For Undercar Warehouse, eliminating hot shot delivery from its services to save fuel costs wasn't an option if it was going
to stay in business.
"We're 100 percent hot shot delivery. That's our advantage," says Jeremy Marchy, parts manager for the single location jobber
based in Modesto, Calif.
It serves shops in a 20-mile radius with five to 12 drivers.
"We're one of the fastest in the area and it helps bring us business," he continues. "We've gained quite a bit of business
from all the places that have gone to a timed delivery. People don't want to wait one or two hours for parts." To maintain its first-call status, Undercar Warehouse made some adjustments to its delivery fleet in lieu of rising gas prices.
"We run (our delivery service) as an independent service," explains Marchy. "Our drivers use their own vehicles so we don't
have the extra overhead of managing a delivery fleet. The drivers take better care of the vehicles because they're their own.
Plus, we can send a driver home after their deliveries are complete, eliminating the need to keep employees after hours to
make sure all the trucks are in and locked up."
The jobber compensates its drivers through pay and a mileage reimbursement, which combined costs less than maintaining their
own fleet. And because Undercar's inventory is mostly small parts, drivers can be even more fuel efficient in their Honda
Civics.
Record-breaking prices
Gas prices set a record in early June as the national average for a gallon of gasoline climbed to $4.043 a gallon. That's
about 30 percent higher than the $3.091 average a year ago, according to AAA figures.
It's evident that a double-digit increase in operating expenses requires some sort of business adjustment, although the path
isn't always clear. The immediate relief of a fuel surcharge is tempting, for example, but many in the aftermarket are hesitant
to pass fuel surcharges down the channel because of competition.
"One of our members said he would love to have a surcharge, but since competitors are not doing it, there is little chance
for him to implement one," offers Bill Maggs, president of National Pronto Association. "All in all, our members are working
on growing the business with existing accounts, which helps off-set some of the added costs."
Trends & Market Analysis
Marchy states that customers don't want to see surcharges on their invoices. "What they get quoted is what they want to pay,"
which is why Undercar has found other ways to curb costs, like delivery options and parts pricing.
With 14 stores, United Auto Supply hasn't started charging technicians for fuel costs.
"I personally believe that the installer wants his cost when we quote him a price," says Dick Beirne, president, United Auto
Supply. "He doesn't want cost, plus a fuel surcharge, plus a delivery charge. We don't put our health insurance cost as a
line item on our invoices. I don't see how fuel is any different."
However others, such as Aftermarket Auto Parts Alliance president and CEO Richard Morgan, believe it's a step we have to take.
At a recent meeting of Alliance members, he recommended that members implement fuel surcharges at the jobber and technician
levels.
"I think everyone in the industry is going to have to do it," he explains. "It's just something that we can't sit back and
worry about the competition and going out of business. Airlines are doing it, car dealerships are doing it...it's time that
we do it."
Derek Kaufman, CEO of C3 Network, Inc. says companies might be trying to add surcharges, but it may not be a solution because
gas prices don't look as if they'll come back down anytime soon. "I think we're talking about a determined ratcheting up of
prices."
C3 Network, Inc. helps companies launch new products and provides communications assistance.
