a buy/sell agreement really is one of the best ways owners can secure some peace of mind about what will happen to the business they have built if they are no longer part of it. nJN

Jennifer Black, BSEd, FMA, CFP, FCSI, CIM, is a Senior Financial Advisor and Certified Financial Planner at Dedicated Financial Solutions in Mississauga, Ontario. She is co-author of Managing Alone: Your Trusted Advisors’ Guide to Surviving the Death of Your Spouse and a member of the Mandeville Private Client Advisory Council.

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:08 PM

JOBBER OF

advertiser index |

THE YEAR AWARD

AIA ............................... 24 www.aiacanada.com/ signup-for-our-newsletter

Named after the founders of Jobber News Magazine, E.J. & A.E. Wadham Memorial Award recipients are a who’s who of the best in the Canadian automotive aftermarket, representing aftermarket auto parts wholesalers from across Canada, from businesses large and small, and of all affiliations.

BlueDevil.........................21 www.gobdp.com

BPI/Raybestos .................. 2 www.raybestos.com

Dana Automotive Group ....15 www.spicerparts.com/ aftermarket

Since 1984, the award has recognized those who epitomize the values of the automotive aftermarket through business excellence, community service, and industry contributions.

NOMINATE SOMEONE TODAY! Federal-Mogul ANCO ...... 32 www.ancowipers.com

YOUR NAME: YOUR COMPANY NAME: YOUR COMPANY ADDRESS:

ITW Permatex Canada .....31 www.wagnerbrake.com

PHONE NUMBER: (

)

I NOMINATE WHO OWNS AND IS LOCATED AT THE FOLLOWING ADDRESS:

Liqui Moly ..................... 27 www.liquimoly.us BUSINESS PHONE: (

)

HE/SHE HAS BEEN IN BUSINESS FOR APPROXIMATELY YEARS

Philips ............................. 9 www.philips.com/chips

AND I NOMINATE THIS PERSON FOR THE FOLLOWING REASONS: (attach a separate sheet if necessary) BUSINESS SUCCESS:

Promax Auto Parts Depot .... 4 www.autopartsdepot.ca

INDUSTRY INVOLVEMENT: COMMUNITY SERVICE:

Schaeffler Group USA Inc .... 7 www.repxpert.ca

(Your Signature) (Date)

also online at www.autoserviceworld.com JOBBER NEWS / JANUARY/FEBRUARY 2017 |www.autoserviceworld.com

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2017-01-18 1:20 PM

business management |

THE JOBBER BUSINESS IS CHANGING RAPIDLY

ur industry and market are changing quickly, and our current business model may not get us where we need to be. We need to redefine and/ or reinvent some aspects of our business. Many jobbers across the country are realizing their way of doing business is changing, and they have to get on board – but first they must examine their own business model. Traditionally, jobbers are sales oriented, and many focus on “best price” to move their products. The problem with this model is that over time, the shop customer base becomes price-focused also. The shops have been conditioned to buy from the supplier with the best price. With margins continually squeezed, I think it’s time to reinvent the jobber business. This won’t happen overnight, but let’s look at the long-term opportunities. First, let’s answer two very basic questions:

What is the right description of the repair shop customer’s business? The automotive service provider (ASP) shop (not the installer) is in the customer relationship business, with the desire to turn customers into loyal clients. They build a trust factor with their clientele, where they sell their knowledge by counselling their client for safety and reliability on their vehicle. Their effectiveness is measured by billed hours.

What is the relationship between billed hours and parts? The more billed hours the shop sells, the more parts that are sold. That being said, how are jobber sales reps approaching the shop owner? If they are going in based on price, they will never win that client for the long term, and profitability with that particular shop suffers. There is a saying out there: “A part is a part is a part.” So

BY BOB GREENWOOD

30_JanFeb2017_Greenwood.indd 30

what differentiates your jobber business from the competition? What are you bringing to the table that no one else can, that can help a shop owner be more profitable and grow his or her business? Imagine, if you will, a situation in which the sales team was trained to focus on the shop client’s business. Imagine if the sales reps made an appointment with the shop owner and sat down to discuss the following shop questions: w How has business been lately? (Not asking “are you busy?”, because a profitable shop is not busy, it’s steady.) w How are your billed hours per R/O? Are you obtaining 2.5 billed hours on basic consumer maintenance? (Of course, the rep knows how to calculate the average billed hours for the client if asked.) w Are you following up on all deferred/declined work properly? (The rep understands the value deferred work brings to a shop, and the importance of proper client follow-up to maintain a proper, safe, and reliable vehicle.) w Is the shop averaging a minimum of 75% site efficiency with a target of 80%? (The rep understands what site efficiency is and how it is measured, and that the only thing that improves site efficiency is increasing the billed hours sold.) This is merely the beginning of understanding opportunities in the jobber business. Many field sales reps are now becoming trained as business counsellors to their shop clients; they actually work with them to improve and build their business. This relationship is extremely valuable and profitable for both parties. Step out of the box and reinvent your jobber business into a valuable profession. I can assure you the millennial generation will jump at the opportunity to be hired as sales reps under these format conditions. Talk with them and get their opinion. I think you will be surprised how energized they become when talking about these possibilities. nJN

Bob Greenwood, AAM (Accredited Automotive Manager) is president and CEO of Automotive Aftermarket E-Learning Centre Ltd. (AAEC). Bob has over 40 years of business management experience within the independent sector of the automotive aftermarket industry in North America, consulting independent retail shops on all facets of their business operations. His 18 years of operating his own consulting and accounting firm in Ottawa, Ontario created some of the most productive and financially successful entrepreneurs within the independent sector today. Bob is one of 150 worldwide AMI approved instructors. His business management development courses for automotive shop employers/managers, jobbers, and jobber sales representatives are recognized as being the most comprehensive, industry specific courses of their kind in North America.

www.autoserviceworld.com | JOBBER NEWS / JANUARY/FEBRUARY 2017

2017-01-18 1:09 PM

No SwelliNg, No SeiziNg oraNge iS THe New BraKe lUBe

Permatex® Silicone Ceramic Brake Lubricant provides high-performance lubrication and protection to critical brake components including caliper pins, sleeves, bushings, slides, pistons and seals. This premium-grade silicone formula is compatible with all plastic and rubber components. • Fortified with high temperature, high concentration ceramic solids • Temperature range -46°C to 1649°C (-50°F to 3000°F) • Resistant to corrosion, contaminants and water washout • Prevents brake squeal and chatter

#24122 - 236ml Bottle

JN_JanFeb2017_ad pages.indd 31

2017-01-17 11:58 AM

THE CHANCES O F B A D W E AT H E R A R E G O O D.

A N D T H AT ’S N OT BA D FOR BUSINESS.

Precipitation can be a great business partner. So take a moment to inspect and replace all wiper blades, front and rear, with ANCO®.

ANCOwipers.com

#PartsMatter

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Federal Mogul ANCO Ad | Jobber News | 8.125 x 10.75 | Jan./Feb. 2017

1/12/17 11:23 AM 2017-01-17 11:58 AM