Arturo Cadena
Owner and Director General
Cadena Automotriz
View from the Top

Managing Customer Loyalty Through Quality Parts

Tue, 09/01/2015 - 13:21

Q: Which of your main business areas of automatic transmissions, power steering, and suspension, are the most important for Cadena?

A: Automatic transmission and power steering remain our two most successful business units. Both product lines are linked, which means that anyone who requires automatic transmissions also has a need for power steering components. Business is stable, with a steady growth. We have some additional projects that will be released in the near future, but we plan to stick to what we know best. All things considered, I can tell you that we are among the top five transmission suppliers in the country. CVT transmissions are extremely new for the aftermarket, so our intention is to gradually incorporate them. We believe that the market has not matured enough, but that the CVT market will continue to grow for us. CVT transmissions do not have enough torque to carry the weight of a load truck, meaning that automatic transmission on trucks will still be part of its original equipment.

Q: What is your approximate market share, and what factors allow you to maintain it?

A: We have roughly 7% of the market share on a national level. Automatic transmissions are divided into two areas: soft and hard parts. Of those two areas, we only carry a soft part portfolio, which is precisely why providing an accurate number can be a complex process. The soft part market is formed by components that normally wear out, such as bushings, oil seals, lip seals, rings, filters, and transmission bands. Hard parts are usually made out of metal, such as drums and gears, and do not normally wear out through regular usage, only needing to be replaced when the part has received severe damage. The hard parts market is commonly comprised of used parts, since the price range for new ones is extremely high.

Q: Some of your products within the same category come from different brands. How do you manage customer loyalty with each brand, and how do you promote healthy competition within your portfolio?

A: It is a simple process since we let the customer choose the product that best fits their needs. That is why we take pride in having such an extensive inventory, as it allows our clients to choose freely. Customers sometimes want cheap parts with excellent quality, which is impossible. The direction we have chosen is to constantly advise our clients that quality is more important than price. To tackle demand, a strong inventory is required. We must keep in mind that the global market grows slowly, but that does not mean that a company’s market share cannot grow at a rapid pace. If we keep inventory volumes at the same level during complicated times, while others may not do the same, we will be ready to make the best of any opportunities that arrive. When those companies do not have product availability and cannot comply with a client’s requirements, we will be able to increase our market share. Inventory volumes are extremely important to us.

Q: How is your plan to enter the suspension part market evolving?

A: The project is growing at a steady rhythm. We chose a good manufacturer with a high-quality approach that allows us to maintain our market share. Although the quality is high, the growth rate is not what we expected. We started with 500 items, we then added 200 more, and we just approved 100 new products. My goal is to steadily increase those numbers to 1,500, and I firmly believe that we will do so by 2017. For 35 years, we have been selling suspension and transmission parts and what makes us different from our competitors is that we do not compromise quality over price, which is the main reason why our growth is slow. As time passes, customers realize that this is the best approach.

Q: What are your priorities for the remainder of the year and beyond?

A: Adding a larger number of items to our inventory will help speed things up in the suspension sector. The implementation of 100 new components will be a good start for our sales growth. In terms of our transmission division, we are exploring the viability of hard part products, and we are currently manufacturing some components for FALSO. We have been exploring the development of a lubricant product and we currently have the authorization from the government to launch our own brand. However, things are running smoothly with the brand we are carrying, so no significant changes will be made in the near future.