There are great opportunities for automakers and their dealers in the aftermarket for automotive mechanical parts. The total size of the market in the U.S. is $26 billion, and it is expected to increase 1.8 percent annually to $28 billion in 2025. But original equipment parts have only a 36 percent market share. In February, Carlisle & Co., along with automotive data supplier Motor, surveyed independent repair facilities, or IRFs, across the U.S. to better understand their decision-making when buying original equipment parts. (Read a white paper on the survey at autonews.com/genuineparts.)
Sales of genuine OE parts to these independent shops through dealer wholesaling generally represent about 20 to 25 percent of such parts sales. Collision parts represent about 80 percent of that amount and mechanical parts the other 20 percent. Harry Hollenberg, 55, managing director at Carlisle, discussed some of the report's findings with Editor Dan Shine. Here are edited excerpts.
Q: How great is the demand for original equipment parts at independent repair facilities?
A: IRFs tell us that only 22 percent of their total parts sales are OE parts they purchased from OE dealers. Interestingly, another 21 percent of their sales are represented by "OE parts purchased from nondealers." We have some theories on where those particular sales are coming from, but we'll have to dig more deeply on the next survey to test those theories. While IRFs indicate they offer OE parts to their customers about 50 percent of the time, they also indicate that customers only ask directly for OE parts about 20 percent of the time. Clearly, automotive OEMs and dealers need to do a better job of creating demand for their parts by selling the quality of genuine OE parts.
Do independent shops consider genuine original equipment parts to be better than non-OE parts?
It depends on the criteria. IRFs do indicate that OE parts are better than non-OE parts when it comes to quality and fit and generating customer satisfaction. There are a few criteria where IRFs see OE parts roughly the same as non-OE parts. These include part availability, warranty coverage and technical support. Finally, IRFs report a preference for non-OE parts when it comes to speed of delivery, price and margin.
How can dealers sell more OE parts into the independent channel?
Of course, price will always be an issue. There is a premium for OE parts, so anything to be more competitive on price would help. But beyond price, there are additional steps that OE dealers can take. The first is delivery. OE dealers dramatically overestimate how long IRFs are willing to wait for a delivery. Among our IRF survey respondents, the median maximum order-to-delivery response time for a mechanical maintenance part is about one hour. However, when we asked dealers how long their IRF customers were willing to wait for a similar delivery, their median response time was 12 hours. Clearly, there's a huge mismatch there.
What improvements are needed from dealers regarding sales calls and online parts options?
IRFs told us that they receive an average of 19 sales calls annually from retailers they purchase parts from. Conversely, nearby dealers are only making about four sales calls annually. It's hard to get the sale when you're not even asking for it. Further, IRFs indicate that when they search online to identify which part to order for a particular vehicle, they only receive an OE part option about 40 percent of the time. While this is more an OEM than a dealer issue, there is obviously a need for a comprehensive online OE catalog to more easily help to get OE part options in front of IRFs during the ordering process. Particularly due to COVID, e-commerce is more important than ever to sell to these IRFs.
What surprised you from the survey?
While there were a number of findings that I found interesting, I was surprised by the lack of interest IRFs had in "one-stop shopping." I know that a number of companies have been trying to aggregate ordering and delivery of parts to allow IRFs to more easily order required parts. Yet approximately two-thirds of IRFs said they'd prefer to make a separate call/order for each part if that was the only way to maximize price, quality and availability. Of course, one-stop shopping would be great if you could do that and still get the lowest price, the best quality and the fastest availability. But in terms of sacrificing even a little bit on price, quality and availability to support one-stop shopping — there seemed to be very little support for that.