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Dwindling DIY market affects profits

Reducing DIY market
A reducing number of DIYers means we need to look at other opportunities for growth.
Many of us are more than aware that sales to the DIY motorist aren’t what they used to be. Interestingly an article on seeking alpha, “More Evidence of a Slowdown In DIY Auto Repairs” shows that US auto recyclers are seeing the same problems.

The article, which you can read here, focuses on American auto recycler, AutoZone whose figures have failed to meet expectations. The reason for this are put down to increasing sales of new cars in the States as they come out of recession coupled to the complexity of modern vehicles.

The problems are the same in the UK. The UK car market has shown 31 months of consecutive growth, with this September being the biggest in a decade. We are definitely showing signs of a reduction in used parts sales from motorists replacing their vehicles rather than repairing them. As for complexity, many DIYers have given up the challenge. In some ways eBay has compensated for this in the short term but it has also served to force prices down which many report is now having a negative effect.

The article about AutoZone in the States makes a very interesting point. Although DIY sales have dwindled, commercial sales have increased and when Autozone’s figures are compared to US companies that have a larger share of commercial sales, it becomes clear that this is where the growth is. AutoZone’s conclusion is to put more emphasis on the trade sale market.

This is where the UK market significantly differs. We don’t have that established trade market to sell into. The market is out there and available to us, You only have to read about FAB Recycling’s success in trade markets to understand that growth in both turnover and profits are to be had but, we have to create that market for ourselves if we want to build this area, and build it we must if we want a long term future. Take a read of this month’s article concerning BMW’s developments in carbon fibre; it doesn’t look like we are going to be making a fortune out of the scrap in the future.
So how can we do it?
We have said it many times before, standards, standards, standards! No one will buy with confidence without a recognised standard - how can you? We recently covered the ARA body panel standards and we have a follow up article all but written which covers their mechanical parts standards. But it’s no use us writing about them - you have to work to them. MVDA need to adopt these standards and modify them where necessary to suit the UK market. Maybe then, they can get an agreement with bodies such as the ABP Club who represent body builders so both sides of the equation know what is required and expected from green parts. Maybe they could have a gold standard for members complying so bodyshops can have confidence in both the company and the part that is being supplied.

Then we need technology - technology that talks and links. We need bodyshops that can order a green part as easily as an OEM or pattern part. This should be possible if the commitment is there. After all, something like 97% of bodyshops use Audatex and this is key to linking into the green parts market. If this package would allow for green parts to be ordered in a similar way as it allows for OEM and pattern parts, then this would offer no hurdle to the body shop.

What we need next is a pool of parts large enough to offer an effective service to the bodyshops. This unfortunately is where things start to fall apart. We as an industry seem reluctant to pull together. We would need a structure to control it and the system would have to be open to all provided they make the grade. We would need amalgamation of parts availability from multiple software providers and top of the list we would need a uniformity of standards so everyone’s stock and services were comparable. I won’t even mention pricing at this point! The MVDA should be the most likely body to control a standard so should also be a likely contender to oversee the development of such a service. This cannot be in the control of any one business as this would only create the problems we have now.

If we do all this, and we can put aside differences and work together then the potential is vast - the crash repair parts market is £1.5 Billion a year in this country - now that’s worth having a go at! We shall look at many of the issues raised in more detail over the coming months.

November 2014

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