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Letter to the Editor
This article originally appeared in the November 2004 Issue of INSIGHT
©2004 Collision Repair Industry INSIGHT All Rights Reserved
Akzo Nobel Establishes Collision Industry Advancement Initiative
California Passes Law Prohibiting Progressive Concierge Program
Keystone Halts Sale of Headlamps for Taurus and Grand Am
Caliber Appoints Dan Pettigrew President and CEO
Allstate Unit Plans Ireland Expansion
Sherwin-Williams Enters Venezuelan Market
BASF Offers Online Instructions for Painting Plastic Auto Parts
Allstate Wins Fraud Lawsuit Against Largest Texas Chiropratic Clinic
Sherwin-Williams Q3 Auto Finishes Sales Up 13%
Valspar Opens New National Training Facility
Rod Enlow Joins CCAR as Director of Industry Relations
PPG Launches Performance Power Technology at Refinish 2004 Performance Summit
Salvage Auto Auctions New Company to Provide Buyer Services Network
China Automotive Aftermarket Report Describes Developing Marketplace
INDUSTRY UPDATE
Akzo Nobel Coatings Inc., has announced the creation of the Collision Industry Advancement Initiative (CIAI). The CIAI has been established to aid in the growth, advancement and perception of the collision industry in North America by providing financial assistance and support to institutions and organizations.
While sponsored by Akzo Nobel, the CIAI will be administered by an Advisory Council consisting of both Akzo Nobel personnel and industry patrons. These patrons will represent a cross section of individuals who have dedicated themselves and their careers to championing the evolution of the collision industry.
“Akzo Nobel recognizes that this industry requires investment for growth to occur,” said General Manager of Akzo Nobel Coatings Inc. in North America, Jim Rees. “Akzo Nobel understands that there are many schools, industry associations and organizations that are focused on making the collision repair industry a career destination as well as a more professional working environment. However, these entities frequently struggle for resources. Our goal is to support these great organizations with the CIAI. If the industry prospers so too will Akzo Nobel.”
Publisher and Editor of Hammer & Dolly Magazine Sheila Loftus will serve as the first Chairperson of the CIAI Advisory Council.
“Akzo Nobel has once again proven that they are a leader,” said Loftus. “While investments at any level of this industry are appreciated it is often the grass roots efforts, where first impressions are created, that tend to be forgotten or overlooked. I have dedicated my career and my publication to taking stands on issues and bringing worthwhile causes to the forefront of the industry. I am proud to be associated with this unique and generous program.”
Other industry dignitaries who will serve on the CIAI Council will be Geralynn Kottschade, general manager of Jerry’s Body Shop in Mankata, Minn., and Chairperson for the Automotive Aftermarket Committee for ASA; Russell Thrall, editor of Collision Week and I-CAR Technical Services Manager; and Don Treschak, owner of Treschak Enterprises of Toronto, Canada.
One Council position will be selected from the 2004 Most Influential Women of the Collision Repair Industry slated to be announced November 4th in Las Vegas.
Requests to the Collision Repair Industry Advancement Foundation can be made through the Akzo Nobel Car Refinishes web site. The CIAI Advisory Council will meet twice annually to review requests for support. Akzo Nobel will then disburse funds based on the recommendation of the council.
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Governor Arnold Schwarzenegger took action on September 30th by signing AB 1079 (Bermudez), which, among other things, would prohibit programs such as Progressive’s Insurance Con-cierge Service in California. This represents, according to a California Autobody Associ-ation (CAA) press release, a major victory for consumers and auto body repair shops in the state.
AB 1079 would define a customer as the “person presenting a motor vehicle for repair and authorizing the repairs to that motor vehicle.” Further-more, the law specifically states, “the customer shall not mean the automotive repair dealer providing the repairs or an insurer involved in a claim that includes the motor vehicle being repaired or an employee or agent or a person acting on behalf of the dealer or insurer.”
The law would prohibit the current Progressive Concierge Program and others like it, which encourages customers to drop off their vehicles at Insurance Centers, pick up a rental car, and leave, while allowing the insurer to “step into the shoes” of the customer and to make all the critical repair decisions including where the car is to be repaired.
“Our members are very concerned about any insurance program that takes away consumer rights and limits the decision making process for consumers, and we are pleased with Assembly Member Bermudez efforts in this regard,” said David McClune, CAA Executive Director.
Jack Molodanof, CAA General Counsel and Lobbyist said, “This new law in California puts the final nail in the coffin for the Progressive Concierge Program, as we know it.”
The bill also raises issues as to whether it prevents insurance company owned body shops from repairing their own insured vehicles.
The California Autobody Association (CAA) is a not-for-profit organization comprised of approximately 1000 collision repair business and associated professionals belonging to the collision repair industry.
Keystone Automotive Industries Inc. has stopped selling headlamps for two U.S. cars after tests showed they do not meet federal standards.
The Pomona, California, aftermarket parts distributor suspended the sale of aftermarket headlamps for the Ford Taurus, model years 1996 to 2004, and for GM's Pontiac Grand Am, model years 1999 to 2004, after the independent tests.
At least six insurance companies have indicated they have also suspended covering the use of the headlamps in question in repairing damaged vehicles, Keystone said. It believes one or more insurance companies may have stopped covering the installation of all aftermarket headlamps in vehicle repair.
Keystone said the sales to date have not been materially or adversely affected by the actions of the insurance companies and the suspension of the sales of the headlamps for the two cars will not have a material adverse effect on the company.
However, if a number of insurance companies were to stop covering all headlamps in the aftermarket, that would have a material adverse impact on financial results, according to Keystone.
Keystone's sales of headlamps for the two cars during the last 12 months constituted less than one-half of one percent of the company's total sales. The sales of all headlamps make up about 12 percent of total sales.
Caliber Collision Centers has named Dan Pettigrew its President and Chief Executive Officer. As President and CEO, Pettigrew will assume leadership responsibility for Caliber’s strategy and operations in California, Texas, and in other new markets as the company expands.
“With extensive knowledge of Caliber’s business model and success managing Caliber’s operations, Dan is uniquely qualified to lead Caliber into the future,” said Matthew Ohrnstein, who will remain as Chairman of the company. “Dan has had a terrific track record at Caliber, managing our rapidly-growing, multi-unit operation. Dan’s strong strategic planning and execution skills, leadership capabilities, insight and passion made Dan the logical and optimal candidate for Caliber’s CEO position. I have enjoyed the start-up and development of Caliber’s business into a leader in the collision repair industry with our $200 million operation. As the industry transitions to an increasingly performance-based and results-driven environment, our clients, associates, business partners and investors will be well served by Dan assuming the CEO role. I wish Dan and the Caliber Team continued success,” added Ohrnstein.
“I’m excited to have the opportunity to lead Caliber during this challenging, but exciting time in the industry,” said Pettigrew. “I plan to continue executing on our current strategy to build the strongest operating team and results-based organization in the industry.”
Pettigrew began his career with Caliber Collision Centers in 1997, shortly after the launch of the company’s start-up. In 2003 he was promoted to Executive Vice President of Operations, responsible for leading Caliber’s operations as well as client services and support services including vendor relations and facilities management.
Some of Pettigrew’s past contributions have included the design and implementation of Caliber’s key field-level standard operating procedures, acquisition integration and information technology strategy and the design and implementation of the industry’s first call center-based central dispatch program.
Caliber Collision Centers currently owns and operates 68 facilities in California and Texas.
Northbrook Technology, a software-developing subsidiary of the U.S. insurance giant Allstate Corp., unveiled major expansion plans on October 19 for its Northern Ireland bases.
Allstate founded Northbrook Technologies in 1999 to develop and operate computer services for the Northbrook, Illinois-headquartered parent. The project has expanded rapidly with financial backing from the British government.
Northbrook, which already employs more than 700 people at software development centers in Belfast and Northern Ireland's second-largest city, Londonderry, plans to open new facilities in both cities and a third office in another town, Strabane. The company expects to employ 1,400 people by 2006.
Invest Northern Ireland, the government agency responsible for wooing foreign companies to this long-troubled British territory, said it would provide 5.5 million pounds (US$10 million, euro7.94 million) to aid Northbrook's expansion.
Northbrook Technology's managing director, Bro McFerran, said the company had found it easy to recruit "well-educated and easily motivated people in Belfast and Londonderry keen to develop careers in the IT industry."
The British government minister for enterprise, Barry Gardiner, said the project was "an exceptionally important investment," particularly for Londonderry and Strabane, whose mostly Catholic populations have traditionally suffered from double-digit unemployment. The region has lost thousands of jobs because of closing textile firms, once the backbone of its economy.
Unemployment, particularly within Northern Ireland's Catholic minority, was a major grievance that fueled intercommunal violence starting in the late 1960s. Peacemaking efforts that culminated in the Good Friday peace accord of 1998 have encouraged a wave of foreign investment in Northern Ireland, where unemployment in mid-October fell to 4.7 percent, its lowest rate in history.
Sherwin-Williams Automotive Finishes Corp. has announced its latest entry into Latin America. The company launched Sherwin-Williams Pinturas de Venezuela, S.L.R. in June, 2004, based in Valencia, Venezuela and is already experiencing positive results. The announcement was made by Michael Cash, Vice President-International of Sherwin-Williams Automotive Finishes Corp.
“We are thrilled to enter the Venezuelan market as it represents such a large opportunity for our company,” said Cash. “Venezuela is the third largest market in South America, and the fourth largest in Latin America. Our entry here broadens our scope in Latin America – reinforcing our leading market share in the region – with penetration in Brazil, Argentina, Chile, Peru, and now Venezuela. We will use this expansion to develop further into other Andean Pact nations.”
Sherwin-Williams initially will not have manufacturing facilities in Venezuela. It will sell its imported products through local distributors. The company is supported by a strong team of 18 sales and marketing representatives led by Ramon Verde, Sales Manager. Verde, a native of Venezuela, has 28 years of experience in the automotive refinish industry.
“We are fortunate that Sherwin-Williams already has strong brand awareness in Venezuela, thanks to our wide distribution of both automotive and consumer house paint throughout the country,” explained Cash. “In general, Venezuela holds American brands in very high esteem, and we are capitalizing on this positive momentum.”
To acclimate the new sales representatives to Sherwin-Williams Automotive Finishes Corp. and its products, the company brought the team to Mexico for training. The employees spent two weeks learning everything from the history of the company and corporate culture to color match and paint application. This training was then followed by a thorough on-site curriculum.
“The Venezuelan market is developing quickly in terms of technology, and many facilities are beginning to use urethane paints, rather than lacquers,” said Cash. “We have been very successful introducing newer technologies to the market, and we expect this to accelerate our growth next year.”
This new market entry is Sherwin-Williams Automotive’s fourth international alliance within the last year. In April, the company announced the acquisition of a majority interest in Shanghai Kinlita Chemical Co., Ltd., based in Shanghai, China. The company, now named Sherwin-Williams Kinlita Co., Ltd., operates under the direction of Sherwin-Williams Automotive Finishes Corp.
Sherwin-Williams Automotive also acquired ScottWarren France, based in Perpignan, France. It also recently entered the South African market through a strategic alliance with Chemical Specialties Inc. Ltd. by which the country’s leading paint distribution company sells Sherwin-Williams Auto-motive-branded automotive products through its established distribution channels.
Sherwin-Williams Automotive Finishes Corp. manufactures and distributes a complete line of technologically advanced coating systems, as well as the automotive and fleet refinishing industries.
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BASF is now offering its Glasurit “Painting Plastic Parts” guide online. Previously available on CD-ROM, the guide demonstrates proper procedures for refinishing plastic auto parts.
Because today’s vehicles include both rigid and flexible plastic parts, repairing the finish on them requires special preparation, products and processes. Determining whether the part to be repaired is made of rigid or flexible plastic is not as obvious as it may seem. The Glasurit guide enables painters to quickly identify the type of plastic by looking up the code, which is stamped on every plastic part, in the guide’s database.
Once the grade of plastic has been identified, the guide features a step-by-step demonstration that includes the entire refinishing process, from applying an adhesion promoter to clearcoating. Safety precautions and proper use of products are covered in detail.
Tony Dyach, Product Manager for BASF’s Glasurit product line, commented, "Refinishing plastic parts correctly is crucial to avoid adhesion failure and costs involved in re-doing the job, and this innovative online program enables painters to learn at their own pace how to do the job right the first time.”
PPG Industries has reported that third quarter earnings rose 37 percent. Third quarter net income was $194 million, or $1.12 a share, including aftertax charges of $4 million, or 3 cents a share, to reflect the net increase in the current value of the company's obligation under its asbestos settlement agreement reported in May 2002 and $3 million, or 2 cents a share, to reflect the previously announced decision to begin expensing stock options in 2004; and income of $5 million, or 3 cents a share, to reflect the benefit of Medicare prescription drug legislation. Sales were $2.41 billion.
This compares with third quarter 2003 net income of $142 million, or 83 cents a share, including an aftertax charge of $5 million, or 3 cents a share, to reflect the net increase in the value of the asbestos settlement. Sales were $2.21 billion.
For the first nine months of 2004, PPG recorded net income of $500 million, or $2.89 a share, including aftertax charges of $13 million, and $10 million, or 6 cents a share, to reflect the expensing of stock options in 2004; and income of $13 million, or 7 cents a share, to reflect the benefit of Medicare legislation. Sales were $7.10 billion.
For the first nine months of 2003, PPG recorded net income of $372 million. Sales for the first nine months of 2003 were $6.58 billion.
"Our strong performance this quarter continues to reflect the benefits of actions we have taken to improve the quality of our business portfolio aided by the continued expansion of the global industrial economy," said Raymond W. LeBoeuf, chairman and chief executive officer. "In addition, our results reflect our continued success in reducing costs and improving productivity. These PPG hallmarks will play a critical role in our performance amid the ongoing challenges of higher energy and raw material costs."
Coatings sales increased $97 million, or eight percent, as stronger volumes across all businesses and the strengthening of foreign currencies were offset slightly by lower prices in the automotive business. Operating earnings were up $11 million. The impact of cost inflation, including raw materials, and lower selling prices reduced operating earnings.
Glass sales increased $10 million, or two percent, as higher volumes in the fiber glass and flat glass businesses and the strengthening of foreign currencies more than offset lower selling prices across all businesses. Operating earnings were up $20 million.
Chemicals sales increased $96 million, or 22 percent. Operating earnings were up $31 million as improved volumes, higher selling prices and lower environmental remediation costs more than offset higher energy and raw material costs.
A Dallas jury has ruled that Texas's largest chiropractic chain, Accident & Injury Pain Center, Inc., conspired in a statewide scheme designed to defraud Allstate Insurance Company and Encompass Insurance, a subsidiary of Allstate.
Accident & Injury Pain Center, Inc., its related entities and various chiropractors, osteopaths and medical doctors were found to have conspired to commit common law fraud by over-treatment and unnecessary referrals. The jury ordered them to pay $2.8 million in actual damages and $3 million in punitive damages.
"At Allstate, we're taking a stand to fight insurance fraud and get the defrauders, no matter where they're hiding," said Gary Briggs, Texas Field Vice President. "Our commitment is to deliver competitive insurance rates to our policyholders, and we can help do that by exposing insurance fraud and putting fraudulent enterprises out of business."
Allstate and Encompass had alleged that the vast majority of X-rays for auto accident patients of Accident & Injury Pain Center were referred to "Lone Star Radiology," located within Accident & Injury Pain Center's corporate office in Dallas. Patients were routinely referred for MRIs on their first visit to one of four facilities that were owned by Robert Smith, the owner of Accident & Injury Pain Center.
The medical doctors to whom patients were referred conducted the "second opinion examinations" at Accident & Injury Pain Centers. The doctors had an arrangement with Receivable Finance Company to sell or kick back to Receivable Finance their medical bills for the examinations for a small percentage or flat fee. Receivable Finance Com-pany is also owned by Robert Smith and is located within the Accident & Injury Pain Center corporate office.
Allstate and Encompass had developed evidence that the wife of one of the medical doctor defendants was receiving up to $10,000 a month for "marketing services" from a pharmacy where the vast majority of the Accident & Injury patients were receiving prescriptions.
According to the National Insurance Crime Bureau, insurance fraud costs U.S. consumers an estimated $20 billion annually.
The Sherwin-Williams Com-pany has announced its financial results for the third quarter and first nine months ended September 30, 2004.
Diluted net income per common share in the third quarter increased 12.2 percent to $.92 per share compared to $.82 per share in 2003 and $2.14 per share in the first nine months versus $1.77 per share last year. Consolidated net sales increased 11.6 percent to $1.7 billion in the third quarter and 11.9 percent to $4.6 billion in the first nine months versus comparable periods last year. Net income increased 10.4 percent to $132.9 million in the third quarter and 19.0 percent to $310.8 million in the first nine months.
The financial results include the operations of three acquisitions completed at various times since the third quarter of 2003 and the operations of two larger acquisitions, Duron, Inc. and Paint Sundry Brands Corporation, beginning with the month of September 2004. The acquisitions increased consolidated net sales 4.0 percent, consolidated net income 2.1 percent and diluted net income per share $.02 per share in the third quarter.
Net sales in the Paint Stores Segment increased 13.0 percent to $1.1 billion in the third quarter and 12.1 percent to $3.0 billion in the first nine months of 2004 versus the comparable periods last year.
The Automotive Finishes Segment's net sales increased 13.6 percent to $130.8 million in the third quarter and 11.6 percent to $382.6 million in the first nine months versus the comparable periods last year. The net sales gains were primarily due to new product introductions, improving international sales and the April 2004 acquisition of a majority interest in a foreign automotive coatings company.
Operating profit in this Segment improved 19.7 percent to $14.8 million in the third quarter and 13.8 percent to $43.1 million in the first nine months. This Segment's operating profit in the third quarter and first nine months improved primarily due to the sales increases, sales of higher margin new products, improvements in the international business units and profits of the foreign acquisition that more than offset the effect of increasing raw material costs.
Net sales in the International Coatings Segment increased 18.2 percent to $80.7 million in the third quarter.
Christopher M. Connor, Chairman and Chief Executive Officer, commented, "Domes-tically, our Automotive Finishes Segment's sales continue to grow through new product introductions and the opening of new branches. We are encouraged by the improving operations of the international portions of our Automotive Finishes Segment.
Joel Hart, Group Vice President of the Valspar Automotive Group was on hand for the ribbon cutting ceremony announcing the Grand Opening of its new Training Center.
Hart noted, “Valspar continues to grow and focus on the needs of our customers. Our new state-of-the-art training facility in Dallas / Ft. Worth is a part of our commitment to excellence and especially to training our customers. Today's products are more complex and technical."
"Our customers need to have the support to compete in a very technical field. This center will support those needs as well as reaffirm our commitment to the automotive refinish and custom painting industry,” George Krul, General Manager for the Automotive Group added.
The 8,400 square foot facility has a state-of-the-art downdraft bake booth, complete with downdraft heated finishing station. The facility’s classrooms accommodate up to 45 students with separate areas for mixing products and computer training. Training programs at the Center will include complete hands-on classes with instruction on all Collision, Fleet, and Color Theory programs for Valspar Refinish and DeBeer products, along with custom painting courses for House of Kolor.
The training facility has also been made available for local I-CAR classes. Jeff Peevy, I-CAR North American Field Operations Manager and a number of I-CAR committee members from Fort Worth and Dallas were in attendance. Peevy stated, “We are very happy for the opportunity to utilize the new Valspar training center for local I-CAR training. We appreciate Valspar's growing support of our industry through educational programs and the DFW area I-CAR volunteers."
Rod Enlow has joined the Coordinating Committee For Automotive Repair (CCAR) to assist in improving environmental and safety compliance in the automotive repair industry. Enlow’s appointment as Director of Industry Relations was announced by Robert G. Stewart, CCAR President.
Enlow retired from USAA Property & Casualty Insurance in 2003 after 27 years of service. His most recent position was as the company’s Director of Auto Industry Affairs. Enlow will continue to manage and operate RENLOW Auto Technical Consulting, Inc. based in San Antonio, Texas. He is immediate past chairman of the Certified Automotive Parts Association’s (CAPA) Technical Committee, serves as co-chair of the Collision Industry Conference (CIC) Parts and Ethics Committees, a member of the National Auto Body Council (NABC), the Society of Collision Repair Specialists (SCRS) and the Society of Automotive Engineers (SAE) South Texas Board of Governors.
Enlow currently serves as vice chair of I-CAR (Inter-Industry Conference on Auto Collision Repair) International’s Board of Directors and Executive Committee. Enlow has been a member of the I-CAR board of directors since 2000. He was also inducted into the “Hall of Eagles,” the collision industry’s equivalent of the “Hall of Fame,” in December 2003.
“I am excited at the opportunity to raise awareness of safety and environmental compliance issues,” said Enlow. “With CCAR, we have the knowledge and the methods to improve and extend the lives of technicians, customers and visiting appraisers. It’s called ‘compliance,’ but safety and environmental responsibility is really just good business. My job will be to help companies realize industry effort is required.... We all should want the legacy of leaving the world better than we found it.”
During its 2004 Performance Summit PPG introduced Performance Power(TM), a new business solution that provides CertifiedFirst Network members and other select PPG collision repair centers with a combination of technology, tools and training for optimizing their operations. The comprehensive program consists of three main components:
- A web-based, proprietary technology solution that measures individual shop and overall network repair performance
- Benchmark reports that compare individual shop performance to industry averages
- Management tools and training that can be customized to target specific opportunities for improvement.
Jeff Blum, Director, Automotive Aftermarket Alliances, PPG Industries, commented, “An old adage states that knowledge is power, and that’s certainly true with Performance Power. It is our latest initiative designed to help select shops optimize their operations, enhance their repair performance and expand their business.”
At the heart of Performance Power is a technology solution that gives shops the ability to easily access, analyze and leverage the data in existing estimating and management systems. Performance Power’s technology automatically moves data from a shop’s estimating and management systems into a central data warehouse, which allows the shop to effectively analyze performance data. The shop management tool is completely web-based, making it suitable for one location or for integrating data from multiple locations, without specialized hardware.
Shops without an existing management system are also able to benefit from Performance Power, because the technology provides day-to-day abbreviated management system capabilities, including resources to:
- Measure performance by location, estimator and insurer
- Track performance against insurance company key performance indicators and market that information
- Access cycle-time and job status reports
- Access customer contact information to initiate direct marketing initiatives and customer relationship-building activities
- Allow customer service representatives to follow up on un-booked jobs
- Automatically update vehicle repair status online, eliminating re-keying of data and reducing time-consuming phone calls.
- Provide insurers with aggregate network performance reports.
“These reports will demonstrate the network’s overall performance against the top key performance indicators valued by insurers, and will also support compliance to insurers’ DRP programs by helping shops understand their strengths as well as opportunities for improvement,” explained Blum.
PPG's CertifiedFirst Network is comprised of over 1,600 quality-rated dealership and independently-owned auto body repair centers.
A group comprised of several of the auto salvage auction industry’s foremost operators have created ICAP Buyers Network, LLC (ICAP), a web-based buyers’ network company designed to allow streamlined access to the combined inventory of participating independent salvage auctions. ICAP is rolling out the first phase of its menu of services at NACE.
ICAP aims to simplify the buying process by offering:
- a single, integrated, searchable inventory database
- e-mail notification of specific vehicles of interest to buyers
- a single registration process with a single user name and password
- live online or proxy bidding
- a transportation network for both domestic and international delivery.
While the current coverage territory is the Central U.S., ICAP plans to eventually offer its services on a national basis by adding independent pools to its provider network. ICAP’s combined customer base currently exceeds 10,000 buyers
Kenneth Rickli, one of the company’s principals, said, “ICAP grew out of a recent brainstorming session. Our goal is to make it as easy and as cost-effective as possible for salvage vehicle buyers to participate in our auctions. ICAP’s principals sell well in excess of 100,000 vehicles annually at our pools, so I am confident that we have what buyers are looking for. We want to become the first source they turn to when searching for and purchasing inventory, and believe that ICAP, by serving as an online buyers’ network, will provide the means to make that a reality.”
“We continue to evaluate market trends and conditions by listening carefully to the needs and concerns of our customer base,” said John Lindle, another company principal, “and we have identified a niche created by the latest round of buyer fee increases in the consolidated sector of our industry. In addition to being a brand-new concept, ICAP brings to buyers the opportunity to conveniently select high-quality, high-quantity inventory from pools offering customer-friendly service at a reduced overall cost.”
Company principals include Kenneth Rickli and Hardy Rawls, who own and operate Bayou City Auction Pool in Houston and Alamo City Auction Pool in San Antonio, Texas. Carroll Estes, outgoing president of the American Salvage Pool Association, owns and operates Central Cities Auction Pool in Temple, Texas, as well as Dallas/Fort Worth Cities Auction Pool in partnership with Rickli and Rawls. Joining them in this new venture are John Lindle and Joe Zrostlik, principals of QCSA, headquartered in Eldridge, Iowa with additional auction branches in Chicago and Portage, Wisconsin.
Technomic Asia, an international strategic consultancy specializing in China strategies for US companies, has announced the availability of its "Strategic Assessment of China's Light Passenger Vehicle Aftermarket." This detailed market report provides insight into the rapidly growing industry with analysis of trends and opportunities.
The report, which stems from Technomic Asia's extensive primary research among key industry players, found that increasing private ownership and an overall rise in vehicle quality and reliability are key trends in China's developing automotive aftermarket. Additionally, the present lack of a dominant company or brand will allow for healthy competition to shape the marketplace.
"Prior to this report, there was no single resource for the automotive aftermarket. The Strategic Assessment of China's Light Passenger Vehicle Aftermarket provides a foundation for developing a business strategy," said Steve Ganster, managing director of Technomic Asia.
Ganster recently presented findings from the report to the Business Opportunities in China's Automotive Aftermarket 2004 Conference in Shanghai, which was sponsored by the Centre for Management Technology.
"Technomic Asia forecasts the light passenger vehicle parc to grow from an estimated 15 million in 2003 to more than 50 million by 2010, driven by aggressive new sales of vehicles," Ganster said. "Most repair categories are expected to grow at an annual rate of 18 to 20 percent per year. The current parts and service market for light passenger vehicles is estimated at more than US$11 billion and will grow to over $46 billion by 2010."
To put the China auto market in context, there is about one car for every 100 people in China. In North America there are 40 cars for every 100 persons.
Today, the eastern provinces of China represent 45 percent of the total automotive market, but markets in other regions are rapidly developing.
"China's aftermarket will take shape in the next few years in terms of channel structure, brands and competitive positioning. This time period will be critical for foreign players to establish position," Ganster said.
Ganster warns that not all businesses are destined to succeed in China, citing current unstructured distribution systems, corruption, counterfeiting and the market's fragmentation.
"Companies need to be very careful in developing their China investment strategies. Making money in China is still very difficult, though long-term opportunities look significant."
Technomic Asia assists companies in entering or expanding their Asian business by providing critical market insight, an understanding of addressable business potential and assistance in designing the optimum strategy for success. Technomic has operated in Asia since the late 1970s and has its main offices in Shanghai and Singapore.
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