A Strategy For Success in Canada’s Aftermarket

Monday, November 30, 2020

By Andrew Ross, publisher and director of content, Indie Garage and Jobber Nation

Up here – just a kick of the leg north of the 49th parallel – lies probably one of the biggest regional markets within your reach: Canada, and its growing, dynamic aftermarket. The global aftermarket knows it is home to some of the most established successful aftermarket organizations in North America, if not the world. And I suspect that, as an essential business, the role of Canada’s aftermarket in the domestic economy will grow as the impact of the pandemic shakes out over the coming months.

Nearly half a million Canadians – close to three out of 10 employees here – work in the aftermarket, out of a total population of some 37 million. According to federal statistics, the Canadian aftermarket comprises more than 48,000 enterprises, 99% of which employ fewer than 100 workers. 

Canada’s service segment boasts approximately 12,000 independent repair and service businesses, plus about the same number again divided amongst specialists, collision repair, car dealerships and related businesses. 

Put another way, about half of the aftermarket businesses in Canada are in the service sector, and about a half of those make up the aftermarket’s core end-user marketplace.

And while there exists a healthy set of banner program options for shops, the majority remain boldly unaffiliated, though they certainly do maintain strong connections with their local supply networks and professional communities which includes both the independent aftermarket and the original equipment service parts suppliers.

Historically, job growth in Canada’s aftermarket has outpaced the Canadian average, providing a significant contribution to the country’s gross domestic product. In 2019, that added up to an estimated $38.8 billion, or about 2% of our GDP. 

Quarterly reports indicate that Canada’s rebounding aftermarket is already outpacing 2019 on a year-over-year basis, which is certainly not the case for many other industries. Even so, for those organizations seeking to do business in Canada, there is much change to adapt to.

In a normal business environment, Canada’s vast geography, significant regional differences (in both Canada and the U.S.), aftermarket culture, and language have made serving the Canadian market a unique proposition. 

So whether you’re looking at Canada for the first time, or looking to adjust how you go to market there in this changing environment, here are some key considerations.

It’s always the best strategy to have boots on the ground in the country you’re selling in, but Canada’s proximity to the U.S. has historically made it possible for some companies to treat Canada as, in essence, really just another big U.S. state. However, the closing of the border to all but essential workers has required a massive rethink of that strategy. For the near future anyway, there is very little expectation among Canadians that we’ll return to “normal” operations any time soon, and the border remains more or less closed to non-essential U.S. travellers.

In the meantime, virtual meetings including cornerstone events like the Virtual AAPEX Experience have become a popular, and so far, viable, alternative. Anecdotal evidence indicates that virtual commerce is most effective with individuals already known to the buyer. In addition, national, regional, and local market knowledge can help avoid missteps. 

Many multinational organizations have imposed travel restrictions to protect the health and wellbeing of their employees. This has hampered their mobility in an industry where face-to-face (or at least mask-to-mask!) meetings matter. 

While Canada’s economy is returning to former activity levels in some areas, this varies dramatically from region to region. As of this writing, for example, the “Atlantic bubble” restricts travel from those outside the Atlantic provinces. Also, many Canadians still respond with caution to travellers arriving from other regions, particularly major population centres, even if local guidelines have been relaxed. 

However, locally based market personnel can still meet with customers as corporate edicts allow, and independent representation may provide an option not bound by individual corporate rules. 

Associations and Industry Groups
The Automotive Industries Association of Canada works at all levels of the automotive aftermarket in Canada. There are also strong regional organizations focused on the repair sector, such as the Aftermarket Retailers Association of Ontario (AARO), the British Columbia-based Automotive Retailers Association, and others. In addition, there are government sector councils, such as the Comité Paritaire in Quebec, that anyone selling in the market should at least be aware of. 

Rules of the road
Canada and each of the provinces present a range of different regulatory environments for companies. In my view, it is worth the investment to research provincial variations in, for example, labelling, but it is critical to understand those that affect your specific market category.

Of course, you could spend a lot of time learning the finer points of government regulations, market players, pricing strategies, etc., but the good news is you don’t have to. Thankfully, there are experienced direct-sales and independent-agent resources for organizations to draw on.

An effective strategy for Canada can include any of these, or some from column A, some from column B.

Regardless of the particulars of the ground game you choose, a genuine commitment will pay off, helped at least in part by the recognition by Canadian customers of that commitment. 

Canada may be known for its cold winters, but those who make a firm commitment to Canada’s aftermarket can expect a warm reception.