If you attended NACE and CARS classes in July, you noticed the industry is undergoing what financial analysts call “disruption.” This means that the way we do business, which has worked in the past, is not working now. And for many of you, by the time you notice, it’ll be too late.
However, listening to the conversations at the show, it was plain that somebody is taking notice. A couple of things happening now illustrate the disruption point and should cause you to adjust your ship’s course.
The OE reality
I’ve been following the news that Fiat/Chrysler CEO Sergio Marchionne is more than concerned that manufacturers redesign more than 50 percent of the content of every vehicle on an almost annual basis. Some say more. This despite the fact there are no brand identity or ROI benefits to the drill. We’re talking about transmissions, axles, door latches, fuel management systems and so on.
I think Marchionne might be right. The industry that produces the products we repair for a living spends its total net worth every four years on R&D, while other industries take 18 to 20 years to burn through that much cash. But as connected cars add more content to the package and prices continue to rise, who will buy these cars?
It can be argued that the auto industry is on a collision course with its past.
The cars that never were
You might recall that only a few years ago we had an overall vehicle sales drop of more than 30 percent. For service repair shops, this means that several model years of vehicles are scarce. You’ll be working on cars that are older, with higher mileage, because fewer used 2009-2012 cars are out there. It seems wise, then, to be capable of repairing those older cars and of making the jump to the 2013-and-up cars that are selling like hotcakes. For those of us living in states where rust is not a problem, we could be working on 1990s and 20-teen cars simultaneously for a customer with decidedly different expectations. “Helm, come right. No, come left 10 degrees rudder.”
Micro vs. macro
The other day, Dan Risley, our president, and I were talking about industry point of view. He made a good point that’s not new but bears repeating: When we live only in the world of our repair environments, it’s easy to believe that what we see represents the entire industry. From this micro point of view, we have a hard time seeing the big picture and generating decisions that serve us longterm.
You’ve heard many of our management trainers say you need to spend some time working on your business, not just in your business. I’m suggesting you visit with other shop owners, attend an ASA meeting or read the non-technical parts of AutoInc. magazine. The wider view should make those steering adjustments your ship needs more corrective and less, um, Titanic.