55% of American drivers surveyed by AutoMD intend to use their current vehicle until "it dies," a decision mainly driven by the generally poor confidence of consumers in the economy.
Nearly 50% of survey respondents indicated that their current vehicle had over 100,000 miles. A combined 69% reported that they planned to drive their current vehicle for 150,000 or more miles (13%), or until their vehicle dies (56%).
Nearly four in five (77%) plan to drive their current vehicle for 50,000 (or more) miles than they drove their previous vehicle. Less than 12% said they will keep their current vehicle for fewer miles than their previous vehicle. For further reading go here.
AutoMD.com is an automotive portal owned by Nasdaq listed US Auto Parts Network, Inc. It's key attraction is the ability of the site to provide an estimated cost of repair, pulled from over 400,000 workshops searchable by their area code. Of course, the service is only applicable to State side users but will have very little relevance to the rest of us. However there is a very informative "How To" section that you can still browse through.
The press release did not mention the total number of users surveyed nor their geographic location and demographics group so its hard to know if the conclusion is drawn from a sufficiently robust sample size and applies to American drivers in general, let along those of us in Europe and Asia-Ocenia. But in any case, it does provide some food for thought.
We all know that after-sales have been a strong revenue earner for car makers. In fact car companies actually earn more from selling bundled / optional accessories, replacement parts and service maintenance of vehicles than from the actual act of selling the car. Stiff competition and constant downward price pressures have left modern day car makers with very little margin from vehicle sales, especially the usual bread and butter models, whose low margins have to be balanced with substantial volume. The percular thing that I am noticing is that despite the depressed new car market, particularly in 2009 when we were at the worst of economic times, there was very little after-sales marketing / promotion activities from car companies. Most were still very focused in meeting their annual new car sales target. Is it because current service bay utilisation rate in a typical OEM owned service center is already high enough and thus there is very little capacity to accomodate any influx of vehicles? Or it could be that a typical OEM's view is that after-sales market is centered around the used car market, relative to the number of brand new vehicles. A typical Western European car owner relies on an OEM garage for vehicle maintenance only in the first 4 years of vehicle ownership. After which owners will switch to independent garages or in the case premium brands, specialist networks that are equipped with similar diagnostic computers used by OEMs. The trend is applicable across Japan and other developed markets as well.
Oddly, the customer profile breakdown in after-sales market is relatively unknown to most car companies. Though this is probably related to the fact that after 4 years of ownership, the expectations of car owners against their after-sales service providers changes from brand expertise, use of original parts, and warranty to one that is highly dominated by price concerns only. OEMs, with their high investments and rigid brand identity and customer service standards laid down by their principal to adhere to, obviously can never match the prices offered by independent garages, and thus do not bother to compete with the independents. But this begs another question - why can't automakers offer an "alternative" budget after sales service channel? I am not just talking about premium vs standard service packages, but an entirely different branded entity. One that does away with the many layered structures and rigid requirements to lower cost. The main rule that they have to adhere to is use of original parts. Investments in infrastructure and service tools to service the latest models need not be spread out to these old models over 4 years old, whose visit frequency to OEM outlets is negligible anyway.
In developed markets like Japan, we already have separate sales channel targetting different customer groups. The "Netz" channel focuses on young and trendy models, while "Toyopet" deals with middle-aged buyers offering mid-size models while "Toyota" channel deals with luxury Toyota branded models. In USA, Scion dealers offers high levels of customization to target the young, far higher than a typical American Toyota dealerships and this require setting up of very tedious back-end processes to monitor the dealer activities to ensure that all standard processes and quality standards are maintained. All these were developed to meet requirements of different customer groups. So why can't the same be extended to after-sales? Possible? No?
After-sales is probably the most tricky part of the car business and is often overlooked in the chase for higher sales volume. Expansion of service bays and service centers is often an after thought, after receiving many complaints from irrirate customers who were forced to put up very long waiting period to service their vehicles.
1 comments:
It is true that aftersales divisions are starting to take a more prominent role in automotive companies. They were previously looked down and now they are being recognized as profit centres.
From an organizational stand point, I am intrigued about what should be the role of marketing in an aftersales division. How should it coordinate with car sales? For example, accessory sales are usually made at the point of sale nevertheless accessories are usually part of the aftersales division. I would really doubt many car companies have a good collaborative marketing environment among both new cars and after sales divisions.
Does anybody have examples? Which car companies are really allowing localized marketing decision making in their aftersales divisions?
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