Motor Factor Consolidation
Motor Factors – What will happen!?
I can’t remember who I heard it from but in my early days in this industry (over 6 years!) someone said to me that give it 5- 10 years and there will only be a few major players left. Now depending on your point of view you may believe this has come to pass and the motor factor marketplace has already changed into something unrecognisable.
The past few years we have seen a large number of changes:
Big vs Small
Ultimately, the aftermarket is a finite size and although there have been peaks and troughs it has been fairly stable over the past 5 years in terms of the numbers of parts purchased. This means the money or available money out there for organisations to take has stayed relatively similar as well. With the bigger players now individually taking more and more there has to be an equilibrium that means others are somewhere, losing out.
Even when I used to personally sell to local independent factors and smaller buying group members, 6 years ago, there were the constant murmurings of the marketplace being an extremely difficult place to exist due to the lack of purchasing power brought to bear by the national factors.
It must be even more difficult for those smaller members now as they have only seen those national motor factors grow in strength by opening new branches, increasing their focus on OEM or high quality aftermarket parts, offering multiple van deliveries a day or having the opportunity to get any low pareto item on the same day distribution from network hubs and warehouses.
This industry thrives on competition and the time of the local motor factor may well and truly be over as I personally cannot see how they can compete against such an onslaught.
I draw comparisons to the national motor factors with retail shopping – most of us will shop in supermarkets because of a number of different compelling reasons – price / range / availability. Local shops can only compete due to ease of location (within their direct vicinity), by offering something different or through the strong loyalty of some of their customers. The local motor factor is usually in the same vicinity to one of the major players and they can generally only offer the same parts but with none of the range or availability – so the one thing that they can compete on is loyalty.
I admit, brand loyalty is a strong pull however it only takes a positive experience on using a different option (such as getting an out of stock part from a national motor factor where it is available) for that to start to leak away naturally, leading to more struggling for business in an already crowded marketplace.
What is the future for the Motor Factor?
Who knows what will happen! – will the independents fight back, will the nationals crumble? Maybe in another 5 years I will be writing another blog post tearing myself to shreds on how I could be so wrong – I would be interested to hear your take on what has happened and what the future holds for the motor factor market place.