Vehicle Service Trends and Outlook: Research Report

1
Vehicle Service Trends and Outlook Research
Report

• Research Sponsored by Global Automotive
  Aftermarket Symposium
• By
• H. Lee Buck Mathews
• Professor of Marketing and Logistics
• The Ohio State University
• 614-292-2700

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Preliminary Notes and Information

• Research Methodology
• 46 Research Projects Reviewed
• 62 Interviews with Industry Executives and
  Installers
• Complete copy of the research data and slides
  available _at_
• www.cob.ohio-state.edu/mathewsh

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Research Questions

• Where are consumers who have purchased cars in
  the past five years planning to have their cars
  repaired after the warranty has expired?
• What service trends can be predicted?
• How rapidly are these trends changing?
• What are the strengths and weaknesses of car
  dealers and how can the aftermarket service
  providers and suppliers react?

4
Research Questions

• What is the impact of extended warranties and
  extended maintenance agreements?
• What are both the new car dealers and aftermarket
  repair facilities (and their suppliers) doing to
  get new customers?
• Is there a difference in consumer attitudes
  toward maintenance and repair work?

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Basic Findings and Conclusions

• Cautious optimism about future growth of
  aftermarket.
• Automobile dealers have an advantage with
  warranty and extended warranty programs. May be
  their biggest strength and weakness.
• Opportunities of aftermarket providers focus upon
  specialized, economic service providers, large
  enough for technology and cost advantages.

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Understanding Market Segments is the Key to the
Future

• Identify the market segment.
• Growth and market potential of segment.
• Develop a strategy toward high potential
  segments.
• Possible strategies for aftermarket providers.

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After the warranty period, where will service be
provided?

• Aftermarket vs. automobile dealers (80/20
  split)

 
OPPORTUNITY?
8
Interview Comments

• Dealers are earning a greater share of the out of
  warranty business than in the past
• Mostly in the aftermarket, most data shows that
  these cars are being serviced in the traditional
  aftermarket. But as new used car dealerships
  open up this may be changing.

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Interview Comments

• Aftermarket absolutely, probably about 80, this
  is the bread and butter of the independent repair
  shop.

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Installer Comments

• Unless there is a sincere effort to train
  technicians in electronics and have automotive
  manufacturers share their knowledge with
  independents my answer would be the auto
  dealership organizations will service the higher
  tech vehicles.  

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Installer Comments

• Auto technicians are becoming scarce -- The
  public needs to understand that the price of
  repairs to fix these technical wonders we call
  cars is escalating faster each year. Either we
  have to reverse technology to a more primitive
  vehicle such as in the 50s - 70s or the industry
  will collapse with no mechanics to service them.

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Trends in Vehicle Repair
13
Trends In Vehicle RepairMakeup of Other 37
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Strengths of Automobile Dealers
15
Weaknesses of Automobile Dealers
16
Weaknesses of Automobile DealersOther

• Warranty Work
• Honesty
• Value
• Hours of Operation

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What are automobile dealers doing to earn
customer trust?
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Other Ways Automobile Dealers are Earning Trust

• Excellent Customer Communications
• Follow Up Programs
• Initial Contact
• Up Front Rates

• Reduced Costs/Warranty
• Certification Standards
• Good Sales Experiences

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Increasing Market Share for the Aftermarket
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Other Ways to Increase Aftermarket Share

• Expand Hours
• More Marketing
• Improve Turn Around Time
• Early Contact
• Research Location
• Certification
• Expand Working Capital
• Better Technology

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Aftermarket Programs
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Other Aftermarket Programs

• Increasing Communications
• Management Training
• Public Relations
• Focusing on Customer Satisfaction

• Sales and Service Training
• Saturday Hours
• Increasing Locations

23
Impact of Extended Warranties
24
Demographics Influencing Customer Service Choice
25
Other Demographic Variables

• Gender
• Religion

• Race
• Attitude
• Quality of Work

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Customer Service Factors
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Important Customer Service Variables
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Customer Satisfaction Auto Dealers
29
Variables According to Future of the U.S.
Automotive Service Industry(1996-2006)
30
Why Individuals Engage in DIYSource
Aftermarket Business
31
What Jobs DIYers are Doing
32
DIY Activities by Age GroupSource Aftermarket
Business
33
DIY Activity By IncomeSource Aftermarket
Business
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Maintenance Vs. Repair

• New Meanings
• A Segment Variable
• Implications

35
Future Trends and Implications
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What markets/customers do we serve
profitably? What do we do really well?
What the market demands we do well? What is
important to measure our progress?
Prioritize Valuate
Mission
ORDER QUALIFIERSORDER WINNERS
Business Plan
Vision
Market Potential
Internal Strengths Weaknesses
Competitors
Competitors
Segment Strategy
Step1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Step 8
Current Situation Overview
SWOT Analysis
CoreComps
Key Success Factors
Bus Unit Strategy
Score-card
Evaluate
Segment Analysis
Base LineFeedback
CompanyStrength
ExternalO/T
Ours
Ours
OngoingStrategyDevelopment
Functional Strategy
Questionn-aire
Prioritize Valuate
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Market Segment Competitive Strategy
Start

• Yes

Is their an opportunity and can you compete?
Do you have a competitive advantage?

• Frontal Attack
• Product
• Reputation

No
Can you change or Expand the buying Criteria?

• Flanking Attack
• New Values
• Services
• Products
• Reputation

Can you find a profitable Subset of the
opportunity?

• Fragment Attack
• Beachhead
• Coexist

Do you have a position In the market to protect?

• Defend
• Insolate
• Isolate

Is this an opportunity for Future business?

• Develop
• Invest
• Delay

Stop
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DEVELOPING COMPETITIVE ADVANTAGE
Company Identify strengths, weaknesses, KSFs,
Core competency What do we need to be good at to
deliver what the customers want?
Customer Identify target segments Which problems
do customers seek solutions to? Which benefits do
customers seek?
Match what we are good at with Segments that
value our capabilities Competition Identify
competitors threats and opportunities What are
competitors good at? Their target segments
Develop and exploit differentiation
Concentrate on segments with competitive advantage
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H. Lee Mathews is a Professor of Marketing and
Past Chairman of the Marketing Faculty at both
The Ohio State University and Pennsylvania State
University. He has been named Outstanding
Professor of the Year by the MBA Classes of
1989,1990,1992, and 1993. In 1994, he received
The Pace Setters Award for the Outstanding
Graduate Professor at The Ohio State University
in 1997 he received the Sigma Chi Award for
outstanding teaching. The alumni of Ohio State
University have nominated him as a distinguished
teacher. Professor Mathews teaches business
strategy formulation, industrial marketing,
consumer and retail trends, business plan
implementation, and sales management in the MBA
program at Ohio State.   His consulting and
research experiences have focused on a broad
range of strategic problems including industrial
market strategic planning, sales management,
market intelligence, financial planning, and
product procurement and marketing. He has
conducted and translated market research
information into strategic plans for many
companies and organizations such as IBM, Lennox
Industries, and Abbott Labs.   Dr. Mathews has
developed a unique approach to business planning
that focuses on strategy formulation and
implementation. This process capitalizes on
SWOT, PEST, and Matrix Analysis as tools to
develop implementable strategic plans. Recent
clients include Cardone, Hillyard, BFGoodrich
Aerospace, ATT, Hills Pet Foods (Division of
Colgate), Metatec, Victorias Secret, Mannington
Mills, McKesson, AlphaGraphics, Cardinal Health,
and Johnson and Johnson.   One special interest
area is B-to-B marketing, distribution and sales
management. Dr. Mathews has been an active
researcher, writer, and consultant for over 25
years. In the areas of sales, marketing strategy,
and financial management, he as worked as a
consultant to both large and small distributors.
Recent clients include The Butler Company,
Limited Distribution, CIBA, Industrial
Distributors, J.J. Haines, Huttig Sash and Door,
and IBM Wholesale Market Segment Owners. Another
special interest area is bank and finance
organization marketing. He has worked with
Mellon Bank in the marketing strategy for credit
cards, and with Bank of America in the marketing
of financial services. He is a speaker at the
Academy of Financial Executives Summer program at
Ohio State and teaches sessions on finance for
non-financial executives for many organizations.
He is the academic director of the NAW Executive
Program run each summer at The Ohio State
University, and director of the American
Wholesale Automotive Distributors Program at Ohio
State University   Dr. Mathews has worked
extensively in executive education programs.
Through Ohio State University, he has taught in
summer programs since 1977, and in extensive
programs focused on distribution. He is a member
of the University of Michigan Executive Education
Faculty.