ARIDRA: Creativity Will Drive the AftermarketBy Alejandro Enríquez | Thu, 06/25/2020 - 01:00
Q: How has the COVID-19 pandemic affected aftermarket operations?
A: First, as there has been a reduction in the circulating vehicle park, this has led to less wear and tear on vehicles and thus fewer spare parts needed. Second, people are taking greater care of their money. Third, the exchange rate, which went from MX$18.75 to MX$25 per dollar, is also affecting sales. In addition, all spare parts imported or produced in Mexico have been introduced with new prices. Finally, we are expecting supply chain disruptions due to the halt in operations. Stocks are limited, which means prices will rise in line with demand.
One of the priorities of ARIDRA members is overdue payments. All of us are forecasting that we will face overdue accounts. We are not yet sure how serious the problem will be but every ARIDRA member will face this. Money collection has also been an issue for our members. We will organize a webinar on the subject in which ARIDRA’s attorney will provide his perspective on how each company should address this issue. The contingency is economic, health-related and social. We hope to enter the new normal soon.
Q: What other initiatives is ARIDRA taking to support its members?
A: It is also important to mention that the aftermarket supply chain has remained active during the pandemic. This is a big achievement. Since March 31, when the health emergency was declared, we have been operating as an essential activity. On April 8, the Ministry of Communications and Transportation detailed essential activities would include vehicle fleet maintenance, workshops and related services. There have even been many requests from related companies to become members of the association due to our results. It is a great moment for ARIDRA to grow.
Another important element to highlight is that from the very beginning of the pandemic, ARIDRA recommended that its members take care of the human element. We are aware of the effects COVID-19 will have on employment and ARIDRA’s attorney is advising members on how they can best address this issue to protect employment while remaining competitive. We have taken care of all necessary measures to prevent contagion. All health and safety protocols announced by the federal government have been implemented and not a single ARIDRA member has been closed down due to this situation.
Q: How have ARIDRA’s members handled supply chain disruptions?
A: A shortage in supply will undoubtedly have consequences. First, there will be difficulties getting a spare part. For those who can, the parts will be more expensive. In addition, there is no single producer that can satisfy all the demands the Mexican market has in the aftermarket segment. There are more than 700 models and more than 50 brands in the market. It is one of the largest vehicle parks globally, which translates to many market needs. A large number of spare parts sold in the country, either original or spare, are imported, mostly from Asian markets where the pandemic hit first.
Q: What opportunities will COVID-19 bring to the aftermarket segment?
A: There will be many opportunities in the future. Companies will have to become more creative and be present on different platforms to promote their products. ARIDRA itself has embraced technology by learning from different communication channels and online meetings. Creativity will be a must.
There are two key elements that will become evident after COVID-19. First, companies will need a positive attitude to brave the coming challenges. Second, there will be many spaces to be filled. For instance, NAPA auto parts announced the definitive closure of its operations in the country. That is bad news but for some it can be an opportunity to tackle the market. Crises are major opportunity generators. It is best to think about a solution.
A major trend emerging from COVID-19 is that consumers and companies have realized that e-commerce is the most important trend in the market today. Disregarding e-commerce will mean bankruptcy for companies.
Q: What is ARIDRA’s approach for the rest of 2020
A: There is little margin to think about expos or large events, which we are taking into account. While embracing creativity, why not think about virtual expos? If we are seeing virtual museums, technology can enable virtual expos. We have also hosted our first virtual meeting as an association, which was well-received by our members. Even if we can have on-site meetings again, we will continue using virtual channels to share our meetings with members anywhere in the country. Our goal is to include more people, while opening the association to everyone. Today, we are present in 19 states and the goal is to increase this number.
The aftermarket segment tends to grow when the economy looks bad. When mobility levels return to their standard, we will recover faster than other sectors. Spare parts could also be considered as a basic need given that a vehicle cannot work without maintenance. If someone needs to repair their vehicle, that becomes a priority. ARIDRA has a partnership with AUTOCARE, the US aftermarket association, to promote preventive maintenance, which results in cheaper maintenance for the end user. This campaign operates in the US, Canada and Mexico, where we upload material to teach the user what needs maintenance and what are the consequences of not doing it. We will continue with this campaign throughout the year.
The National Association for Representatives, Importers and Distributors of Spare Parts and Accessories (ARIDRA) is a civil association that integrates manufacturers, importers and distributors of spare parts and accessories in Mexico