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A Challenging Position for Growth

Michael Gines - Dacomsa
Managing Director of Dacomsa

STORY INLINE POST

Sat, 09/01/2018 - 11:38

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Q: What is Dacomsa’s strategy to cope with a growing and aging vehicle park?
A: The age of the vehicle park, far from being an obstacle, is an opportunity to grow our sales. The true challenge for the aftermarket is to cater to the demands of such a large and diverse vehicle park. In 1985, there were only 10 or 12 types of engines available in Mexico and now there are over 600 models and versions to service. We have had to adapt our inventories to increase the number of SKUs available while decreasing the stock of each component.
Q: What impact have the scrappage scheme and the import of used-vehicles from the US had on Dacomsa’s operations?
A: The scrappage scheme for heavy vehicles has certainly affected the development of the aftermarket because most of the units destroyed required constant replacement components. Used-vehicle imports have presented a much more complicated situation. These cars were imported normally after five years of use, which means they were right at the stage where they needed repairs and maintenance. However, many of these models were not available in the Mexican park, which meant there were no spare parts to meet demand. Now that imports have been limited, we have noticed that states near the border have regularized their vehicle parks with national models.
Q: What have been Dacomsa’s recent results in terms of sales and what are your growth projections for the end of the year?
A: 2017 was a very successful year for Dacomsa, particularly in the braking market. Our results were strong enough for us to push our development plans ahead by two years and we are opening a new manufacturing center in Celaya to increase our brake pad production volume. Our original plan was to start constructing this site in 2018 and begin manufacturing in 2019 but thanks to our success we are now accelerating our process.
However, 2018 has not been so favorable mainly because of three factors: the presidential elections, the negotiation of NAFTA and the six-month elimination of the vehicle verification program. Although we cannot quantify it precisely, we think the fact that people did not have to verify their cars had an impact on the purchase of spare components mainly for engines, which represents 55 percent of our total operation. Our performance in braking, which contributes 35 percent of our sales, and powertrain that represents the remaining 10 percent is still on track and growing, but our sales for engine parts remain flat compared to 2017. That being said, our performance outside of Mexico has been successful and we are growing significantly. Our priority right now is to consolidate our operations outside the country, defend our position as market leaders and ramp up production at our new site in Celaya.
Q: How have customers changed their mindset in favor of high-quality albeit costlier spare parts?
A: Users understand that using quality parts like those offered by Dacomsa guarantees their vehicle will remain functional for 100,000km to 150,000km. That being said, purchasing power has decreased after the recent increase in gasoline prices, which has forced clients to go back to cheap, low-quality parts.
This is a worrisome situation and many distributors have faced problems regarding payment collection but there is only so much we can do in this situation. Our strategy to showcase our advantages has been to contact shops directly and understand how we can help them solve recurrent problems. We have several training programs for mechanics that take place at their shops but we have also implemented training via Facebook Live and YouTube to avoid affecting schedules. Automotive components are becoming increasingly complex and our role as a spare parts manufacturer is to help shops understand these changes.

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