Sales
tools

Grzegorz Kacalski: Let’s go back for a moment to sales tools to talk about how they have evolved over the years. Historically, your first tool was a printed price list. What came next?

Krzysztof Oleksowicz: The price lists printed back in the 1990s were valid only for a few days. First of all, our offer was expanding rapidly. Secondly, high inflation meant that prices had to be adjusted almost daily. One solution to this problem was to quote them in Deutschmarks. The way of communicating with customers has also evolved. Initially, they would come to pick up goods - that’s when we operated our open warehouse system, where customers got to pick the products they wanted from the shelves on their own. Then came the time when orders could be placed by fax. Those who placed them this way would get a 2% discount from us and we delivered the goods to them. This may seem like economic nonsense, but there was a method to that madness - this way, we encouraged customers from outside Warsaw to buy everything from us. We figured that once they arrived at the store, they would probably also visit our competitors and buy goods from them as well. So, we decided we would be better off delivering the goods they ordered to their doorstep while still giving them a discount. In addition, when processing orders placed by fax, we were able to get the goods ready for delivery at a convenient time, such as in the evening when we were not serving customers on site, and this greatly improved our work.

Alfred Franke: I remember a customer whom I tried to dissuade from coming to pick up the goods himself, but to no avail. He visited us, he would also stop by other companies to buy goods. On his way back to Lublin, he would almost visit every village to deliver the goods to customers. We never thought of giving a customer a discount just for staying at home.

KO: Another big change in the way we processed orders was the introduction of the online catalogue and electronic order forms. One time, while visiting a friend’s garage, I noticed that the owner searched for parts online, but ordered them by phone, giving the dealer the appropriate reference numbers. I was curious as to why he was making life so difficult for himself, when he had access to a very convenient tool and could simply put all the products in the cart with a single click. And he said: “It is indeed more convenient to click, but you know, if I order over the phone, the guys get a bonus for it.” Then I realized that there was a bug in the system that needed to be fixed. Since then, sales groups have been assigned customers, and regardless of how they place their orders, it is the actual sale that serves as a basis for calculating bonuses for employees.

I remember that back in the 1990s our electronic catalogues also became popular overseas. The so-called logisticians, or those who traded in those countries, installed the catalogue for their customers who in turn selected the products they wanted. Orders would then flow down to the logisticians, who would collect them, order the goods from us, and then take them abroad. There is no way you can succeed in our business without a proper catalogue.

AF: Computerization has improved our sales beyond imagination. In the mid-1990s, our customers didn’t have a possibility to order goods online, but at least they could check our inventory. Unfortunately, in those days, inventory movements were not recorded in real time but with a few hours’ delay. We would upload an updated inventory status to a server every four hours. This way we tried to provide them with the most reliable inventory information possible. Today, a well-designed online catalogue is an absolute must, and it’s extremely important to properly cross-reference parts from all manufacturers and describe products decently so that the customer doesn’t have any problems with selection.

KO: It’s fair to say that all of Poland’s leading distributors have very well-designed catalogues to cater for the increasingly broad product range and to ensure better product availability.

AF: In the case of some product groups, product pictures are of great importance. I understand that most of the data included in distributors’ catalogues comes from car parts manufacturers, for example packaging dimensions or the product weight. This information is crucial from the point of view of efficient logistics. But what about pictures? I know you have a special photographic studio. Do you do everything yourselves?

KO: We get some of the pictures from the manufacturers. Actually, we’ve been getting quite a lot of them recently. But we still take the pictures of some items ourselves. It’s equally important to provide dimensions - the external and internal diameter, etc. Product management is also tasked with creating cross-references - for example, when we have the same reference coming from several different suppliers.

AF: In the old days, the final verification consisted of putting the old part against the drawing in the garage catalogue to make sure that they matched. Today, the process is a bit more difficult as the drawings are available only on the computer screen, but you can still put brake pads against it to make sure that you’re ordering the right ones (laughter). And what do you do when, for example, you happen to have brake pads for one vehicle model from different suppliers? Generally, they have the same shape, although there are often subtle differences between them. Is there a separate picture for each of these products in the catalogue?

KO: Each reference number, that is, a product from a particular supplier, has its own picture in the catalogue. Take a break pad for car X by company Y, for example - you’ll see a picture of that particular pad. If there are five suppliers, then the catalogue has pictures of five pads for the same application. In general, the idea behind the catalogue is to provide as much information as possible to facilitate customers' proper selection of parts. In this context, an insightful analysis of returns is also very important, because it can help to correct all these data. Of course, returns result from the fact that a customer orders two parts because they don’t yet know which one will fit, and then returns the other one.

AF: Because mechanics are not always certain about the type of car they will be repairing- for example, the braking system it will have- as very often, the same car model comes with different braking systems.

KO: Or a mechanic hears a clatter but he is not sure whether it is coming from the tie rod end, the stabilizer bar or the control arm pin. So, just in case, he’ll order all these parts with the intention of returning the ones he will not use.

AF: This increases the logistics costs, but sometimes there is just no other choice.

KO: Precisely. All distributors try to limit returns somehow, because they are killing them economically. Issuing goods from the warehouse is relatively cheap, but when you have to accept a returned product, open a box, check it, enter it back into stock, the cost of the whole operation is gigantic. Unfortunately, some customers treat distributors as a rental company.

AF: Everyone complains about this practice, yet no one has managed to reduce it, mainly because of the fierce competition between the distributors, none of whom wants to take any serious action in this regard.

KO: Unfortunately. We have to admit that we are losing the war against returns. There are still far too many of them. Suffice it to say that returns from online sales on the German market are twice as low as the returns from garages in Poland, and the latter are certainly much more competent when it comes to part selection.

GK: By the way, how is that online channel developing? I remember interesting discussions about the future of e-commerce a few years back. The predictions varied, and so did attitudes toward these changes. Some companies decided that they were unavoidable and that all you could do was adapt to them. Other companies complained, somewhat along the lines of: “things used to be just fine,” or “who had a problem with it?”....

KO: Looking around Europe, we see that in some markets this form of sales is beginning to dominate. In Bulgaria, for example, 80% of parts are sold online. In Poland, that figure has not exceeded 50% in the case of parts for passenger cars. Garages usually place their orders by phone as follows: ‘I have such and such a car and I want you to choose the right parts for me.’ Of course, one could imagine a situation where the customer registers the vehicle in the system and selects a particular part from the list, for example the aforementioned brake pads, to choose from products by several suppliers. This solution could be used instead of placing orders by phone. When it comes to truck parts, orders are still placed mainly by phone, while only twenty-something percent of transactions are handled online. So, in this segment, the vendor helps to select parts and will probably continue to do so for a long time to come.

AF: It seems to me, on the other hand, that in your case this difference between Poland and Bulgaria is precisely due to tradition. Garage owners are often accustomed to dealing with vendors, whom they have often known for years. But when it comes to markets you have not penetrated before, you enter them equipped with an entire set of new tools and that's how you communicate. So, in other words, the customers there haven’t had the time to pick up those old-school habits in dealing with your employees.

KO: To know for sure, you'd probably have to conduct an in-depth sociological and psychological research, but my intuition is telling me that you are right.

AF: I wish you hadn’t been so quick to admit I was right, because I’ve now lost the chance to commission such research for my company (laughter).

GK: The fact that the Internet has become a popular sales channel has probably contributed to a fiercercompetition and the flattening of prices, as customers can compare different suppliers in terms of their products and prices in a matter of seconds.

KO: Of course, this leads to more fierce price competition, but it’s important to remember that price isn’t the only factor determining competitiveness. What also matters in this regard is the product range and availability, logistics and support tools. If you don’t have these, the price doesn’t really matter. Of course, you need to offer goods at market prices, but you can successfully sell them at a price slightly higher than the average market price. I think that it is the Polish market that is the most competitive in Europe, which is evidenced by how well the Polish distributors are doing in Germany. I suppose that by the end of this year, the combined revenue earned by all Polish companies in Germany will have amounted to several hundred million euros.

AF: Speaking of the support that distribution companies provide to garages, we should also mention the projects aimed at helping them to finance their equipment, for example the lease. Another interesting idea is providing assistance in buying replacement cars for customers.

KO: That’s true, but the most fundamental projects involve initiatives aimed at ensuring a continuous flow of technical expertise to garages. We recognized the need for such training a long time ago, as exemplified by our Show Car. I remember the discussions about this idea. Some argued that organizing them in this format was unnecessary since training could be conducted in a school. What’s the point of having this touring theatre, they questioned? However, it turned out that a mobile training room pulled by an American truck was the right approach.. The Show Car has generated significant interest among garages.

GK: By the way, let me ask you this, because it has always bothered me - where did you get such an exotic vehicle? It looks like Willie Nelson’s or some other Nashville celebrity’s tour truck.

KO: Sitting behind its steering wheel makes you want to sing “On the road again” (laughter). It is a true rarity, extremely difficult to find on European roads. And it has an interesting history to it. Originally requisitioned from a smuggler, the truck languished in the customs office parking lot for two years, broken and rusting away, until it was finally put up for sale. We took pity on it, though I must clarify that its original appearance was nothing like it is today. Despite acquiring it at a low cost, a major overhaul and a pimped-up makeover transformed it into a mobile advertisement for American pop culture. We affectionately named it ‘Beauty.”

AF: The idea seems to have worked well, with many companies following suit. Today, you even own several of these beautiful trucks today.

KO: Yes, it has been a smashing hit not only in Poland, but also abroad. The idea behind Show Car was very simple - we wanted the truck to go from one branch to another, where we would set up this "circus" of ours. I should add that a training room on wheels is not only visually attractive, but also very convenient and comfortable. It unfolds, inflates by itself and suddenly there is plenty of space inside. On top of that, all the necessary equipment is there, including TV screens.

AF: And who has performed on this stage of yours worthy of Dolly Parton? (Laughter)

KO: Mostly our suppliers, who have delegated their coaches. The truck would park by a garage for a week, hosting training sessions in various areas, including demonstrations with a training car. At the end of the week, typically on a Saturday, we organized an event for the garage staff. Here, they could grab a snack and a beer, creating a relaxed atmosphere. Additionally, we set up a special tent showcasing garage equipment, each item offered at a promotional price with delivery included. Once the show concluded, the truck would move on.

AF: I understand that suppliers highly valued these training sessions because they provided a direct line of communication with garage owners, their end customers. These sessions also offered invaluable feedback straight from the market. Another venue providing a similar opportunity for suppliers to engage with their end customers, albeit on a larger scale, is trade fairs. While other distributors have long organized such fairs, including local ones more recently, the most significant events have been those organized by you and Moto-Profil.

KO: Our fair was conceived first and foremost as a celebration of motoring meant for the garage staff. Let me stress, just in case anyone thinks I’m bragging about my own genius, that we borrowed the idea from ATR. German distribution companies organized their Hausmesse long before our events. We picked up their idea, only we modified it to fit our conditions.

GK: And what was the Polish version of that proven German trade fair idea?

KO: They held their fairs in conference rooms, but we opted for huge tents. This not only allowed us ample exhibition space but also provided room for various attractions, shows, contests- you name it. Attendees could engage in a sparring match with a boxing champion, arm-wrestle with an arm-wrestling champion, and more.

GK: I particularly remember a show organized by a big parts manufacturer. It was a body painting show featuring a female model of a truly statuesque physique. Dressed only in a working suit with the company logo painted on her body by an artist, she walked right across the venue, causing a great stir among the audience....

KO: Our fairs also offer plenty of attractions, both in terms of sport and art. There is always something interesting for everyone (laughter).

AF: Initially, your fairs were held in your warehouse in Czosnów. If I remember correctly, the very first fair was held at the warehouse to celebrate its opening.

KO: Precisely. A few years later, we decided that we needed something more ambitious, and so we changed the venue to the Bemowo airfield in Warsaw. There, the highlight was the Motor Show featuring amazing cars, top racing drivers demonstrating their skills on a track, as well as motorcycles and other stunts, many of them defying the laws of physics. There was also the Jet Car, a vehicle that is a complete defiance of common sense, powered by a jet engine. The driver, or rather the pilot of that crazy vehicle, would announce its take-off with a series of powerful thunders. This caused people to rush to the runway to witness the monstrosity reaching an absurdly high speed in just a few seconds, only to brake at the other end of the runway with the help of a parachute, akin to a fighter jet. Another awe-inspiring stunt involved motorcyclists riding inside a steel cage. At times, you could feel weak at the knees watching what they were doing.

AF: We probably won’t see these attractions in the foreseeable future, as the formula of the fair keeps changing and the event is being gradually decentralized. Instead of one big event, many smaller, local events are now being organized. Last year, on my way to Masuria, I saw billboards near the town of Pułtusk advertising a car show organized by one of the local companies. I immediately decided to go there and check it out. Well, it was a copy of your events, only on a mini scale. They had stalls, an outdoor display, food and a show featuring very original cars. I bumped into many friends there. One of them told me that on Saturday, when his family was still asleep, he sneaked out of the house to go to Pułtusk to attend the fair. Later, he had to explain himself as his family listened to his story with disbelief.

KO: Everything is changing and so are the ways in which companies operate. The industry professionals have always traditionally been interested mostly in the exhibition of garage equipment. There was even a special day set aside just for garage owners, who could take their time to examine the exhibits. Nowadays, new equipment is presented on the Internet, largely as a result of the pandemic.

AF: As you know, I’ve been using the Internet for the last 20 years, but I still prefer eye-to-eye meetings and conversations. However, I think that this virtual form probably suits the younger generation better, although I also hope that they find great joy in building personal relations.

KO: We have recently held a semi-virtual event in cooperation with beer producers who provided six-packs to the participants. As car mechanics meet up at each other’s homes from time to time, we figured that we could use that as an opportunity to organize an online garage equipment presentation for them. The branches themselves frequently held such meetings for customers, which was a bit like watching a soccer game together. These meetings also gave the brewers an opportunity to tell the participants about how different kinds of beer are brewed. I remember that during one of such meetings we learned that in an ancient brewery in Ireland a bit of goat poop is added to the mash, as a result of which the beer acquires special qualities during fermentation. Supposedly, this tradition dates back to the time of the Celtic druids (laughter).

AF: Let me go back to Internet technology for a moment. How is the idea of electronic garage booklets developing? As the garage chains developed, we came up with the idea that they could issue paper booklets to their customers, in which a car’s service history would be recorded, just like at authorized service centres. Today, both the authorized garages and the aftermarket entities offer digital booklets as a way of tying the customer to the garage and the garage to the distributor.

KO: We are considering the creation of a repair register, which would be a valuable tool for garages. During my time working in Germany, I observed that when a customer arrived for car repairs, the initial inquiry was about their recent visits to garages and the previous repairs conducted. The objective was to identify potential causes of the current car issues at the outset. After all, mishaps during repairs are not uncommon, such as forgetting to tighten a screw or unintentionally damaging components in the electrical system without immediate detection. With a repair register in place, we could promptly gain insights. For this system to function effectively, however, every garage would need online access to it

AF: So, such a digital service book available in a cloud would belong to the car owner, who would give access to it to the garage?

KO: Exactly. The book would also contain the VIN number, based on which individual parts would be searched for. Another benefit for the owner would be that a car with a transparent repair record like that would be easier to sell. We even came up with a working name for the register: National Repair Registry. Sounds serious.

AF: Such initiatives show that the independent garage market is capable of offering the same standard as authorized garages. Some independent garages, for example, connect with the customers online to show them what needs to be replaced and explain why. This form of contact with the car owner builds not only the reputation of the garage as a reliable company, but also allows it to expand its service range. Seeing with their own eyes the condition of particular components, the customer is more likely to agree to their replacement.

KO: Let’s now talk about what the dealer offers the customer? First of all, comprehensive care of the vehicle, which means not only full service, but also added values: for example, an inspection with each repair. If we, members of the independent aftermarket, want to take over the authorized garages’ customer, we must give them exactly the same offer. Car owners switch to independent garages after their warranty expires for three reasons. Reason number one is the lower prices. Secondly, distance becomes a factor, especially for those living outside big cities where reaching an authorized garage can be a considerable journey. Thirdly, the ability to communicate directly with the garage owner, is often impractical in authorized garages, where interaction is typically limited to the manager. Independent garages offer easier communication, often with the owner also serving as an advisor to the customer. However, it’s important to note that all services must still adhere to a correspondingly high standard.

GK: I’ve always been annoyed by how difficult it is to obtain even the approximate price of a repair from an independent garage. I’ve always heard: I don’t know, we have to see, check etc.

KO: A good idea for garage chains would be to introduce a price list of services - not just a universal one, but one tailored to each make of car and type of repair, so that the driver could enter the website of a garage and check the cost of replacement of, say, shock absorbers in their car. I see it this way: the customer registers their car in the app, providing the VIN for accurate vehicle identification, then selects a service from the menu, chooses a garage in a convenient location and enters the price list. The price must include not only the cost of the service, but also the price of the parts. If the customer accepts the price, they can immediately make an appointment with the chosen garage.

AF: But prices sometimes vary quite a bit. The same thing may have a different price depending on the garage. A shock absorber by one manufacturer may be more expensive than a shock absorber by another one, and then there is the discount that a garage gets from their distributor.

KO: This can be differentiated. Each garage has its own man-hour price and its own level of discounts it gets from the distributor. The price list would be dynamic, incorporating these parameters, while allowing garages to determine the cost of a man-hour at their discretion. would shape the price of a man- hour price at their discretion.

GK: Let’s change the topic. Years ago, when Inter Cars announced its entry into the truck segment, many voices were heard saying that IC’s chances of success were slim, because this market is completely different from the passenger car market. Many believed you would fail.

KO: Inter Cars is basically the only company that has managed to build an offer for cars, trucks, body parts and tires all under one roof. Many companies in Europe have tried to expand into the trucks market, but we happen to be the only one to have succeeded.

AF: Don’t exaggerate about that single roof of yours. When it comes to roofs, you have quite a few of them (laughter). The truck parts market is quite unique. The products there rotate more slowly than in the passenger segment, and warehouses must offer wide availability, because that's what customers expect. A transport company that has a vehicle breakdown can’t wait, because waiting means losses. But ensuring availability of parts requires distributors to commit sufficiently large resources, especially since truck parts are much more expensive than those for passenger vehicles.

KO: It’s like trying to square a circle, because if a distributor wants to ensure their availability, they should have as many branches as possible, and will take a lot of money to fill the shelves there. So combining one with the other is practically impossible. In Europe, historically the largest company in the truck parts segment was Europarts, but it has been dethroned by Inter Cars. Europarts lost its leading position after the owner left and sold his shares in the company. This shows how difficult successful succession in this industry is.

AF: But you have succeeded. I must admit that whenever I visited your company, I was filled with admiration when I saw your son, Maciek, working on an equal footing with everyone else. You could have told him, ‘Son, have fun, and when the time comes, I’ll send for you to make you the CEO.’ However, he went through all levels in the company. It was a great decision to have him do that.

KO: Let me tell you an anecdote from my student days. During a vacation, I worked in a hotel in Sweden with a group of young people from different countries. One of them was a guy from Malaysia. During one conversation, he mentioned that his father was very wealthy. His statement made us all laugh because a boy working as a dishwasher didn’t quite fit the stereotype of a rich man’s son. Jokingly, we asked him that he, as the heir to his father’s fortune, was doing working in a hotel. He explained that his father had sent him abroad to work and learn something. This revelation amused us even more because, after all, what could one possibly learn about washing dishes, right? With utmost seriousness, he clarified that he was learning while engaging in conversations with us, discovering all sorts of interesting things about the countries he didn’t know, including Poland.

AF: And you had Maciek work in a warehouse to learn things.

KO: Maciek’s first job as a warehouseman was still at home when I used to store car parts in our apartment. He managed the pan department located on a shelf in the hallway, which was easier for him to reach than for me. He already knew the specific dimensions \and competently selected the goods I asked for (laughter).

AF: It’s now clear why you started with pans and not, for example, mufflers. That shelf was really small! (Laughter)

KO: So, Maciek has been connected with the company from the beginning; he had colleagues at Inter Cars and didn’t start out like someone parachuted in. This is very important because our industry is full of examples where those who came from the outside led their companies to a disaster.

AF: That’s what happens when you derive your knowledge about the industry solely from Excel tables. I once heard an anecdote about a manager who was temporarily “thrown” into an automotive company. While reviewing sales data, he discovered a reference item stocked in only one branch on the eastern border, selling very well there, yet it was not in stock in other branches. It seemed obvious to him that all branches should have this hot commodity in stock in large numbers. That product turned out to be a V-belt for a Lada, purchased by only one customer who had come all the way from Ukraine for that particular product (laughter).

KO: As a rule, automotive companies managed by their owners tend to develop faster than other companies from the segment. The industry is very demanding and specific, so individuals from outside the sector often lacked the experience necessary to understand certain nuances. Ideas born out of experience gained in other industries didn’t work as effectively in this market segment.

GK: I have one more question about those truck parts. Where did you get your inspiration from? How has your company, so unique on the passenger parts market, become a tycoon in the truck parts segment?

KO: The inspiration for entering the truck market came from abroad. As mentioned earlier, I know many people in the industry from other countries, and I’ve often engaged in conversations with them, listening carefully, because there is always something to learn from others.

AF: You sound quite like that Malaysian guy you mentioned before. That is, there is a life wisdom to this anecdote. It’s important to talk, but it is equally important to listen to others.

KO: That’s right. During different international meetings, I spoke with Robert Lang, the number one distributor in the passenger segment in the Hungarian market, who had entered the truck segment before us. He came up with a nice and distinctive name for this business, namely Cargo. As I had been thinking about getting into the truck market for quite some time, I asked Robert for advice. He said that the key was to strictly separate the trucks and the passenger car segments. He claimed that if the same people who manage the passenger car segment were to build an offer for the truck segment, they might easily fail. Besides, it’s important to keep in mind that building the truck segment means, so to speak, “impoverishing” the passenger segment because money is taken from it to establish a business that may not work out. Many companies have attempted to enter the truck segment, but we are the only one which has succeeded.

KO: So I listened to Robert. The passenger car and truck divisions share logistics, accounting, and the customs department, but their sales have been completely separated. Michal Wisniewski, who built the truck segment, had his own team and a separate product management. One manager orders clutches for passenger cars and a different one for trucks, even if both parts come from the same manufacturer.

AF: You have even created separate branches, so to speak, intended solely for handling the truck market.

KO: The locations remained the same for logistics and cost-related reasons. Truck parts sales are handled by a separate manager who hires their own staff so the sales operations are separated. The distinction between the passenger car and the truck markets is further highlighted by the following story. Back in the 1990s, when we had just started out in the truck segment, one of the tycoons warned us that since we had trespassed his “backyard,” he was going to trespass ours. He did deliver on his threat but without any success.

AF: I assume that since he didn’t succeed, he backed out from the market just as quickly as he entered it (laughter).

AF: You have also succeeded in the tire segment, which once seemed to be the exclusive domain of specialized companies.

KO: I remember our discussion at a board meeting 10 years ago. I had a habit of analysing the performance of companies and market segments before those meetings, just to know what was going on around us. As far as tires are concerned, it was clear to everyone that there were many tire distributors, all of them selling their products just fine. There was only one little problem. Their margins were so low that they weren’t making much profit. Our management board was divided. Some of its members claimed that since there was no margin there, and, consequently, no profit, it made no sense to enter that market segment.

The other board members, including myself, recognized that with no profit in that area and the companies selling tires being monocultures, how long could they continue like that? In short, it became evident from the analysis results that tire distribution companies lacked the resources to grow. Simultaneously, tire manufacturers were hesitant to supply goods to companies with poor financial results because insurance companies would not insure such transactions. Therefore, I concluded that the segment was in such a dire situation that it was the right time to penetrate it.

Another finding of the market analysis pointed to the fact that in Poland, tire service was handled mainly by specialized tire garages, whereas we figured that a well-equipped garage also needs a balancer, because sometimes a wheel needs to be balanced to find the causes of its vibrations. So we began persuading garages to invest in assembly machines and broaden their services to include tire service. The costs of the whole operation were relatively small, and no special training was needed. Potential customers came on their own, so there was no need to invest in marketing. In short, we saw potential in that market segment.

AF: But not everyone thought you would succeed. Some predicted that you would have your fingers burnt.

KO: I remember a meeting with representatives of tire manufacturers at our trade fair in Bemowo, when we presented the idea to them. We said that we would sell tire changing equipment on favourable terms, so that garages could expand their service range. In short, I told them the same thing I’m telling you right now. The reaction was such that, in the end, no one asked any questions, there were no backstage conversations, and everyone left quietly.

AF: Let me use this metaphor: had the meeting been a theatre play, it would have been announced a total flop.

KO: Definitely! A few years later I had a conversation with one of the directors of a big tire company and mentioned that meeting to him, he smiled and said: “Krzysztof, after that meeting, we had a discussion in our closed circle about what you said then. But none of us believed in it. We considered it to be total bullshit.

AF: It turns out that you are an avant-garde artist, and such artists are not appreciated until many years after their work is presented to the public (laughter). Anyway, the independent garages have thus extended their offer to provide comprehensive car repairs and servicing. On the other hand, the tire companies responded to Inter Cars’ move by consolidating and extending their own services to include car repairs.

KO: Indeed. We should keep in mind, though, that while it is relatively easy for a garage to extend its offer to include tire service as all it has to do is buy a balancing machine and a fitting machine, it is extremely difficult for a tire service garage to add car repair and maintenance services to its offer as doing so requires a significant investment in equipment, people, training, and the profits do not come until much later. Such investment may turn out to be a financial suicide.

AF: I think we should also mention the so-called fast-fit garages, which used to offer tire replacement and a limited range of mechanical services while operating as large retail stores. Several international chains of these garages once tried their luck in Poland, but their concept failed.

KO: They failed because they offered a limited scope of services, whereas customers expect garages to provide a full service. Besides, why do customers choose independent garages? The main reasons were the price, followed by a convenient location, and an owner ready to provide professional advice. All that the fast-fit garages offered was a procedure, with hardly anyone to talk to. Consequently, they disappeared. Despite substantial investments, the transferred know-how didn’t catch on in Poland. transferred to Poland did not catch on, despite huge investments.

GK: Let’s talk about car body parts. You have entered that market segment too, although it is in many ways a very specific and therefore difficult segment.

KO: In the 1990s, there were quite a few companies that extended their offer or even specialized in these items. Car body elements don’t sell very well. However, original parts are often necessary for body repairs. On top of that, the market is full of parts from salvage cars, often of unknown origin.

AF: Well, and this segment is very specific in the sense that its operation is highly dependent on insurance issues. If there is damage, the insurer makes the necessary calculations, indicates the parts that are to be used for the repair, determines its cost, and so on. All this plays out in this peculiar triangle of conflicting interests. The insurer wants to insure the car as much money as possible and repair the damage as cheaply as possible. The customer would like to pay the lowest possible insurance premium and have the best possible repair made, and the garage would like to fit an expensive product with a high margin in order to earn as much as possible on the service provided. And on top of that, there is the distributor offering aftermarket components.

KO: All this is true, but when it comes to the aftermarket repair parts, the most significant comes from thermal elements: radiators, fans, and housings. More than 50 percent of these components are sold in garages because they are susceptible to mechanical damage, not only due to collisions but also very vulnerable to corrosion. Another product group are headlights, which are replaced not only due to collisions, but also due to damages caused by a pebble. These elements sell well too, even though they are expensive.

AF: The fact that there are practically only two companies left in the post-collision parts segment, although there used to be a lot of them, is the best indication of how difficult this market is.

The conflict
-of-interest triangle

GK: Let’s talk about the situation of garages in 2023 and the years to come.

KO: Small garages are bound to face more and more problems as the role of mechatronics in servicing modern vehicles increases. Without these competencies, it is impossible to repair complex systems. A small garage with two or three workstations simply does not have the opportunity to hire a mechatronics technician, because these specialists are scarce and therefore expensive. In short, small garages will not be able to provide full vehicle care and will have to refer their customers to their competitors. And those customers might not want to come back. In turn, full-service garages will be able to price their man-hours higher.

AF: So you can expect prices of services to vary even more.

KO: We have three levels here. Authorized garages have the highest price per man-hour. After the warranty period expires, car owners no longer have their cars serviced by those garages, primarily because of the cost, but also because they can usually find an independent garage closer to where they live. Larger independent garages have five or six stations each, so they are capable of handling air conditioning, mechatronics and tire replacement services. In addition, they offer tire storage and have a decent waiting room. So they offer a correspondingly high standard of service and take over the former customers of authorized garages. Unable to provide full service, the smallest garages can no longer cope with the costs and are slowly closing down. Some of them officially suspend their business operations for “tax optimization” purposes, but, in fact, they are simply moving into the shadow economy. In my opinion, this process will continue.

AF: Those smaller garages that are still trying to stay afloat often hire external specialists to handle advanced electrical, electronic or mechatronic repairs on the spot. But these repairs are all carried out only on a particular day of the week when such specialist is available.

KO: I believe there are two things that can help those garages survive. The first is the aforementioned “flying mechatronics technician,” who can be called in to perform a specific repair. The second is tool rental. A small garage may not be able to put together a sufficiently wide range of equipment, because the specialized repairs they are needed for are carried out too rarely for such garages to consider buying them. Tool rental could be a convenient solution in this case. But the major problem that the smallest garages have is training. If you have one employee and send him to training, the garage cannot operate. But then again, there is no future without training.

NOT AN EASY SUCCESSION

AF: MotoFocus’ survey of garages shows that in most Central European countries garage owners expect a decline in the number of garages, mostly the small ones. The reason for that is the limited access to technical data, which unfortunately they will not be able to afford.

GK: So, where will the customers of these small garages go once they all wither away? Will the larger garages be able to handle them?

KO: Undoubtedly, the larger garages are becoming increasingly efficient. Well-equipped garages with know-how, trained employees, and effectively arranged space have been using their time more and more efficiently. When managed by an agile owner, a garage like that will eventually experience a significant increase in the number of customers.

GK: Speaking of garage owners - how does the succession process work as far as garages are concerned? Frequently, the older generation is not particularly open to changes.

KO: Succession can be difficult in the case of smaller garages. Historically, a garage owner was a well-to-do entrepreneur and could afford to provide their children with education. However, the younger generation often prefers to pursue a different career, usually unrelated to motoring. If you’re a computer programmer earning good money, it’s unlikely that you’ll return, for example, from Portugal, where you’ve settled down and work remotely-spending your free time surfing in the ocean- to take over your father’s garage in a small town such as Pasłęk. That’s the reality of today.

AF: In addition, the general perception of garage work as being hard and dirty, is not conducive to succession. Most people imagine a garage worker as a guy in grease-covered clothes and dirt under his fingernails, although this stereotype is becoming increasingly removed from reality, and good garages are staffed by highly qualified engineering specialists. Undoubtedly, the entire automotive market must make an effort to change that perception because we do want young people to work in this profession.

KO: Is it even possible? I don’t know about you, but I see a change in the public attitude towards motoring. During the communist years, the topic of cars was brought up at practically every social or family gathering, with uncles having long disputes about the superiority of Fiat 125 over Wartburg or the other way around. A car mechanic was a profession of prestige. I have the impression that today people couldn’t care less about motoring, and the profession of a car mechanic is not perceived as attractive. After all, who wants to have their hands damaged and constantly dirty? So, it appears to me that no matter how much we encourage and persuade young people to choose this profession, the industry will permanently face a shortage of workforce.

GK: It’s a rather ominous prediction. What do you think should be done to improve the situation?

KO: We need to think of how to optimize work in garages to increase their productivity. This issue requires a thorough scientific analysis and practical conclusions to be applied to the daily operations of garages. While I was in France, I came across a very cool idea: f repair packages! It involves preventive replacement of those parts that happen to be available for some other repair and are cheap enough to be worth buying when, for example, a car is already on the lift anyway. This way, the customer is provided with a more complementary service and garages benefit from an increased number of customers. I think this idea is worth applying in Poland in the form of an extended service.

GK: Sounds interesting and is definitely customer-oriented.

But who will do it if car mechanics will be in short supply?

KO: That’s why it’s also necessary to optimize their work to make it as efficient as possible. The key issue in this context is the ergonomics of the so-called “dirty part” in an independent garage. A mechanic should not have to come out from under the car twenty times a day and run to the reception desk. So, we need to think about what to do so that parts can be ordered more efficiently, and the time spent identifying and selecting them reduced to a minimum.

AF: The problem with ergonomics in independent garages is that they were often built many years ago when no one even thought about it. Subsequently, they were expanded, and they are what they are today. In addition, optimization requires investment.

KO: You're right. Moving the driveway, the gate or the situation of the customer service office is not an option. We’re not talking about investments requiring tearing a garage down and building it again from scratch. But we can, for example, improve the communication between the mechanic repairing a car and the staff at the front desk, so that the mechanic doesn't waste time walking back and forth. This requires a small investment in, for example, voice communication. I sometimes see scenes like this in garages: a mechanic goes to the reception desk to report on what is wrong with a particular car, so that the reception desk can contact the customer about the scope of the repair and order the necessary parts. And since the reception desk employee happens to be serving some other customer, the mechanic has to wait. And time goes by.

AF: When it comes to the efficiency of car mechanics, the situation is much easier for authorized garages, whose services are limited to vehicles of a particular brand, and whose activities are highly repeatable. So they have all the special tools at hand and don’t have to worry about where to get, say, a camshaft locking tool for a certain model, whereas repairs of this kind happen very rarely in independent garages.

KO: Perhaps independent garages will focus on specific brands to make their tasks as repeatable as possible, at least in terms of servicing more complex systems, which would make the mechanics’ work more efficient. I believe that some of the garages will consider this possibility.

AF: It’s also worth mentioning that in the near future, garages will be confronted with increasing environmental requirements to which they will have to adapt. Regulations are constantly being tightened. But here’s where a problem arises. On the one hand, there are legally operating garages that have to incur high costs resulting from increasingly stringent requirements. On the other hand, there are the shadow economy garages that don’t care about the regulations nor incur any costs, resulting in unfair competition.

KO: Indeed, the ever-changing regulations and state-imposed requirements are a torment for garages. A large garage with an accountant on its payroll somehow manages to cope with this situation, but small garages are drowning in this regulatory thicket. The atmosphere surrounding the automotive industry is generally very unfavourable. Garages are, by definition, treated as part of the shadow economy, which will eventually force the smallest ones among them to indeed operate within it.