Competitive
Environment
Similar to the trends in the automotive manufacturing industry, industry consolidation and
restructuring are producing oligopolistic markets in the automotive aftermarket industries.
According to the APAA, the aftermarket industry experienced a total of 195 mergers and
acquisitions in 1997, up from 165 transactions the previous year.
The consolidation and restructuring environment has had the greatest impact on independent tire
& service outlets who are unable to compete profitably and have consequently either been
acquired or have gone out of business. As would be expected in an industry experiencing such
trends, large entities with easy access to financial markets are creating the majority of retail
outlet growth. For example, according to the APAA, although the total number of auto parts
stores declined slightly in 1997, the number of outlets operated by the top ten chains increased
by more than 500 to 5,579, up 10.2% from the previous year.
This intensely competitive environment is creating pressure on the independent and chain outlets
to remain profitable and to also achieve high levels of customer satisfaction, or loyalty, to defend
against the threat of acquisition and/or bankruptcy.
Industry Strategic Issues
From an industry-wide perspective, the primary environmental concerns for the U.S. automotive
aftermarket today include the following3:
l
Competition from Original Equipment (“OE”) versus aftermarket vehicle repair, involving
dealer competition for the service repair market, the establishment of free-standing repair
facilities by dealers and the growing trend toward refurbishing of leased vehicles;
l
Consumer trends, including the shift from “Do-It-Yourself’ to “Do-It-For-Me” vehicle repair,
the growing preference for light trucks, the popularity of leased vehicles and increased safety
concerns;
l
Government regulations-Attorney Generals push against the flat-rate system; and,
’ 1997 U.S. Automotive Aftermarket Overview
20
l
Changing vehicle technology, such as computerization, which requires more sophisticated
technician skills.
From an outlet perspective, additional factors also exist. According to a survey conducted by the
Automotive Service Association (“ASA”), the following rank as the most immediately
concerning industry issues:
Finding and retaining quality technicians (top concern for 29% of respondents).
Keeping up with technological advancements in the industry (23% of respondents).
Improving and maintaining the industry image for the industry (20% of respondents).
Repair information availability ( 12% of respondents).
Increased competition (8% of respondents).
Regulatory compliance issues (7% of respondents).
21
s
EXHIBIT 5
ManaPer of Vehicle Services Performance & Assessment
S.S.#
Name:
Store:
Months In Position:
Company Service Date:Fails
out
Supr.
Fully
Manager of Vehicle Services
Stand
1%
Perf
Meets to
Meet
Management
Works with technicians and general service to do
quality CVI’s or courtesy checks on all vehicles qualified
Works with sales staff to ask for CVI’s or courtesy checks
So all vehicles are qualified
Checks that all vehicles with wheels off have brake readings
Makes all customers aware of scheduled Maintenance
Oversees that all vehicles have a tire inspection
Oversees the work flow and quality assurance
Provides immediate back-up on all store manager activities
In absence of store manager
Creates highly motivated team environment
Controls
Supervises parts inventory to control outside purchases
Returns vendor parts in timely manner
Maintains and cares for shop equipment and tools
Follows CSDS including all sign-offs
Build Car Count/Customer Retention
Staffs service department at optimum level of number and quality of
Employees
Takes charge and can satisfy irate customers
Treats customer respectfully and actively seeks to meet
All the customer’s needs
Hiring and Education
Directly hires service department employees
Develops/instructs/educates employees on procedures
Conducts group meeting with employee
Ensures that service employees complete all Certified for Excellence
ASE certification, and all introductory testing
Trains service employees
Safety/Image
Follows OSHA regulations and assures that all equipment is in
Safe condition
Completes district safety inspections
Maintains MasterCare clean image of shop
Summary of Ratings
(circle one)
Outstanding Performance
Superior Performance
Fully Meets Position Requirements
Fails to Meet Position Requirements
28
A
B
C
D
-.
/