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Automakers turning to aftermarket for trends, ideas

Michael Wayland
The Detroit News

The automotive specialty and aftermarket industry is no longer an afterthought for automakers.

The Detroit automakers and others are using the more than $30 billion industry as inspiration for styling as well as gauging interest in parts and accessories for production cars and trucks.

“They’re paying a lot more attention,” said Hanno Lorenzl, EY Global Automotive & Transportation Center senior manager. “They’re looking at, what are the trends in the aftermarket? What are people putting on their vehicle after they purchase it at a dealership and how can we profit off of it?

Lorenzl, whose company — formerly Ernst & Young — consults with several major automakers and suppliers, said domestic automakers particularly started paying more attention to the aftermarket following the recession, as their service and parts divisions were helping them stay afloat. He said the aftermarket industry is traditionally two to five times more profitable on a profit-margin basis than new vehicle sales.

The 2015 North American International Auto Show starting next week is expected to be a grab bag of vehicles that years ago would be aftermarket-exclusive or influenced by the aftermarket industry, including rumored performance models from Ford Motor Co.; Chevrolet Colorado ZR2 concept from General Motors Co; and a Ram Truck model from Fiat Chrysler Automobiles NV that is being teased as “an exciting new way” to get somewhere.

FCA US, formerly Chrysler Group, has particularly grown accustomed to bringing once-aftermarket ideas to life on production, special- and limited-edition models, from the Dodge Challenger with a Shaker hood and Scat Pack performance kits, to its popular blacked-out edition of the Ram 1500 and a hoard of Jeep accessories.

Part of FCA’s success is a result of its own Mopar service, parts and customer care brand, which has grown its market share 25 percent from 2009-14 and offerings to more than 500,000 parts and accessories in more than 130 markets.

“The aftermarket is a very profitable part of the business because it’s part of the (vehicle purchasing) cycle,” said Mopar President and CEO Pietro Gorlier in a phone interview with The Detroit News. “You sell a car, then you sell services (and) parts.”

Gorlier said besides the parts themselves Mopar helps drive customer loyalty. He said customers are more likely to stay with the automaker’s brand if they have good aftermarket experiences and service.

Benefits of aftermarket parts from automakers usually include company-backed warranties and installation at dealers, as well as the ability for customers to roll the cost of optional parts into the purchase, lease and financing of a new car or truck — making them more attainable while helping drive profits.

“We’ve had tremendous growth over the past three or four years,” said Jim Campbell, GM’s U.S. vice president of performance vehicles and motorsports, in an interview last month. “After coming out of the recession … we’ve seen nice growth in the performance parts business. It shows no signs of slowing down.”

In 2014, Campbell said GM’s parts performance business was up 13 percent and general accessory sales, which includes things such as side steps, floor mats and wheels, were up 20 percent in the U.S.

Automakers do not release profits of their aftermarket sectors, but judging by retail aftermarket sales they’re likely thriving.

According to the Specialty Equipment Market Association, retail sales (excluding automakers) reached more than $33 billion in 2013, marking the fourth year of growth. The trade organization expects sales to continue to grow.

SEMA President and CEO Chris Kersting said performance products continue to be a major driving force in the aftermarket segment as well as the overall economy and trends in the automotive industry.

“Products for trucks and SUVs are currently strong and riding the wave of growth in new vehicle sales,” said SEMA President and CEO Chris Kersting in an email to The News. “Another factor driving growth is sales to those not traditionally categorized as auto enthusiasts. More and more mainstream consumers are modifying their vehicles, whether it is with exterior products, mobile electronics or interior products that enhance comfort or convenience.”

Look no further than the organization’s annual SEMA Show, showcasing more than 2,300 companies, to see the growing importance of the aftermarket industry in the mainstream market.

Automakers continue to grow their presence at the show to showcase possible parts, and vehicle packages inspired by the aftermarket industry such as the Sonic Dusk which Chevy brought to market.

“They’re going to buy parts and accessories somewhere,” Campbell said. “We want them to buy them from Chevrolet.”

That mindset isn’t music to the ears of traditional aftermarket shops and businesses, but Kersting said SEMA and its members aren’t too worried.

“When specialty aftermarket innovations are picked up and offered as options on production vehicles, it’s an endorsement of a product’s success and popularity,” he said. “Specialty manufacturers thrive amidst OEM competition because the aftermarket offers a strong alternative for value, quality and distinctiveness.”

Scott Koehn, owner of car restoration and customization shop Kreative Bodywerks Hotrods & Customs in Clinton Township, said some of the most popular services right now are customizing wheels, hoods and grilles; tinting taillights; and darkening/removing chrome.

“We’ve been non-stop busy for at least two years,” Koehn said inside his shop at 37623 S. Groesbeck Highway.

Chris Ustick, an employee at the shop, added an emerging trend with LED lighting are halo (circle) headlights that can change colors. LED is currently a major trend in new cars and trucks as well.

Koehn, who opened the shop in 2005, said as much as automakers want to jump into the aftermarket, there’s just some things they will never offer.

“They’re not taking any work from us,” Koehn said. “They’ll get better, but we’ll just make it even better.”

Staff Writer Melissa Burden contributed.

North American International Auto Show

-Press preview days: Jan. 12-13

-Industry days: Jan. 14-15

-Charity preview: Jan. 16, $400 per person

-Public show: Jan 17-25; $13 adults, $7 children (7-12 years old) and seniors (65 and older)