Automotive Aftermarket News

Why is it?

2008-06-13T06:52:00.000-07:00

Women's magazines are mostly about catching men. Men's magazines are mostly about catching fish?

5 mediocre people do not equal one brilliant, driven individual

2008-05-29T20:48:00.000-07:00

When are people going to figure that out? Nuff said.

Basic Strategies

2008-05-27T07:03:00.000-07:00

It's never too early to build a good website, whether you're B2B or B2C. If you already HAD a website that got a reasonable amount of traffic, you could move the clearance items pretty easily and maybe do some direct to retail to keep some additional margin. Use the website to continually strengthen your relationships with your customers, and no, they don't have to be expensive.

I was talking to an old school Aftermarket guy the other day who was bemoaning the changes that were happening to the industry. Consolidation, changes to the supply chain, companies tanking, Asia, the falling dollar, the internet. This is just the beginning. The aftermarket landscape is going to look very different in a few short years.

Bottom line? You need to be ready to be more independent of other players (they may not be able to move fast enough to suit you), you need to be able to turn on a dime and you need to be thinking; Where's the advantage? What strengths do we have that we can build on?

Different Strokes (strategies that we've seen to date)

2008-05-24T10:03:00.000-07:00

Disintermediation. Wow! Big word. Something that we've talked about since about 1995. Disintermediation is killing off the middle man in order to keep more of the margin, but if you anger your traditional buyers in a multi step distribution chain, you could be cutting your own throat. A manufacturer we know started selling directly to the public via a website, bypassing the entire supply chain. That way, the get to keep the WD's margin and the retailer's margin. A WD could do the same thing, bypassing the retailers and thereby keeping their margin.

Clearance items. This is the equivalent to cleaning out the garage or attic and putting the stuff on eBay. All of us have stuff that just didn't move. Millions of dollars worth of stuff taking up space in the warehouse (a hefty cost). If we could just move it, we might acquire a stash of cash and more breathing room. Ok, it's a temporary one shot deal, but still worth the effort. We know several companies that are working this angle. I'm sure you've already thought about this, but how do you sell this stuff without incurring a ton of up front costs? Yup, the Internet again. We can talk more about that in future posts. Stay tuned.

Initial Reactions to Recession

2008-05-24T09:16:00.000-07:00

If you're a manufacturer and you didn't see this coming, you were probably blithely creating parts and getting ready for new '08 product releases when all of a sudden, Wham! sales are off by double digits.

Let's say you're driving and you see a deer in the road. Your first reaction is to put in the clutch, right? Maybe it'll move. In business this is the equivalent of stopping forward growth, letting a couple of positions term out through attrition, disallowing overtime or putting off that order for the new CNC machine.

If the deer still doesn't move, you might hit the brakes a bit, actually trimming payroll or cutting costs in some other ways.

All too often we are reactive. Deer! Slam on the brakes! Let's talk a bit about how humans respond to perceived threats. Physiologically, when we feel threatened, the adrenal glands kick us into fight or flight. What happens is that the body pumps energy and blood supply into the arms and legs and brain stem (center of physical activity and defense). This starves the forebrain, the center of rational thought. This is the cause of test anxiety where students know the answer but can't think of them while taking a test because they're frightened. Bottom line? When you're stressed, you're stoopid! BTW, fight or flight also starves the viscera where our immune system resides. That's why people tend to get sick when they're stressed. They're just more susceptible.

Step one. Stay calm, slow down, take deep breaths.

2008-05-24T08:45:00.000-07:00

Yup, It's the Economy

2008-05-23T23:48:00.000-07:00

OK, raise your hands if you predicted this economic downturn. Ford? Nope. GM? Nope. CitiBank? Nope. How about our companies? Did any of us begin making parts for Yaris's last year in a big way? How about Prius parts? Anyone? You mean you were counting on continuing to make a living on parts that fit vehicles that get 15 MPG? Oops. Big Mistake, huh? At least you're in heady company with some of the largest corporations in the world. It makes you wonder how Toyota and Honda were prescient enough to predict this.

Well, you've seen nothing yet and if your batting average on economic predictions has been low in the past, are you going to find some outside advice to help guide your company through this trough or are you going to continue to count on your own best guess? Maybe you're counting on taking more market share from your competitors in a market that's going to continue to shrink? Boy, that's not a position that I want to be in. It reminds me of fighting over crumbs.

Are people going to keep driving? Well, yeah, but a lot less and it doesn't much matter if they're driving 26 mpg cars or 15 mpg cars and trucks, they're just plain going to drive less and they're going to have less disposable income. They're going to be disposing their income on things like food and medicine and postage for sending out their resumes, cause there's going to be a bunch of people looking for new work.

Or maybe you're counting on this thing blowing over by next spring? Not going to happen and there are a lot of reasons why, which I'll enumerate in future posts.

There ARE options as long as you don't wait until you're running out of money to make those CNC machine payments or payroll. You have to act now and act decisively.

Do you cut costs or spend more money on marketing? There are a lot of variables and I'll try to outline some of them. Stay tuned.