Mark Drennan is the general director of ACDelco, the true General Motors original equipment maintenance and repair parts brand. Over a three-decade career at GM, Drennan has influenced every part of the aftermarket value chain, from product design to marketing, sales and distribution. The team he leads is driving a business strategy to making ACDelco the most trusted partner in the aftermarket parts industry.
One thing on everyone’s mind is the U.S. economy and the auto industry. What’s ahead of us in 2018?
We feel very good about the U.S. economy. Gross domestic product is growing at a relatively healthy pace, unemployment is low and consumer confidence is at its highest level since 2000. Small business optimism has also stayed very high, which is something we watch closely. All of this makes for a very healthy auto industry.
New vehicle sales set an all-time record in 2016, and the pace has moderated this year. Some forecasters expect more settling in 2018, but even if that happens, sales will be at a level that’s very strong from a historical standpoint. It really is a great time to be in the business, and mass-market brands like Chevrolet, Buick and GMC are well positioned because the market is embracing crossovers, SUVs and pickups.
What about the used vehicle market?
The new vehicle market grabs all the headlines. But the used market is far larger. In fact, we could see 39 million used vehicles sold this year, which is up year over year. Some of that is replacement demand because so many vehicles were destroyed by Hurricane Harvey. But what’s really driving the market is a healthy consumer. More folks are working, and families are taking more home every month. In fact, middle-class Americans made more money last year than ever before, and that should create opportunities for parts suppliers like ACDelco, our distributors and retailers and shop owners alike.
What other trends are shaping the market, and what does it mean for shop owners?
I think the millennial generation is really going to shake up our industry. When I say millennial, I’m talking about the 75 million people born from the early 1980s to the late 1990s. They’re now bigger than the baby boomers! While the boomers and Generation X are the primary customers for new vehicles, millennials, for the most part, buy used. They also have very different opinions and behaviors when it comes to taking care of the vehicles.
Are millennials really all that different from other consumers?
Anyone who raised kids during the rise of video games, the Internet and smart phones knows that millennials are a band apart in many ways. And they have very different habits than people my age or older when it comes to vehicle maintenance.
My team and I wanted to really get our arms around the change that’s coming, and the business opportunity that will come with it. So in September, ACDelco and Babcox Data surveyed 1,000 consumers of driving age and 150 auto service professional about maintenance and repair behaviors.
When we boiled everything down, some important insights jumped off the page. First, deferred maintenance is a hallmark of youth. Second, millennials are much more likely to drive a vehicle in risky mechanical conditions. And third, keeping these people safe on the road will be challenging, but it’s a huge business opportunity too.
What do you mean by risky conditions?
In general, service professionals say millennials are far more likely to defer maintenance than any other age group and drive with worn or damaged tires, brake pads and suspension components. We call these three systems the safety triangle because a failure can lead to a potential collision.
One reason for this behavior is that millennials are price sensitive. They haven’t reached their peak earnings years, many have families and there’s no shortage of bills to pay. Something has to give, so more than two-thirds are spending less than $500 annually on maintenance and repairs — that’s $350 less than the average American, according to the U.S. Bureau of Labor Statistics. But spending less up front doesn’t mean they’re saving money. The survey also found that this population is more likely to be towed following a breakdown, which costs them more in the long run.
What can shop owners do to attract millennials into their shops?
I think the best way is to build a customer-focused “preventative maintenance” culture in your business. You have to demonstrate that an ounce of prevention is worth a pound of cure. One way to do that is through car-care clinics. ACDelco’s “Knowledge is Power” program, which is one of the benefits of becoming an ACDelco Professional Service Center, can help you get started. This kind of community outreach is a great way to start building trusted long-term relationships, especially with millennials. I’m sure they will be receptive. Our survey showed they are hungry for knowledge about preventive maintenance, and many are even willing to tackle some light repairs on their own.
What other trends should shop owners be watching?
Several trends have been reshaping new vehicle product development over the last several years. Body and chassis components are being light-weighted to help optimize fuel efficiency and there has been tremendous growth in turbocharging for the same reason. At Chevrolet, for example, every new Equinox crossover has a turbocharged engine under the hood. Then there are the electronics. An industry trade group pegs the average number of sensors in a new car at somewhere between 60 and 100. All of these trends impact maintenance requirements and parts selection. For example, turbo engines require DEXOS-certified oil. Aluminum brake calipers can only be remanufactured so many times, and sensors fail. We’re expanding our product range in all of these areas and more, and we’re trying to make life simpler for the mechanic turning the wrench in the way we design and package their parts. The cars themselves are complicated enough.
Tire Pressure Monitoring Sensors (TPMS) are a great example. New vehicles have been using these sensors for years to help keep customers safe, but they only last 5-7 years, due to battery life. We estimate that 62 million sensors are ripe for replacement, or will be soon. That’s a big business opportunity for a pretty small part.
We will be ready with a new sensor that will fit almost three-quarters of the TPMS-equipped vehicles currently on the road. Shops need to carry just five part numbers to cover the majority of these vehicles and the sensor is pre-programmed to follow existing OE re-learn procedures. This eliminates the need for special calibration tools or loading software.
Do you have advice for auto service professionals who are trying to keep up with all of this change?
Service professionals should take every opportunity to read, train and practice. ACDelco is a huge training advocate and we’re constantly releasing the latest diagnostic tools, information and software needed to reprogram any module or controller that needs it. These easy-to-access resources are available at ACDelco.com.
In fact, we just updated ACDelco.com’s TechConnect homepage to offer a one-stop-shop for resources like repair information, catalogues and — most importantly — training opportunities. Shops participating in ACDelco’s Professional Service Center program have access to in-person and online training courses. In 2017, ACDelco introduced 20 new training courses and conducted more than 500 instructor-led training seminars — resulting in more than 37,000 combined training participants. I want to see these numbers grow.
As vehicles evolve, so will ACDelco — and we look forward to navigating this evolution with our service professionals.