At the 2021 AIA Canada Annual General Meeting (AGM) attendees were invited to take in the Panel Discussion which proved to be very interesting.
Panel members were Steve Gushie, Carquest President, Michael Macaluso, Driven Brands Group President & EVP, and Ezer Mevorach, Mevotech President.
When asked how pandemic-era e-commerce had impacted the distribution network, Steve Gushie stated it had grown for them and changed rapidly.
“Fourteen months ago no one had heard of ‘curbside’ and now we’re with it daily. People are thinking about where to take their car for repair, where is it safe. Shops are figuring out ways to have contactless ways with consumers. Consumers don’t want to take public transport, they want their vehicle back by 5 o’clock!
“E-commerce has been huge for the industry. Customers are now in your ecosystem […]where they’re finding there’s a lot of information surrounding the job—warranty information, torque specs, photo of the part, etc.—plus it’s contactless. We’re seeing more and more of that being driven up today.”
Enriched data and opportunity
Ezer Mevorach stated, “COVID has accelerated the business, we now have ease of doing business, there’s a lot more transparency, plus enriched data—a big contributor to this transformation. Working with distributors now there’s a lot more focus because of enriched data and where it’s at.
“We have a more educated consumer, a huge change and a good one for our industry. We also have the opportunity to further educate them via the internet, etc. Then there’s the efficiency and the speed to market in terms of to the distributor to the consumer.”
Being more consumer interactive, Michael Macaluso postured, “in the digital transformation—smartphones, etc.—the pace of change has accelerated. On the collision and glass side, we’ve had to adapt and bring new solutions forward far quicker than before… great for the business and great for the consumer. It has been better for the whole supply chain.”
Mevorach continues by saying, “from the manufacturer side, it’s the ability to almost interface with the user and elevate the user experience. The manufacturer spent a lot of time training many people and I think that facilitates that… providing the data (enriched), the features and benefits, all of that takes the pressure off being face to face. This gives us the ability to educate our customers and change the decision paradigm. Customers can see the product, then there’s the contact, it’s quite exciting.”
The U.S. perspective?
Susan Hitchon queried the perspective from the American point of view.
Mevorach noted that “the lockdowns on the Canadian side have really slowed us down. The U.S. economy has recovered faster. I think it’s driven by the vaccinations and the rate of progress. The lockdown, the third wave, has deterred Canada from getting back to business as quickly, some provinces have been slower than others.”
Macaluso remarked, “the key to the aftermarket business is vehicles km/miles travelled in our business and the auto aftermarket, and congestion km/miles. Recovery in the U.S. is fairly steady… we’ve seen our business recover at a different rate which has a direct impact on collision rates which has steadily increased along with the MTA increase in parallel rates.
“Certainly the congestion part of things and collision rates has also been increased in parallel with the increase in the U.S. and that has driven their marketplace […] The tax stimulus/initiatives just pumped a lot of money into the retail sector within the U.S. propping up the economy, so we’re very optimistic and very confident Canadian businesses will recover at the same level as the U.S. then run parallel.
“Consolidation and different acquisitions after some of these economic changes will accelerate… we’re seeing that in the supply chain in the U.S. as well. That will eventually return here and we’ll see the M&A across the automotive aftermarket.”
Diversity and inclusivity
Jean-Luc Champagne posed the question: “We’re looking at the dynamics of diversity and inclusivity, so do we need to talk about this?”
“Absolutely. We need to talk about it more—that’s how our culture was founded. But we need to do more, communicate a lot more and back it up with actions. We have to raise awareness, raise questions, question all of us about how we run our businesses. It’s up to all of us to respond in inclusive matters and issues that we’ve been witnessing this last year. It needs to be celebrated… the changes, the policies as part of our day-to-day life.”
“We should celebrate the positive sides of your businesses, to be diverse, that needs to be outlined a little more too.” She had heard a shocking stat on another webinar… women are exiting the workplace at 10x the rate of men during the last 12 months because of the child care problem families are experiencing. How do we recover from that in a predominantly male industry and how do you see it moving forward and are we doing enough?”
“We are not doing enough! That’s abundantly clear across all organizations including the automotive aftermarket. Doing the right thing.. practice the right thing to do, but there’s a point missing—growing business, and so if you’re missing out on that segment how are you going to keep growing your business without diversity inside the workplace! Not just women, but certainly everyone that is included[…] Traditionally our business is perceived as the male-dominant one, but really it’s what we put into it.”
“I think it’s an important topic and we are proud and happy that within our office the equality, diversity and inclusion trend is truly global. Unfortunately, one of the great challenges that have come through has been highlighted by the pandemic.
“Within our industry, I believe we all benefit from more equal and presenting of opportunities regardless of age, gender, etc. There are tools, programs, platforms we need to shout from the rooftops how we’re open, diverse, equal… we need to change the dialogue… everyone can certainly be treated equally.”
On adaptability, Champagne asked: “how are manufacturers adapting to the new technology, the new realities… hybrids, EVS?
Gushie remarked, “The aftermarket is a little slower than Michael’s business. When there’s a vehicle crash, they indeed have systems right in there, they’re involved in that today. Typically, we wait until the vehicle gets into our sweet spot to react to some of the stuff. If we’re not forward-thinking, we’re going to miss out on an opportunity for our business.
“For instance—in the last 12 months, sales of the AGM battery has grown exponentially because of start/stop technology, plus the AGM battery is a lot more expensive than a regular flooded battery. So there’s a great opportunity, then you think down the road—cell batteries are going to present a different scenario, they’re larger, so you need to think about transporting it to customers.
“Most of us have transitioned over the years from maybe having one pickup in the fleet to having more cars… 76% of what we sell is less than one cube so it makes sense except when it comes to an EV battery.
“Now you’ve got a different shelf life. Some of these residual buys have a three-month shelf life before needing to be recharged. If you’re going to transport that to the place of installation, the usual methods won’t work. We’re going to have to talk about hiring vehicles, training people in specific ways.
“Think about safety protocols, not only for the battery but lifting the battery, transporting it, and the other things that are involved. How about the core charges—the core charge on a regular battery is one thing, but a core charge on EV batteries is something else. So, are we going to morph into something like a drop ship? We need to be thinking about that because it’s about to happen. We have to get proactive about that.
“It’s a large ticket sale, so other people are coming into this industry who aren’t interested in regular batteries. But the EV batteries present an opportunity for them to be involved in that market so they want in… nobody wants to avoid getting the big sale. It’s the opportunity ahead of us is how do we adjust along the way! We’ve got to prepare for that before it shows up on our doorstep.”
Getting ready for the future
And what about the skill sets of the people who will have to fix these new vehicles.. are they ready for it?
Macaluso stated, “I think we have an extremely robust workforce that has been adapting for some time now. For the EV and all the features related to vehicle repair on the collision side and for repair maintenance, there’s much more need for repairing or replacing now… a technological component to repairs today that really hasn’t been seen in our history.
“So there’s a need for training, certification, and partnering across the entire sector to ensure we’re doing as much as we possibly can to get ahead of the car coming in.
“We rely on the industry to help us get there. The skillset is definitely there, training is certainly needed, as much access to information as possible is extremely critical and it’s across the entire technological change sector that we need to make sure we’re fixing cars properly as to the right supply change to fix on time to get individuals back on the road safely.”
“It all ends with the individuals who fix the vehicle, day in and day out and organizations across the board.
And the final question: How do you feel the Aftermarket will do in 2022 overall? Are you optimistic or pessimistic… what do you see ahead?
Each of the three-panel members said they were very optimistic about 2022… that business would be robust!