Friday, October 21, 2011

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MACRO-ENVIRONMENT ANALYSIS AND STRATEGIC IMPLICATIONS


Social/Demographics


· Women make up 65 percent of the customer base for service centers. Unfortunately, 80 percent of these customers are not satisfied with the service and repairs they receive, and 8 percent feel they are treated differently because of their gender.


· Two-thirds of the women who patronize aftermarket businesses are college-educated, and 15 percent of these women hold postgraduate degrees.


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· Society highly values the actual performance of auto repair, yet it does not value the process of auto repair; distrust, a lack of knowledge, and the propagation of bad experiences have made fixing one’s car an unwelcome experience.


· The market is here to stay; as long as these vehicles or any evolution of them are in use, repair shops will exist.


· A need for highly-trained auto mechanics has spurred advanced training programs.


Women are fueling major change in the automotive aftermarket. Hiring practices, consumer demographics and customer service are all reflecting the influence of female consumers. It makes good business sense for firms to follow this trend and adjust their services or products to accommodate them.


Political


· Federal and state governmental approval / certification to repair autos.


· Motor Vehicle Owners’ Right to Repair Act of 00 dealership must reveal repair information to independent auto repair shops.


· Increased foreign governmental pressure to raise auto repair standards.


· Increased automobile emissions standards mandate frequent testing.


· Federal and state governmental regulation of highways / interstates improved roads mean less repair needs.


· Clean Air Act of 14 mandated all vehicle manufacturers install emissions-testing computer systems.


· Impacts of NAFTA on consolidation and regional standardization


· Governmental restrictions on the disposal of used parts, tires and oil.


Changes in requirements to emissions and quality had a negative impact on small business in the industry as a whole, including additional time requirements, and the need for investment in appropriate environmental and safety procedures. These factors will impact on the viability of small general repairers in the long run and it is anticipated that some consolidation will occur. Changing requirements of the major insurance companies on repairers are also pushing smaller businesses throughout the automotive industry toward consolidation.


Economic


· Auto repair is an aftermarket of the auto industry; automobiles are necessities, therefore auto repair is a necessity service.


· During times of economic downturn, a slight shift emerges towards DIFM (Do-It-For-Me) repair as individuals hold onto cars longer and put off purchasing new vehicles; in all, industry is prosperous in times of economic upturn or downturn.


· Customers are relatively price insensitive the automobile is indispensable and the general public lacks knowledge of auto repair to leverage in bargaining.


The aftermarket is an increasingly complex and competitive business that is undergoing profound change. Rapid industry consolidation over the past decade has left fewer market players, while manufacturing improvements in parts quality for new vehicles has contributed to flattening aftermarket sales growth.


Due to a stagnant U.S. economy, overall aftermarket sales slowed in 001. However, an increasing number of miles driven by an ever-growing vehicle population helped partially shield the automotive aftermarket from the impacts of a slow economy. Sales in the automotive aftermarket (cars and light trucks) totaled $178.8 billion and are forecast to grow to more than $185.8 billion by the end of 00.


Technology


· Increased use of computers, information technology, and tech-savvy workers in performing auto repair.


· Growing trend towards “digitizing” the service provided by the auto repair industry IT and customer databases on the back-end allow for increased front-end customer satisfaction.


· Improved quality in auto manufacturing due to technological advancements could cause overall market to shrink.


· Greater advancements in vehicle computer systems create a need for auto repair shops to upgrade or fail to meet customer needs.


Technological change that incorporates the latest development in electronics, engineering, metallurgy and paint technology has repercussions for training. Post trade courses and shorter targeted industry based courses remain integral to the development of a skilled workforce able to cope with the increasing demand of new products and technology. Increasing use of technology in the industry imposes greater costs on repair businesses, particularly the mechanical repairers where more expensive diagnostic equipment is required.





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