UK Sales Manager, Nick Hood, speaks candidly on why Autoelectro has chosen to revise its surcharge structure – with more than 2,000 references having their surcharges cut and many of those becoming surcharge-free:
Why was it a challenge?
“The market for old core pricing has been going through a transition phase due to the surge in imported copy units –particularly popular part numbers.
“The effect of this is that many fast-moving references in ourPareto now have a substantially-reduced old core value because of a lack of demand for remanufactured products, due to price and zero surcharges on new units – despite the fact that they may not be made to original equipmentspecifications.
“At Autoelectro, though, we are continuing to increase our range because of part number proliferation to ensure that we have the best availability that reflects the UK car parc. This is part of a wider process, as we are constantly reviewing everyfacet of our business to show leadership in an ever-changing market.
“Therefore, we now offer a premium product that, where possible, does not command a surcharge. This project has taken considerable time and thought, but we are leading the aftermarket with this move, as no other premium level supplier has a comparable offer, and no ‘box-pusher’ will be able to compete with us in terms of range and availability.”
‘Resoundingly positive customer response’
“We have always taken on-board what our customers tell us – it is crucial for building relationships – and it was obvious, with the market evolving in the way that it is, that there was a need to look at reducing surcharge rates where possible.
“Our new strategy has been met with a resoundingly positive response, but as we are greatly reducing our distributors’stock investment, we are encouraging them to reinvest that saving into our growing range. Effectively, we are freeing up capital, allowing a greater return on their outlay and increasing the possibility of meeting their customers’ requirements through holding more part numbers.
Word of caution
“We can’t get carried away, though; the reality is that the market is not going to allow for a surcharge-free offer on all units. Under current trends – increasing part numbers, shorter product lifecycles and advances in technology – it’s not commercially viable to put new Chinese units into production for every application.
“What I hope this does, though, is back-up one of our founding principles: honesty. For many years I heard the phrase ‘where there’s core, there’s crime’, suggesting that the supplier is manipulating circumstances to their advantage.
“Autoelectro is not looking to make a profit from surcharges; our future and our customers’ future range availability reliesupon open core management, and the fact is we only want returned what we surcharged, in a timely manner.
“Without efficient and fair core management, availability is compromised and without the product available, there are no sales and, consequently, no margin opportunities at any level in the supply chain. With this move, I think we have managed to strike a good balance with zero or reduced surcharges where possible and a fair surcharge where we need the core to maintain accessibility.”