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Parts distribution under pressure

Parts pressure: Australian Automotive Aftermarket Association (AAAA) senior manager of government relations Ben Bartlett.

Companies that distribute parts diversifying to fight intense pressures

12 Apr 2013

WARNING bells have started ringing for parts distributors due to changes in the way manufacturers distribute their products, according to a leading industry association.

Parts manufacturers are increasingly selling direct to workshops as well as distributors, meaning the latter have to change if they are going to survive, according to Australian Automotive Aftermarket Association (AAAA) senior manager of government relations Ben Bartlett.

Mr Bartlett was releasing preliminary findings from a major membership survey the AAAA had recently conducted.

“This is not saying distributors are dead, because they categorically are not,” he said at the opening of the 2013 AAAA Aftermarket and Collision Repair Expo in Sydney.

“But there are warning bells and if you, as a distributor, sit back and say I am going to do what I have always done, well, you need to make sure you can evolve.”

The survey results threw up a conundrum for parts distributors, he said.

When asked what they expected in the coming 12 months, more than 80 per cent said they expected to grow faster than the consumer price index.

“We thought that was strange, because on the one hand it looks like distributors are being almost squeezed out of the market because manufacturers are going direct to the retailers and re-sellers, yet the distributors we surveyed said things are good.

“What we found was, those that think they are going to grow are value-adding,” Mr Bartlett said.

“They are saying they can add value by training the resellers.

“The manufacturers may not have the time or resources, particularly if they have a small footprint in Australia, to support their brand. So, instead of the manufacturer, the distributors are out there on the ground talking to resellers about this brand new car care product or whatever.

“This is the way many distributors see how they can add value for their customers and maintain or grow their businesses,” Mr Bartlett said.

Distributors have also been diversifying.

“They also believe they can counter (the direct selling by parts manufacturers) by broadening their product ranges,” he said.

“They may have been a distributor in brakes, but now they are moving into electrical, it may be steering and suspension, car care. They are diversifying.”

Mr Bartlett said the AAAA was planning some follow-up surveys to get a better take on the apparent optimism of distributors when their business model is under attack from manufacturers.

“That’s the conundrum for the industry, where to next for the supply chain.”“What we’re saying is, it’s not all doom and gloom.

“If we asked before the survey what we thought the results would be, we would have said overwhelmingly distributors would say life was getting too hard for them.

“But they are not saying that.”

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