How Communication and Collaboration Are the Most Important Tools to Unlock a Successful Aftermarket

Wednesday, May 11, 2022

How Communication and Collaboration Are the Most Important Tools to Unlock a Successful Aftermarket

By Paul McCarthy, president and CEO, Automotive Aftermarket Suppliers Association (AASA)

Paul McCarthy Headshot
Paul McCarthy

Welcome back to travel and some degree of normalcy! Thank you everyone for last year’s surprisingly wonderful 2021 AAPEX show. By all accounts, the show was a tremendous success. We heard that the meetings were “the best ever” for both manufacturers and customers. And that, as we all guessed, being together face-to-face was a refreshing change and allowed for creative problem solving and thinking. 

I remember talking to a member who said they came into AAPEX unsure if they would hit their budget for the year. They left the show not only having hit the year’s budget, but also next year’s. Amazing. AAPEX showed once again that it has real value – not just in bringing our industry together, but in growing our businesses and achieving goals. 

Fewer, bigger in-person meetings with customers

One thing that is evident is, with less business travel taking place, AAPEX is becoming even more important. As one customer mentioned to me, we used to see key supplier executives every month; now it’s only a couple of times a year. We’ve mastered “virtual business” and that has allowed us to keep budgets down and improve work-life balance. And that shift makes the in-person events in our industry even more valuable, more important. 

As we heard at our first in-person Show since the pandemic, conversations are just different face-to-face. You can see and read body language, you can raise difficult topics that are often just skimmed in video meetings, and problem solving is so much easier. 

AAPEX remains the best place to do business. You can meet with all of your customers in the same place with just one trip. And with all of the right people in the room you can connect and build the relationships and the trust we need and depend on. 

Better communication with customers

We hear it again and again from customers: As we exit the pandemic and return to our new normal, the number one desire from manufacturers is better communication. AAPEX, as the industry homecoming, is the most powerful platform to achieve that. 

When asked what the best suppliers are doing, the nearly unanimous customer message was, “The best have open and honest communication.” As we deal with ongoing supply chain issues, inflation, wars, and more, communication is what is setting the best apart. One thing we know is that disruption will continue, and we need communication and time together to bridge and to solve these issues.

A customer CEO told me, “…force majeure is not a business plan.” We need to work together, forecast and plan together, use the data we have, and prepare together for the next crisis. AAPEX can be a valuable platform for some of these needed discussions.

Customers have also stressed that coming out of the crisis mode that has gripped us in recent years, we need to refocus on the end customer. We need to innovate like we were pre-pandemic. We need to differentiate ourselves. And we don’t need to “get back to normal” – we need to raise that bar and connect more with customers. To create the parts and services that customers of today need, we need to collaborate. And to do that, we need AAPEX. 

Market shift from battle for availability to battle for share

There is no doubt that the aftermarket has been in a battle for availability over the last two years. The reality is if you could get the part to the customer, they will likely buy it … this has been a highly unusual period.

That market reality is shifting, and increasingly we think the story of 2023 will be a battle for share. 

Availability is not necessarily getting better; but it is less and less a competitive differentiator. The next stage in this ever-shifting period of disruption appears to be share. 

We’ve seen during the pandemic so many shifts accelerating:

  • Changing online and offline consumer buying preferences
  • Shop and consumer use of technology 
  • Retailers looking to increase their presence in the professional market
  • A trend of WDs increasing their presence in the retail market through e-tailing fulfillment
  • And on and on 

For better or for worse, we may be set for increasing share shift or defense over the next couple of years.

And the share battle may not just for be for channels – it is for manufacturers, too. Customers have warned us that they think winners and losers will be emerging among suppliers. For many manufacturers, customers say, “Your business may not be as strong as your sales figures.”  

On the other side of the coin, we’ve been cautioned that with a lot of new supplier relationships due to supply chain challenges, on the other side of this crisis, there will be different winners among vendors. AAPEX is happening during a critical time for manufacturers and for our channel partners.

We have work to do to establish market position through collaboration. Companies up and down the value chain must ensure they are aligned with the winning channels and are doing the right things as partners to be able to have the same pace of success in this next phase of industry dynamics as we did during the aftermarket COVID boom. 

AAPEX is the perfect forum to game plan to make sure you win in this emerging battle for share.

More service and repair professionals 

One of the biggest shifts in AAPEX today versus what it was in past decades is its increasing relevance to technicians and shop owners. We’ve seen an increasing trend of exhibitors who use AAPEX to connect with shops and those who are making shop-level buying decisions. We are thrilled to host the Alliance’s Auto Value and Bumper to Bumper members at AAPEX. Thousands of decision makers will be joining AAPEX 2022 thanks to the entire Alliance team and membership. We are thrilled for these shop owners and decision makers to attend this year. And our friends at Advance are bringing 800 CARQUEST shops to AAPEX. This is exciting. Suppliers love to have these attendees benefit from the training and hands-on experience they can provide about what sets their brand apart. 

One of the most exciting things about AAPEX 2022 is the growth and excitement around Repair Shop HQ and Joe’s Garage. Given the great response in 2021, this year Joe’s Garage is 50% larger! There will be 10 service bays with training and tools this year. It is a small miracle that WT Glasgow Inc., AAPEX Event Management, convinced The Venetian Expo to install the footings for lifts to allow us to really bring our industry into the halls of the show. This hands-on, on-site demonstration area was, to me, one of the most engaging and dynamic parts of last year’s AAPEX (and simply a favorite place to visit for a car nerd like me). 

We need to prepare industry and shops for technology revolution

With increasingly high-tech vehicles, the shops need us. AAPEX will lead the way.

The technology revolution – ADAS (advanced driver assistance systems), electrification and EVs, and much more – makes it more important that we connect with technicians and customers. There is opportunity in increasing vehicle content, demonstrated by in the huge increase in new vehicle prices.

While some of the near-term impact is supply and demand due to supply chain issues, the content growth trend over the last decade is striking. And every one of these new technologies can break, will need calibration, and will need maintenance.  

This huge increase in vehicle technology making its way to the aftermarket bodes well for future aftermarket “tickets.” And this is before the full impact of the driver assistance trend and electrification trends are felt.

Just looking as ADAS alone, the dollar growth of the ADAS repair and maintenance market, shown below in an AASA member study unveiled at our recent Vision conference, is tremendous:

Total Addressable Market - ADAS Parts

A good chunk of this market will be collision and, of course, some will go back to the dealer. The huge opportunity – and challenge – for our industry is to get shops and consumers to understand and trust that they can go to the aftermarket to safely repair these high-tech vehicles. AAPEX is vital to achieving that goal. AAPEX offers a valuable platform for getting the word out on our industry’s and our company’s capabilities and put the training and knowledge in place to prepare our customers for the technology wave.

Looking forward

As we look to the future, these sure aren’t your father’s vehicles, this is not your father’s aftermarket, and it is not your father’s AAPEX. And that’s a great thing. Our industry is more dynamic and exciting than ever, and the blue sky of potential is out there. 

Given the changes that we see coming in the industry, AAPEX is important for our industry to get its message out, to grow our businesses in changing times, to prepare our channel partners and shops for unprecedented change in technology, and to influence the decision-makers on which parts they can trust to give safe, affordable repairs throughout the vehicle lifecycle. Given these trends, AAPEX will only grow in importance to our industry’s success.

We look forward to seeing you at AAPEX this year. During a time that the aftermarket has been growing from strength to strength, AAPEX is the fulcrum of change and progress. As we bring together the full repair and maintenance value chain to help manage current growth and secure future growth, we’ll see once again that coming together is how we solve problems, innovate and get better. Only together can we conquer change, disruption, and continue to elevate the strength of the aftermarket. 

May 11, 2022