Oct 2, 2010

Challenges of the Automobile Industry in the 21st Century

By Anthony E Emuan

Business in the automobile engineering will continue to thrive and given the peculiar state of underdevelopment in the rail, water and air transportation subsector of our economy, the market opportunities in the motor trade business are enormous. This fact can easily be confirmed by the many vehicle dealers one sees everywhere in our major cities.

The motor trade business generally is divided into two components, namely, sales and after sales. Whereas sales involves that activity of canvassing and getting prospective clients to exchange their hard earned money for the seller’s brand, after sales have to do with providing maintenance services, spare parts and warranty to ensure that the customer enjoys the maximum benefits of service and comfort derivable from the use of the vehicle bought and it is in this later component of business that real challenges lie. It has become pretty difficult for the Nigerian motorist to find the ‘one stop’ automobile services vendor that can provide the satisfaction of the total marketing approach of modern business. This poor state of affairs has been further aggravated at the turn of the century due mainly to high-tech in design, service technology in terms of tools and equipment and quality human capital required to deliver necessary technical services.

Challenges In The Motor Trade After Sales Business In The 21st Century

From 1860 when Lenoir, the Frenchman built the first internal combustion engine that was capable of driving itself with coal gas as fuel with an efficiency of about 3%, the new generation car of the 21st century has undergone tremendous transformation. The quest for higher efficiency, improved safety, comforts and issues of the environment have moved the new-generation car far away from the simple machine that it was. More recently, the term MECHANOTRONICS has emerged. This is because it is increasingly becoming difficult to find a mechanical system in the modern car that is not controlled or managed by electronic means or computer as it is more commonly called by laymen. (fuel, ignition, transmission, door locks, steering, brakes, suspension, air conditioning, lighting etc). These changes or improvement in technology though desirable have brought with it challenges for the 21st Century entrepreneur of automobile engineering practice. What are the challenges?

Challenge no. 1: Death of Skilled Human Capital

Today’s roadside mechanics are endangered specie. Automobile craftsmen and technicians with the requisite skills to handle these high-tech vehicles are very few and difficult to find. Unfortunately, as a nation, we are doing very little for the education and training of low and middle level technical manpower. This ugly trend is evident from the preponderance of public and private educational institutions that only offer non-technical education and training. How many technical and vocational training centres are available for the acquisition of technical skills in this country?

High tech training is key and imperative for success in the 21st Century automobile engineering practice in view of the sophistication in design and service equipment technology. These new generation cars are expensive and their maintenance requirements should not be left in the hands of unqualified and inexperienced personnel (PAN Story Rationalized Dealership Network in the Year 2000)

Challenge No. 2: Specialized Tools, Equipment And Technical Information.

Special tools are needed for the effective diagnosis and repair of the new generation car. The challenge here is that the financial capital required for adequate tooling is high and matters are not helped by the low-volume of work environment vis-à-vis return on investment which makes it imperative to operate multiple-brand repair workshop. This situation is even further compounded by the brand exclusivity phenomenon.
Challenge No. 3: The Number of Parts Have Increased in the New Generation Car

The numbers of parts have increased and is possible to have variants of the same part. The large importation of used cars with all kinds of technical specifications (eg American specifications, European specifications ete) has increased the complexity and down time of sourcing genuine parts. Lean Inventory Management and Central Warehousing has brought enormous efficiencies into vehicle manufacturing processes but the same can not be said of parts sourcing and supplies for after sales purposes.

Challenge No. 4. Poor Remuneration: Even though a man will work into a showroom with pride and easily part with millions of naira to own a car, the same man may contest or haggle a maintenance bill of a few thousands of naira. Discounts are demanded and sometimes payments are differed or even repudiated on grounds of any dissatisfaction over a service or repair. The irony is that there is so many headaches where there is so little economic reward. This is the main reason most car dealers prefer to stop at the sales function and this is one country where many people are not discerning at all when it comes to purchasing a vehicle or any piece of equipment for that matter. I see all kinds of vehicle brand on our roads and I cannot stop to wonder how they are maintained and a vehicle that is not adequately maintained constitutes a hazard on our roads.

Challenge No. 5: The Dynamics of Technological Change:

The constant and regular change or modifications in the technology puts the entrepreneur in automobile engineering practice in a position where he is perpetually contending with the ‘what’ and ‘how’ of the future.

For example:

A) What will be the new trend tomorrow?

B) How will services be delivered then?

C) What new delivery competencies will be required?

D) How will the competencies be acquired?

E) What proactive steps must be taken today to help remain in business tomorrow?

Some ten years ago, it was inconceivable that a motor mechanic would need to be computer literate. Today, to be able to partake in training course in the Toyota training school you have to be able to use the computer.

In conclusion the automobile engineering business is lucrative one and will remain even more so in the 21st Century. The entry barrier into the business has been raised higher due to challenges already enunciated above and the automobile maintenance service and repair trade will cease to b an all-comers business.

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