The economy has created many challenges and opportunities for the aftermarket — and both can work to make the industry stronger.
As OEM sales have greatly weakened, the aftermarket must recognize that it relies on the OE market for survival, says Bob McKenna, president of the Motor & Equipment Manufacturers Association (MEMA).
“The OE new car business is absolutely important to the aftermarket because there would be no aftermarket if we didn’t sell cars and trucks. So as aftermarket managers and executives, it is important to watch what is going on because that is the future market,” says McKenna during the presentation, “Snapshot of the Auto Industry and the Effect on the Aftermarket,” on Thursday, Nov. 5 at the AAPEX show in Las Vegas.
McKenna presented with Ann Wilson, MEMA vice president of government affairs, Steve Handschuh, president and chief operating officer for the Automotive Aftermarket Suppliers Association (AASA) and vice president of MEMA, and Mike Hanley, Global Automotive Leader for Ernst & Young Global Automotive Center in Detroit, Mich.
During the economic recession, MEMA streamlined its championing to fight for cash for suppliers, McKenna says.
“We started looking for every avenue to get funds to the parts supplier. They desperately needed it,” he says of early 2009. “We kept putting the pressure on it every area we could.”
After months of effort, MEMA was told by Congress, “until we can’t make cars and assembly lines shut down, you are on your own.” But the aftermarket has endured.
“We still have a problem, we are still fighting it. We are not out of the woods, but we are surviving. It speaks well to the automotive parts industry that we have gotten through a horrific time. If the tough survive, the tough will come out of this very strong,” McKenna says.
The dynamic changes affiliated with the economic recession have created multiple challenges for the aftermarket going forward.
Increase in vehicles scrapped and reduction in new car sales means tougher forecasting for the aftermarket, and for the first time a "flatlining" of vehicle use.
Growth in emerging markets will mean more sourcing from Asia, driving price pressures. It will also present the opportunity to balance declines in mature markets with growth in emerging markets. The aftermarket will be presented with the ability to develop new distribution models and partnerships with domestic companies to continue succeeding.
New hybrid and electric vehicle technologies provide the potential for new market entrants while also creating new product development opportunities as advancing vehicles will require new components.
But individual action plans among separate businesses is not the only option. There are multiple pieces of legislation that aim to improve the positioning of suppliers and manufacturers despite the economy, Wilson, says.
Wilson discussed a proposed bill that would change loan requirements for small business proposals.
“Let us know what should be changed, and we can help,” Wilson says.
The IMPACT Bill aims to provide a state-organized loan fund that will make credit available to small- and medium-sized manufacturers, and for suppliers who provide components to assist automakers in complying with upcoming federal fuel regulations.
The Advanced Vehicle Technology Manufacturing Bill focuses on helping fund research & development efforts that will improve vehicle technology and fuel efficiency in the future.
