You may not recall the name Tom Sharpe. But chances are you recall his character: the Goodyear Guy.

This tall, balding actor used his deadpan, Bob Newhart-style delivery to great effect in a memorable series of early-’90s TV spots for Goodyear Canada. The purpose of the ads: to let car owners know that Goodyear offers tune-ups as well as tires.

That one of the country’s leading tire manufacturers chose to focus the spotlight so strongly on its other service offerings was indicative of a fundamental shift in the automotive aftermarket business – a shift that has only accelerated in the intervening years.

Simply put, this $15-billion market has become much more fiercely competitive.

For a start, improved technology and better-engineered parts are reducing the overall number of service occasions for car owners.

At the same time, automotive dealers are making an aggressive bid to reclaim a larger portion of this market, promoting themselves as cost-effective, convenient and reliable providers of everything from oil changes and tire rotations to brake repairs and tune-ups.

For established aftermarket players such as Goodyear, Midas Canada and Speedy Muffler King, the obvious strategy has been to diversify, establishing themselves as full-service providers.

Consider Midas, for example: Long known primarily as a ‘muffler place,’ the chain has lately begun opening shops called Midas Oil and Lube, underlining its full-service car-care capabilities.

Of course, the more one-stop shopping consumers can do, the more crucial branding will become for service providers – and the harder they will have to work to differentiate themselves through price, service, and quality.

In short, it’s going to be interesting. Here’s how the major players plan to meet the challenges ahead.

Auto Dealers and

Manufacturers

According to the 1997-98 Customer Commitment Study conducted by Toronto-based J.D. Power and Associates, automotive dealers have seen their share of the aftermarket grow from 30% to 40% over the past decade.

This is largely the result of a concerted effort, on the part of both manufacturers and dealers, to correct the perception that dealers are more expensive and less customer-friendly than other independent service providers.

‘This image problem has to be addressed not only in communications, but also in the delivery of the service,’ says Santo Giardini, national marketing manager for General Motors Parts in Oshawa, Ont.

For GM’s dealer-operated Goodwrench Service centres, he says, the priority has been cultivating consumer trust, as well as differentiating themselves with competitive, all-inclusive pricing, better-qualified technicians and revamped facilities.

Glen Rumpel, president of Stampede Lexus Toyota in Calgary, is quick to affirm that dealers have made great strides in recent years.

‘A good percentage of Canadian dealers have been able to offer higher levels of service and a competitive price in order to win back that maintenance work,’ he says. ‘And it’s much more convenient for customers to take their vehicle to a dealership than to a corner garage.’

Jim Wilson, president of Jim Wilson Chevrolet Oldsmobile in Orillia, Ont., says that an increased commitment to training for service personnel is also helping dealers claim a larger portion of the aftermarket business.

‘Dealers spend a fortune on training their people,’ he says. ‘With the complexity of today’s cars, if you don’t keep up to speed, you’re out of the program. And a lot of aftermarket people simply can’t keep up.’

Among manufacturers, one of the most notable aftermarket-related moves of late has been Ford Motor Company of Canada’s introduction of Fast Lane, a chain of dealer-operated light maintenance shops that service all vehicle makes – not just Ford cars and trucks, as a traditional dealer service centre would.

Richard Cooper, an analyst with J.D. Power and Associates, says he expects to see more manufacturers adopt this approach in their pursuit of a share of the aftermarket business.

Offering service under an entirely separate brand is one way for manufacturers to deflect the image problems that have plagued their dealer networks, he says. ‘The challenge will be: Can you establish a brand that is sufficiently separate from the manufacturer, but at the same time carries a lot of the reassurance and equity of the manufacturer?’

Specialty Shops, Quick Lubes and Tire Specialists

Taken together, these three categories claim approximately 19% of the Canadian aftermarket business. They include a number of large companies, such as Midas, Goodyear and Mr. Lube, that began as niche players but have since branched out into other service areas.

‘They’ve had to diversify a bit,’ Cooper says. ‘The need for repairs has dropped quite dramatically, and as a result they’re having to look for other sources of revenue.’

The Firestone Tire & Auto Centre chain is a fairly typical example.

Its parent company, Mississauga, Ont.-based Bridgestone/Firestone Canada, puts its primary focus on tires, says national advertising manager Don Moore. But a move into full automotive service was inevitable. Tires, like mufflers, are lasting longer, which means car owners are changing them less frequently. So what else to offer?

Firestone Tire & Auto, which holds about 1% of the Canadian market, ranked among the highest-rated service providers in the J.D. Power customer satisfaction survey. Moore says much of this success can be attributed to the fact that all 89 service centres are independently owned and operated.

‘We find that entrepreneurs are much more interested in their customers than employees of major companies. As a result, the relationships that these entrepreneurs build with their customers are very strong.’

Retail Chains

As a player in the automotive aftermarket business, retailer Canadian Tire is not to be discounted. There are nearly 430 Canadian Tire Auto Centres across the country, accounting for roughly six per cent of all service occasions in Canada.

Many of the newer Canadian Tire Auto Centre locations boast an open-concept design that lets customers actually see their vehicles being repaired. They also feature a separate waiting area with a television, and a children’s play corner – all intended to make the service experience more agreeable to the consumer.

Bruce Allen, vice-president, automotive marketing with Canadian Tire, says the open concept is a means of creating trust with customers. And trust is the basis on which Canadian Tire differentiates itself within this competitive environment.

‘Many argue that bigger isn’t better,’ he says. ‘But one could also say that being established means people can count on you. When it comes right down to it, the main driver of customer loyalty is trust, and Canadian Tire has built trust in communities over time.’

As a player in the aftermarket game, Canadian Tire also enjoys a number of other advantages. Its Motomaster brand of automotive products, for example, is well established. And the company has an enormous database that it can tap in its efforts to target potential aftermarket customers.

Canadian Tire isn’t the only big retailer making its presence felt in the aftermarket business. Since entering the Canadian marketplace, Wal-Mart has also been seeking a piece of the auto service pie.

For the most part, the U.S.-based chain has focused on the quick-lube business, although it also dabbles in tires and batteries.

Not surprisingly, given its overall philosophy, Wal-Mart has chosen to differentiate its auto service offering on the basis of price.

‘Wal-Mart has a small share of the market, but they also have a very loyal clientele,’ notes Richard Cooper. ‘They have a specific segment of the market – the price-sensitive consumer.’

For its part, Canadian Tire has tried to position itself differently, rather than attempt to compete with Wal-Mart on the basis of price alone.

‘We offer a broader spectrum,’ Allen says. ‘We’re competitively priced, but we offer more services and features.’

Gas Stations and

Independent Repair Shops

To the extent that automotive dealers have succeeded in grabbing a larger share of the aftermarket, they have done so at the expense of gas stations. Once a formidable player in the auto service industry, gas bars have seen their share of the aftermarket business dwindle to a mere 5%.

Falling gasoline and oil prices are at the root of this, Cooper says.

‘Because the margins on gas aren’t high enough, there’s been a lot of consolidation in the gas station business,’ says Cooper. ‘The branded [chains] – Shell, Esso and Petro-Canada – used to have approximately 11,000 locations. Now they’re down to about 8,000.’

Many chains, he adds, have shifted their energies from auto service into sales of branded convenience items and snack food, and partnerships with food-service outlets such as Wendy’s or Tim Hortons.

Independent repair shops, meanwhile, claim a respectable 17% share of the Canadian market. But many also face considerable challenges. Foremost among these: a shortage of financing to pay for the kind of sophisticated equipment and staff training that’s necessary nowadays.

‘Because equipment is so expensive, and because the technology is so demanding, there’s no question that the [small independents] are really feeling the pinch,’ says Firestone’s Don Moore.

Some, says Santo Giardini of GM Parts, may bite the bullet and invest in better equipment. Others may simply choose to focus on core services such as lube jobs and tire rotations.

While life is clearly getting tougher for the independents, Giardini predicts that they will remain a major competitor in the business. The reason is simple: they have done what many larger players – dealers included – have failed to do: namely, maintain close ties to the customer.

‘Their whole market share is based on the relationship they have with their customers, and that’s extremely important in this area of business,’ he says.

Also in this report:

– Spotlight on … automotive creative p.18