Post on 24-Apr-2018
Brake Manufacturers Council
2010 Annual MeetingJune 04, 20104,
Longboat Key, FL
Steve HandschuhAutomotive Aftermarket Suppliers Association
Topics to be Addressed
• AASA/MEMA Overview
• Key Issues for the 2010 U S • Key Issues for the 2010 U.S. Automotive Aftermarket
h l f• Vehicle Safety Initiatives
• “Know Your Parts”Know Your Parts
What is MEMA?
F d d i M t d E i t • Founded in 1904 – Motor and Equipment Manufacturers Association
b ( i di id l )• 700+ members (over 4,000 individuals)
• Three Market Segment Associations
• MEMA exclusively represents North American manufacturers of:• motor vehicle components
• tools and equipment
• automotive chemicals and related products
4
Representing ManufacturersRepresenting Manufacturers
MEMA members…MEMA members…• Supply about 90% of the total U.S. market for
automotive and heavy duty productsy y p
• Have nearly 12,000 U.S. plant locations
• Employ approximately 1.3 million workers
• 80% based in Detroit, Cleveland, Chicago triangle
5
Councils & CommitteesCouncils & Committees
• AASA AAPEX Show Committee
• Brake Manufacturers Council• Brake Manufacturers Council
• Brand Protection Council
• China Aftermarket Forum
• Filter Manufacturers Council
• Fuel Pump Manufacturers Council
• Government Affairs Committee*Government Affairs Committee
• Marketing Executives Council
• MEMA Information Services Council
• Overseas Automotive Council
• Regulatory Affairs Committee*
• Coming: Motor & Equipment Remanufacturers
6
g q pAssociation*
* MEMA
Key Factors Driving the 2010US Automotive AftermarketUS Automotive Aftermarket
• Industry Rate of Growth
• Dealership Closingsp g
• Vehicle Age
Miles Driven • Miles Driven
• Unemployment
• Lack of Credit
• Recession - Economic Outlook
U.S. Aftermarket Growth
• 2008 -2.0%
• 2009F +1.8%
F %• 2010F +3.1%
• 2011F +3.3%
F %• 2012F +4.0%
• 2013F +5.0%
8
Size of the U S Automotive AftermarketU.S. Automotive Aftermarket
$250,000
$200,000
$100 000
$150,000
Mill
ion
s
$50,000
$100,000
$0
Source: AASA Automotive Aftermarket Status Report
*= AASA Forecast
Primary Components of the U.S. Automotive AftermarketAutomotive Aftermarket
Purchased Labor25%
Aftermarket Parts54%Tires
12%
Specialty Equipment
9%
20072008
Source: AASA Automotive Aftermarket Status Report
Primary Channels of the U.S. Automotive AftermarketAutomotive Aftermarket
OE Service
Independent Aftermarket
O Se ce30%
200770%
2008
Source: AASA Automotive Aftermarket Status Report and NADA Data
Dealer Closings
• As many as 3 000 by end of 2010• As many as 3,000 by end of 2010
• Independent Aftermarket (IAM) Impact:
R hl $ billi f h l l • Roughly $23 billion of wholesale parts into IAM through OE dealers; $2-2.5 billi il bl d l ibillion available due to closings
• As much as $5 billion in service work available to the IAM
12
U.S. Light Vehicles in Use
245
235
240
i h220
225
230
ons
Light Vehicles in Use in the
U S210
215Mill
io
U.S.
195
200
205
Source: R.L. Polk & Co. 242,081,704 light vehicles in use in 2008
20082007200620052004200320022001
Average Age of Light Vehicles in Use (Years)Use (Years)
9.6
9.2
9.4
8.8
9.0
8.4
8.6
8 0
8.2
Source: Registration Data © R.L. Polk & Company
8.0
2002 2003 2004 2005 2006 2007 2008
U.S. Automotive Aftermarket Five Year OutlookFive Year Outlook
$250 000
By Vehicle Age
$200,000
$250,000
$100 000
$150,000
Mil
lio
ns
$50,000
$100,000 M
$0
New to 5 Year 6 to 10 Year Over 10 Year
Source: AASA Automotive Aftermarket Status Report
U.S. Light Vehicle Population Growth
18 000 000
20,000,000
14,000,000
16,000,000
18,000,000
8 000 000
10,000,000
12,000,000
4,000,000
6,000,000
8,000,000
0
2,000,000
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Source: Ward’s Automotive Reports and R.L. Polk
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20
Total Lt. Veh. Sales Scrappage
U.S. Automotive Aftermarket by Vehicle AgeVehicle Age
$ 6
$18,000,000,000
$12,000,000,000
$14,000,000,000
$16,000,000,000
$8,000,000,000
$10,000,000,000
$ , , ,
$4,000,000,000
$6,000,000,000
$0
$2,000,000,000
Source: Maintenance Data - IMR Inc. and Registration Data - R.L. Polk
DIFM Repair/Maintenance Costby Vehicle Ageby Vehicle Age
1050
850
950
650
750
550
350
450
Source: IMR Inc. Continuing Consumer Auto Maintenance Tracking Study
Vehicle Miles of Travel
3,100
2,950
3,000
3,050
2,800
2,850
2,900
illi
ons
of M
iles
)
6
2,700
2,750
,
(Bi
Every 1% decline in miles driven reduces aftermarket volume by approximately
$500 million
2,550
2,600
2,650
2,500
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
2010
Source: US DOT
Economic Outlook
New Privately-Owned Housing Units Started
1,600
1,800
2,000
ate.
1,200
1,400
adjusted
ann
ual ra
600
800
1,000
f units, seasonally
200
400
Thou
sand
s of
Source: U.S. Census Bureau
0
National Average Retail Price -One Gallon of Regular GasolineOne Gallon of Regular Gasoline
$4.25All Formulations
$3 50
$3.75
$4.00 Every one penny change in prices at the pump moves $1 Billion into or out of
vehicle owners’ pockets.
$3.00
$3.25
$3.50
$2.25
$2.50
$2.75
$1.50
$1.75
$2.00
Source: Energy Information Administration
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep
-05
Nov
-05
Jan-
06
Mar
-06
May
-06
Jul-0
6
Sep
-06
Nov
-06
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep
-07
Nov
-07
Jan-
08
Mar
-08
May
-08
Jul-0
8
Sep
-08
Nov
-08
Jan-
09
Mar
-09
May
-09
Jul-0
9
Sep
-09
Nov
-09
Jan-
10
Average Gasoline Expenditures Percent of Median Household IncomePercent of Median Household Income
8 5%
6.71%
7.65%
7.0%
7.5%
8.0%
8.5%
5.07% 4.98% 5.27%6.42%
6.91%
5.5%
6.0%
6.5%
4.93%4.32%
4.33%4.77%
4.44%
4.63%
3 5%
4.0%
4.5%
5.0%
2.5%
3.0%
3.5%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: US Department of Labor, Bureau of Labor Statistics
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Indexed Aftermarket Comparable SSS vs Gas Prices
7.5%
$3.80
$4.00
SSS vs. Gas Prices
4.5%
6.0%
$3.20
$3.40
$3.60
1.5%
3.0%
r Ch
ange ‐ SSS
$2.60
$2.80
$3.00
gasoline price
‐1.5%
0.0%Yr/Yr
$2.00
$2.20
$2.40
$
Avg. g
4 5%
‐3.0%
$1 40
$1.60
$1.80
$2.00
‐4.5%
Q1'03
Q2'03
Q3'03
Q4'03
Q1'04
Q2'04
Q3'04
Q4'04
Q1'05
Q2'05
Q3'05
Q4'05
Q1'06
Q2'06
Q3'06
Q4'06
Q1'07
Q2'07
Q3'07
Q4'07
Q1'08
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
$1.40
SSS ‐ Parts Retailers SSS ‐ Professional Installers Avg. gasoline price
Source: BLS, Company filings, BB&T Capital Markets
Average Number of Repair Orders Each MonthOrders Each Month
80
70
75
60
65
50
55
40
45
Source: IMR Inc.
40
Issues Impacting Vehicle Repair
• Economy, unemployment=decrease in spendingI d hi l li bilit d l i • Improved vehicle reliability and longer service intervals
• Owners relying on vehicle service reminders rather than scheduled maintenancethan scheduled maintenance
• Service model: break-down repairs vs. preventive maintenance
i hi l l i i i i d • Increasing vehicle complexity requiring increased investments in tools, information and training
• Competent and qualified technicians• Access to diagnostic and repair information• Remote vehicle diagnostics• Regulatory (environment, business) complianceRegulatory (environment, business) compliance• Increased focus on ROI
Vehicle Safety InitiativesVehicle Safety Initiatives
I i f T t f t i d • In view of Toyota safety issues and criticism of NHTSA, vehicle safety is going to be a hot topic for some time to cometo be a hot topic for some time to come
• Only 17 states still require mandatory safety inspectionssafety inspections
• Grassroots campaign to lobby US Congress th d f ti id d t on the need for nationwide mandatory
safety inspections
The SituationThe Situation
L t l lit t t • Low-cost, low-quality auto parts are finding their way into all aftermarket h l channels
• Outsourcing methods are replacing popular premium, branded parts
• Essential services offered by Full Service ySuppliers are being diminished
ASA Member SurveysASA Member Surveys
Th t d i d th f OE• The study examined the use of OE-purchased parts vs. aftermarket-
h d t ll t f purchased parts as well as country of origin preferences
• This study revealed that service providers want more information about “what’s in the box” (i.e., country of origin, specifications, certifications, labeling, etc.)
Babcox Tech Group SurveysBabcox Tech Group Surveys
Importance of Factors in Deciding Brand of Part(a higher value = more important)
4.8Quality/f it/function
3.9
4
4.3
Lifetime w arranty
Strong brand name
Available @ primary parts source
3.4
3.8
3.2Low price
Informative catalog
Full line coverage
1.9
3
Promotion/contest
Tech Hot Line/training
p
0 1 2 3 4 5 6
Average Rating Given
Focus Group StudyFocus Group Study
Th hi i R l i h NC • Three geographic regions – Raleigh, NC; Chicago, IL; and Los Angeles, CA
• More than 60 participants, including:
• Shop ownersp
• Technicians
• Service advisors• Service advisors
Focus Group StudyFocus Group Study
Top considerations on choosing a particular brand0
32.6%Availability at Primary Source
Same Brand I'm Taking Off
0
0
17.3%
Lif ti W t
Speed of Delivery
Rebates/Marketing Programs
0
39.1%
6.5%Strong Brand Name
Previous Experience with Brand
Lifetime Warranty
100%4.3%
Form/Fit/Function
Price
g
0 10 20 30 40 50 60 70 80 90 100
The CampaignThe Campaign
A bli i t d t A public awareness campaign to educate and inform everyone throughout the
l h i i ll th i supply chain, especially the repair professional, of the importance of using
lit t f t t d f ll i quality parts from trusted full-service suppliers.
The RisksThe Risks
Safety threat consumer and technician• Safety threat – consumer and technician• Product liability
L f i l i • Loss of essential services • Consumers driven to dealers• Irreparable damage to the Independent
Aftermarket
Know Your Parts!Know Your Parts!
• Full Service Suppliers to design engineer and • Full Service Suppliers to design, engineer and produce quality parts and to promote brand and essential services;Ch l P t t t b d d t • Channel Partners to promote brand name products from trusted Full Service Suppliers and support suppliers’ programs;
• Repair Professionals to diagnose, repair and replace broken or worn-out components with only premium quality parts;p q y p
• Vehicle Owners to ask about the parts being installed and research the brand before authorizing repairs.repairs.
Know Your Parts!Know Your Parts!
• AASA Special Report: Independent Repair AASA Special Report: Independent Repair Industry: Focus Group Findings on Buying Influences of Repair Professionals
• AASA Special Report: Independent Aftermarket Image: Quality Does Matter
• PSA video produced by NASCAR Performance
• AASA “Know Your Parts” materials
• FAQs, Full-service Suppliers, pocket card, etc.
• Web site kyp.aftermarketsuppliers.org