Antonio López
President
ARIDRA
/
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ARIDRA: Online Sales and Aftermarket Standardization

By Alejandro Enríquez | Tue, 03/23/2021 - 10:42

Q: What were some of the lessons learned by the aftermarket during the pandemic?

A: It was a truly atypical year. Fortunately, we were considered an essential activity from the very beginning, which supported our faster recovery. That being said, many things changed radically. April, May and June were really difficult since mobility levels remained really low. Many sectors adopted quarantine measures while aftersales services remained suspended.

Our lesson is that change is constant. We cannot foresee all variables but companies that adapt faster are the ones that thrive. Together with our members, we thought creatively about how to interact, and keep our communications and sales channels active.

Meanwhile, e-commerce consolidated what used to be a trend. Now, online shopping is a common habit, from clothes to auto parts. Online marketplaces remain strong with Mercado Libre as the most important one for the aftermarket, but there are many others. The way in which auto parts are traded is changing as well. There has been mutual support in the automotive sector. In particular, we have collaborated closely with INA, AMDA and the National Workshop Conference. These partnerships strengthen the value chain.

Q: What has been the impact of the pandemic for members of ARIDRA?

A: April, May and June were difficult months but there was a fast recovery for sellers and resellers of auto parts. In 2020, the market’s value totaled US$28.5 billion. ARIDRA members report on average they reached 95 percent of the sales seen in 2019. The forecast for 2021 is that the spare parts market can grow between 10 to 14 percent.

Another interesting figure reported by IHS Markit is that Mexico’s vehicle park reached 33 million units by the end of 2020, including models from 1961 to 2020. The average age of a vehicle in Mexico is 15.5 years. Many might assume that this indicates that good times are coming for the spare parts market because sales of used vehicle are rising. However, we do rely on new vehicle sales to improve. New vehicle sales grow the vehicle park, which strengthens the aftermarket as a whole. New vehicles enter the aftermarket between four and five years after being bought. In 2021, the aftermarket will receive the units sold during the record year of 2016. In the coming years, the vehicles that were not sold will influence the aftermarket’s performance.

Q: How is the arrival of new brands influencing the aftermarket?

A: It is an interesting phenomenon. Results show that 50 percent of new vehicle sales over the last five years are from Asian brands, 29 percent from North America and 21 percent from Europe. It is no secret that Kia and Hyundai are offering extended warranties. There is a great opportunity to support Asian vehicles. Many spare parts distributors are already focusing on importing parts for Asian vehicles.

Q: How do extended warranties influence the vehicle market?

A: Extended warranties aim to increase customer loyalty to keep maintenance services at the dealership. However, after around three years, drivers take their vehicle to the workshop. In fact, many workshops already purchase original equipment directly so they can better satisfy the customer. That being said, there is room for the aftermarket to grow.

Q: How are ARIDRA’s members adapting to online channels? What do partnerships look like in the digital world?

A: Companies that had not embraced online sales before the pandemic are taking more time to adapt. However, most of the companies are already digitalizing their processes. They are aware of all the specifics online channels demand. Creating content, digital marketing and other areas are crucial. ARIDRA has organized webinars to address these different elements, inviting the participation of large players in the sector such as Epicor or Mercado Libre. We have addressed other topics such as payments, overdue invoices and other important elements in our conferences.

Q: Marketplace leaders affirm immediacy and transparency are at the cornerstones of online sales processes. How have ARIDRA members embraced these precepts?

A: Our members are aware that they need to answer immediately to any inquiries. The longer you take to answer, the more likely clients will go to another marketplace. Online channels also do not have a fixed schedule; they can be active 24/7, which is valuable for our customers. Regarding transparency, it is really important to reassure our customers. People are buying in marketplaces that can provide warranties, easy payment methods and clear delivery costs. All these elements provide certainty for our customers.

Q: Since the start of your term as president of ARIDRA in 2019, what have been the association’s milestones and what are your expectations for 2021?

A: We remain optimistic for the sector. Several studies point to positive growth for the aftermarket of between 10 and 14 percent in 2021, against the previous year. Changes are also coming in stock management since online sales are forcing companies to get creative in managing sufficient stock to satisfy online demand. On the other hand, it is true that the economic impact of the pandemic has been greater on micro companies. Some of these micro workshops, where there are fewer than four people working, can disappear and there will be some gaps to fill. The market will also be influenced by the fact that such a large player like Napa also decided to leave the market.

Another important element we addressed during this term was the standardization of auto parts sales. These standards apply to online auto parts catalogs. For instance, Autozone told its suppliers that they needed ACES-PIES standards to be part of its supplier base. Product attributes should be well specified to prevent any mistake in the auto part a client is asking for. There are two major standards in terms of aftermarket sales. One is ACES-PIES for North America, developed by AutoCare, our counterpart in the US. The other is TECHDOC, which rules over European spare parts. Companies in the aftermarket should handle both standards. We are confident that in the midterm all companies will use these new standards to sell spare parts in the country.

 

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

Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst