Lang Aftermarket iReport: Distribution influences brand use

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“In a recent analysis of repair outlets in two metro markets, Lang Marketing found significant differences between these markets in the brands used for foreign nameplate repair by Service Stations & Garages and Foreign Specialists.

“These differences were directly traceable to whether or not products (brands) were readily available from a local direct-selling Import Warehouse.”

— Jim Lang, publisher, Lang Aftermarket iReport

Brand Impact of Parts Distribution

In a recent study of repair outlets, Lang Marketing discovered big differences in the brands used by Service Stations & Garages and Foreign Specialists conducting foreign nameplate repair in two different but comparable metro markets. One metro market was supplied by a local direct-selling Import Warehouse and the other market was not.

Service Stations & Garages

The greatest brand use differences in foreign nameplate repair were found between the groups of Service Stations & Garages in each of the two markets studied.

There are two major reasons for this: Service Stations & Garages switch the brands of parts they use more often than do most types of outlets, and Service Stations & Garages are rapidly expanding their foreign nameplate repair volume.

Foreign Specialists Increase Use of Non-OE Brands

Lang Marketing found that the presence of a direct-selling Import Warehouse in a market tended to shift Foreign Specialists’ brand use from OE brands to OE-Supplier brands (brands from companies that supply OE parts to carmakers) and Foreign brands (brands from foreign parts manufacturers that are not OE suppliers.

In many cases, OE-Supplier brands provide products that are identical (or very close) to OE products in quality, appearance and fit.

Service Station & Garage Brand Shift

While Foreign Specialists generally shift from OE brands to OE-Supplier brands and Foreign brands when a direct-selling Import Warehouse enters their marketplace, the impact of those distributers on Service Stations & Garages is different.

When working on foreign nameplates, Service Stations & Garages often switch from OE brands and Domestic brands to OE-Supplier brands and Foreign brands.

Some Increase in OE Brand Use

In some cases, where direct-selling Import Warehouses have OE brands available, Service Stations & Garages repairing foreign nameplates shift from Domestic brands to OE brands supplied by direct-selling Import Warehouses.

These OE brands are generally regarded as gray market products (OE brands sold through non- OE channels).

Shift Away from OE Brands

With some exceptions, the general impact of a local direct-selling Import Warehouse on brand use in foreign nameplate repair by Service Stations & Garages and Foreign Specialists is the reduced use of OE brands and Domestic brands and the increased use of OE-Supplier brands and Foreign brands.

Three Reasons for Brand Shift

OE-Supplier brand and Foreign brand use in foreign nameplate repair by major Independent (non-Dealer) outlets is increasing for three major reasons.

First, foreign nameplates are rapidly expanding their share of vehicles across the country and now comprise a majority of light vehicles in the repair-age sweet-spot.

Second, local availability of OE-Supplier brands and Foreign brands is increasing in many markets, reflecting the growth of direct-selling Import Warehouses and other distributors and parts suppliers.

Third, Dealers generally underperform competitive independent distributors in the speed of parts delivery and other customer services provided to Independent repair outlets.

Six Major Takeaways

  • Big differences exist between metro markets in the brands used by Service Stations & Garages and Foreign Specialists in the repair of foreign nameplates depending on the presence or absence of a direct-selling Import Warehouses.
  • Lang Marketing found in examining two metro markets that the greatest brand use differences existed between the groups of Service Stations & Garages in each market (one market with a direct-selling Import Warehouse and the other market without such a distributor).
  • Direct-selling Import Warehouses tend to shift Foreign Specialists’ brand use from OE brands to OE-Supplier brands and Foreign brands.
  • When repairing foreign nameplates, Service Stations & Garages in markets supplied by a local direct-selling Import Warehouse often switch from OE brands and Domestic brands to OE-Supplier brands and Foreign brands.
  • Much of the success of direct-selling Import Warehouses hinges on their providing parts delivery and customer services to Independent repair outlets that are superior to those provided by local Dealers.
  • The rate of brand change among Independent (non-Dealer) repair outlets in the foreign repair market could accelerate as foreign nameplates rapidly increase their VIO share (and share of vehicles in the repair-age sweet-spot) at the same time that OE-Supplier brands and Foreign brands become locally available in more markets through the expansion of direct-selling Import Warehouses and similar parts distributors.

Copyright 2019 by Lang Marketing Resources, Inc.

NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.

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