Aftermarket Distributors with Short Lead Times Win in Competitive Industry
30 June 1998
Mountain View, California -- The automotive aftermarket is characterized by intense pricing pressures, vendor and distributor consolidation, parts proliferation and a shift in end users. Distribution is playing an increasingly important role in this dynamic and competitive market, as excellent distribution translates into higher margins for both vendors and distributors.
According to strategic research conducted by Frost & Sullivan (www.frost.com), Automotive Aftermarket Distribution Channel Analysis, aftermarket growth is due in part to rising sales of light trucks and passenger cars, the growing average age of vehicles, and the increasing price of new vehicles. Total revenues for the U.S. automotive aftermarket have grown between one and four percent annually for the last five years, and current trends indicate that this growth will continue for the next five years.
"Distribution is becoming a key means of differentiation for vendors in the aftermarket," say the authors of this report. Consumers often have little leisure time, so when their vehicle needs repair, they want it done quickly. For distributors, this means whoever can deliver the product first to the professional installer or do-it-yourselfer is the winner. Inventory management systems are an important technology trend. Inventory selection, order tracking and forecasting are all in need of technological improvements. Auto parts retailers have gained an advantage in this area, and consequently have been gaining market share since the 1980s.
Another growing trend is two-step distribution. Although three-step distribution is most common in the aftermarket, it is slowly giving way to two-step distribution, which consists of warehouses selling directly to installers, and jobbers buying directly from vendors. However, eliminating a third level of distribution has proven to be no guarantee of success.
The greatest threat to a distribution channel is other distribution channels. For instance, auto parts retailers, not satisfied with their success in the do-it-yourself market, have begun adding installer delivery programs, threatening traditional distribution channels. In addition, some distribution channels have been growing at the expense of others through joint ventures and consolidation. Joint ventures between merchandisers, quick lubes, and installer chains are increasing.
Frost & Sullivan's new study, Automotive Aftermarket Distribution Channel Analysis, separates the aftermarket into 14 channels of distribution, and analyzes the strengths, weaknesses and opportunities for each channel. This report provides vendors with new distribution ideas, as well as an idea of the direction in which each channel is headed.
Frost & Sullivan is an international marketing consulting company that monitors the automotive industry for market trends, market measurements and strategies. This ongoing research is utilized to update a series of research publications such as #5776-18 U.S. Brake System Part Aftermarkets, and #5777-18 U.S. Exhaust System Parts Aftermarket, and to support industry participants with customized consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.
Report: 5316-18 Publication Date: June 1998 Price: $3450 For more information in the United States, please visit our web site: http://www.frost.com
