This article is about the race to the bottom in the automotive aftermarket industry… and how it plays out. It addresses the greed & ego of a youth-driven culture. It addresses the effects of fly-by-night internet companies who sell under MAP. And it addresses the inexperienced & short-sighted manufacturers who let it happen.
When the economy crashed in ‘08, many of the most valuable sales people & marketing people in this industry were forced out of their jobs. These were professionals… with tenure, and higher salaries. They were well respected, and well connected in this industry. They had built careers, and relationships. And when things collapsed, they were cut to save costs. Gone – to other industries with more earning potential.
And who replaced them?? The low man on the modem pole. The wet-behind-the-ears 20-something. The f*cking new guy.
Now did the FNG get a sweet pay raise? Nope… just a hollow promotion with more responsibility.
Yeah but didn’t he have an entire career’s worth of experience? Nope – he was 25.
Did he even have a damn degree in anything… let alone the field he had been shoved into? Nope. But he did get a sweet new business card that said something like SALES MANAGER or MARKETING DIRECTOR.
This may sound harsh, but he/she lacked the skills, the experience, and the foresight of his/her predecessor. That’s your gas.
So keep in mind, we’re sitting around 2008. What was coming up real fast in 2008?? …..Online businesses & social media. What were all these new 20-somethings in the workplace a product of??? …..The internet……..… & social media.
So what you had, was an abrupt & major shift in all sorts of business practices across the board, all at once. Out with the old, in with the new. The experienced, old-school guys with long-range vision & wisdom were pushed out of the aftermarket industry… without ever being able to properly teach, mentor, & develop the skills of the young guys. The young bucks inherited the big job titles, which led to big egos, and basically a Shut up I f*cking got this mentality.
The internet + social media was all the sudden making it possible for a couple-of-dudes to make an ‘online parts business’ in an afternoon. For our purposes here, let’s call that business – Fab Lyfe Fitment.
Fab Lyfe Fitment (FLF) then freely, easily, and effortlessly, went out & gained distribution accounts with all these inexperienced new sales managers. Buy-ins were ignored & overlooked, and these new retailers weren’t vetted… because companies were in a recession survival-mode, and the inexperienced new sales managers figured something like,
“I’ve never even heard of you before, but hey, the more distributors we have, the better…. right?”
Then they digitally crossed pee streams by sharing each other’s social media posts. That’s your match.
Wuh-oh: FLF quickly realized that because they didn’t have any reputation or credibility, they couldn’t compete (even online) with any major retailers. I mean, who’s gonna buy parts from some company they’ve never even heard of & found on accident. Unless!!!…. it was cheaper!!!!
FLF slashed their prices, sacrificed profit margin, and used any scene-points they had for leverage. And – they got some sales coming in. Because online – hell you would stab your best friend in the eye if it meant you could save 10 bucks.
The major retailers were forced to lower their prices to match FLF.
FLF’s sales dried up as people went back to the majors.
So FLF was then counter-forced to slash their prices AGAIN… because this is their only viable path to get a sale. Can you see the degradation here?! That’s your spark.
And THIS… guys… is the race to the bottom, illustrated. This is the cancer. I’m not saying it’s going to happen. I’m saying it happened. We have cancer.
The downward undercutting spiral compounded on itself until the major retailer, who employed many people & had built lives, families, & careers, was forced out of business. They couldn’t afford to run a legitimate, larger-scale operation, while competing with the two FLF guys working out of their parent’s basement.
Awe but here’s the REAL millennial kicker: The 2 FLF guys in their parent’s basement, killed the major retailer… but never got out of their parent’s basement.
It gets worse. Because in FLF’s wake, they had driven down the VALUE of all the parts they were selling. In other words, they had driven down the VALUE of the industry. Just for example, if a company called ‘Sweet JDM Exhaust Co’ has an exhaust system priced at $1000 retail, but it’s constantly for sale online from FLF for $700… guess what… that’s now a $700 exhaust. Period. No matter what Sweet JDM Exhaust Co thinks or says.
Yet, Sweet JDM Exhaust Co allowed for their own destruction, by accepting an unqualified FLF as a distributor in the first place.
Every lazy, cheap, and selfish decision the internet has anonymously allowed us to make… has created this situation for all of us.
AND – the cancer continues to spread like a damn chemical bomb, and devalues all of Sweet JDM Exhaust Co’s COMPETITION as well. So now everyone in the industry is effected negatively… even the companies who weren’t participating in these stupid, immature business practices.
And guess what. Some of those competitors used better quality materials, with more R&D, and ultimately made a better product for that same $1000. And now they’re upside-down & forced to lower their standards in order to stay competitive.
And just to be clear & drive the point home… this is all a result of ALL the FLFs of the industry, working in conjunction with ALL the under-qualified, inexperienced, short-sighted ‘sales managers’. Let’s recap.
Major Retailer – out of business; former employees on unemployment
FLF – still operating from their parent’s basement for crumbs
Sales Manager – still no raise; and 1st baby on the way
Higher Quality Exhaust Competitor – either forced to used cheaper production methods, or forced out of business
And at this point in the story, we’re completely rock-bottomed out. Crashed & burned, huh Mav. I see it all too much first hand, being on the media side of this aftermarket industry. “We don’t have the budget” is the buzz-word of the decade.
And I get it – if you don’t work in the industry, then you might not think about the industry side of it too much. You’re just out there modding your car living the good life. I don’t blame you. Hell man – this race to the bottom means that you ultimately get the best prices, right? So the consumer wins, right??
Not at all. Not in the long run anyway.
This is essentially the blanket-reason why millennials can’t find jobs. We give all these millennials a hard time, but every lazy, cheap, and selfish decision the internet has anonymously allowed us to make… has created this situation for all of us.
In the long run – instead of having a moderate amount of strong companies representing the culture, we have a ridiculous amount of WEAK companies, racing to the bottom. These companies are not likely to be much help before, or after the sale. They’re pretty much an online vending machine. And they don’t have much/any leverage to get warranty issues resolved. They can’t go to bat for the consumer. And that weakens the reputation of the industry & future involvement. Especially in this face-paced digital world where rumors fly, and bad reviews quickly scare people away from purchases.
Also in the long run – your QUALITY of parts can be compromised easily… in an effort to for a company to stay afloat with diminishing product values. Instead of aftermarket brands battling it out & besting each other with new products, like they should be… you have stagnancy. Or even worse, a regression. Guess what – that further weakens the reputation of the industry. The ‘culture’ ultimately becomes a mockery by the general public, and enthusiasts become embarrassed to be a part of it.
You think it can’t happen; it’s happening right in front of your face. This industry is NOT too big to fail. It’s as fickle as a generation shift, some heavy-ego mentalities, and an inability to see the big picture. We can make excuses, or we can make changes. We need to make changes.
So there’s the problem – laid out. Keep scrolling read Mike’s solution.
Wow, Wooley really laid it out & put me on the spot here.
As you can see, the race to the bottom is a very real problem with very real consequences… so I’m going to take a stab at a few solutions. The first thing that we need to do is clearly define each problem. According to my notes, this is what I see:
1.Smaller distributors are undercutting larger companies, forcing them to also compete in this race to the bottom, or slowly sink into oblivion.
2.Social media & digital marketing has become the new norm. It is good for making sales today, but is lacking when it comes to truly building a brand/company with longterm goals.
3.Most of the real media companies have been pushed out, and are being replaced by… well, nothing really.
4.The overall market share of the industry is down. Prices have been slashed, which is effectively devaluing both the goods and the companies involved.
I think the problem with the parts distributors (the dealers) is probably the toughest to solve. Personally, I prefer mid-sized distribution companies. I don’t want to buy from the scene-kids slinging parts from Mommy’s basement, but I don’t want Amazon or Ebay either (at least not for car parts). I want to deal with a group of guys that are big & professional enough to do more than just sell me a part… but not so large to be indifferent about it. I want them to care, to make recommendations, to know me & my car, to deal with problems when they inevitably arise, and to help our industry/culture grow. Damnit, I want real customer service! I mean, these vehicles are our super-expensive passion, right? Hype me up!
This is how it was when I first got into modifying cars, which was the pinnacle for the tuner market… so that is where I have set the standard… and we’ve fallen from it. Plus, these are the kind of companies that employ multiple people, pay salaries, and keep families in the green.
Competition is always a good thing, but our aftermarket parts manufacturers DO need to start regulating their sales prices. This will undoubtedly weed out some of the smaller basement dealers. In my opinion, this would be a great time for SEMA to step in and call a massive meeting of the manufacturers. All of the manufacturers need to get back on the same page here, and it’s in everyone’s best interest to work together. Raise a standard to only work with truly qualified distributors – legitimate businesses. Most importantly, MAKE these distributors/dealers stick to the manufacturer’s designated pricing structure! Sure, it’s ok to run sales every now and again, but it’s not really a ‘sale’ if you always sell a $100 part for $75. That’s just lazy marketing & salesmanship. And it drives the industry down, effectively lowering not only the price, but also the value on that part. When you devalue the part, you are also devaluing the manufacturer, their brand, and all of the other parts that they sell. This sucks! Why the hell would any manufacturer want to sign up for that?!
I know I know, the rise of the internet & social media has made our world change too fast for us to truly keep up & consistently make informed decisions on issues like this. Well, I have had a ton of time to sit around and think about it for you. And trust me, you don’t want that deal. I know that ‘a sale is a sale’, and times are difficult right now, but you have to think about the longterm goals here. Having these fly-by-night distributors constantly slash your prices and devalue your brand name is not good business. You have to either keep better tabs on their pricing, or give them lesser discounts than the larger distributors. That should help to even-out the playing field again. If nothing else, it will get rid of the guys just trying to take advantage and make a quick buck.
I know that with all these bottomed-out prices, customers are in a buying frenzy, scooping up truckloads of aftermarket parts like it’s a heroin addiction……..
Oh wait… they’re not???? Ding! Ding! Ding! ……You’re already debunking your own myth that ‘cheaper prices’ create more demand.
Plus, as a customer, do you really think you’re getting the highest quality parts out there… by shopping in the bargain bin? You’re not.
The industry was strong & solid. And we traded that in… for Instagram quick pics. And moronic comments.
Social media was originally created to help connect people. But then profiteers & businesses saw the juicy herd, and the wolves came in to feast. They took advantage of the free platform, and used it for purposes other than its original intention. Now, social media has kind of just become a really mean spirited, narcissistic war zone. This is what happens when you give everyone in the crowd a bullhorn and tell them to go nuts. It’s chaos. The internet seems to be packed full of agenda-driven people who want to misinform you, deceive you, spread hate, hide facts, steal your spouse, or at least your credit card. It’s out of control. I’m not at all a fan of big government, but this has become lawfully, ethically, and socially dangerous.
In most cases, social media is not informative media. Yet it’s strangling many forms of legitimate media. Killing them. That would be ok I guess, if social media were giving a superior product. But the fact is, they’re not. There is no credibility, no accountability, and no name tied to the source. There is often misinformation, or lacking information, or biased information. Nowhere is this more obvious than the political realm, but for the sake of this article, let look at automotive. It hits close to home, but look at all of the great automotive magazines that have gone under in the past 5 years or so. Sure, in S3’s younger years, we bashed the big corporate mags, but the truth is, they ALL had SOOOO much more to offer, than social media does today! They were professional, knowledgeable, informative, inspiring… and they showed you the best builds on the planet, with all the groundbreaking new parts. Their advertisers were consistently the gold standard of companies within the industry. The industry was strong, and solid. And we traded that in… for Instagram quick pics. And moronic comments. Seriously guys? No wonder there are no more real builds on the street now!
It’s like Walmart, or freaking Redbox. In both of these illustrations, society replaced a superior product, with a cheaper, more annoying, inferior, and less personal new-aged option. And once they’ve cornered the market & burnt the competition out… the prices rise back up, and we’re left with all the negatives… and not one positive. Oh and – no other alternative to run back to. We try to justify it to ourselves, because saving money in the moment is really hard to walk away from. But at the end of the day, it’s not the right move and we know it. We desperately need a dose of character, morality, and strength in our car culture. It can’t wait. Support this industry. Support the professionals who are there when you need them. Scroll a little less, and think before you share… or comment. Question what you read. Have faith & confidence in your value. Interact with people; invest in them. If we wait for the guy next to us to make the first move, we’ll fail. Because we’re teetering on the edge of the cliff right now. And if we f*ck around with this, we’re gonna go over.