What is ahead for the automotive aftermarket?
During the Automotive Aftermarket Products Expo (AAPEX) in November, AASA President and COO Bill Long discussed future strategic shifts that hold opportunity for the aftermarket during the association’s annual media briefing.
These strategic shifts include telematics, new vehicle sales, miles driven, e-tailing and better partnerships, Long noted.
“Telematics isn’t a major trend yet, but it will be by 2020,” Long said. “While it has enormous potential to disrupt the aftermarket, telematics also provides a stronger connection to the end customer.”
That is an advantage for independent service providers and the aftermarket supply chain by enabling a platform to develop relationships with motorists, Long noted. It also offers the aftermarket the means of tapping into unperformed maintenance – which AASA estimates to represent a significant 27 percent of the total aftermarket potential.
New vehicle sales are forecasted to return to pre-economic downturn levels by 2014. Looked at in isolation, new car sales might be considered a headwind. Consumers’ increased willingness and ability to buy new vehicles – thanks in part to highly affordable and available credit – has likely contributed to the recent slowdown in the aftermarket.
“But, taking the ‘Long View,’ new vehicles sold will need repair and will become potential customers for the aftermarket,” Long explained. “These new vehicles will eventually be out of warranty and trickle into the aftermarket ‘sweet spot’ driving aftermarket growth.”
Miles driven have been holding the aftermarket back in recent years – considering the nation’s unemployment levels, it’s amazing that miles driven have not dropped further. “Over the longer term, the most likely outcome is substantial growth in miles driven,” Long said, “even if the pace of growth is slower than the amazing increase in automobility seen in the 1980s and 1990s.’
e-Tailing creates opportunities for the aftermarket if it is leveraged correctly. Currently, it is a small market and, on the high side, accounts for 5 percent of parts sales. However, aftermarket e-tailing is projected to grow 15 percent annually from 2012 to 2018.
“e-Tailing will impact all parts of the value chain,” Long said. “For full-service suppliers such as AASA members, it provides the opportunity to engage with customers, build brands and grow with winning channels.”
“The final aftermarket opportunity I’ll address is that of better partnerships across the value chain.” Long said. “The aftermarket is behind the curve on what is done by the best in consumer products (CPG). The need for partnership is greater than ever: end customers are becoming more demanding and the marketplace becoming more competitive than ever.”
Better value chain cooperation will unlock profits, Long stated. AASA addresses this topic in its latest report conducted with Booz & Company, “Value of Full Service Suppliers – A Necessary Conversation: The Benefits of a New Relationship Between Full-Service Suppliers and Channel Partners.”
“The study confirms that today’s supplier is under increasing pressure to provide services that may not add value to the entire supply chain,” he said. “We are encouraging suppliers and channel partners to engage in a new dialogue that creates real value.”
This is not a member-exclusive AASA Special Report. It is available for free download from the AASA website by clicking here.
“In the aftermarket industry, neither suppliers nor channel partners can afford to continue with the status quo. The revenue expansion and cost savings opportunities are too great to pass up,” Long concluded. “When compared to other industry best practices, there are billions of dollars of potential growth in the aftermarket profit pie. The good news is that the path to a better way is proven, known, and can work for the automotive aftermarket.”
OAC promotes the sale in foreign markets of automotive and heavy-duty products manufactured in North America. Those products include components, accessories, chemicals, hand and power tools, service maintenance and repair equipment, and paint and body supplies for both cars and trucks. OAC has more than 350 members in more than 40 countries. More information is available through its Web site, www.oac-intl.org.
AASA (www.aftermarketsuppliers.org) exclusively serves manufacturers of aftermarket components, tools and equipment, and related products. It is a recognized industry change agent – promoting a collaborative industry environment, providing a forum to address issues and serving as a valued resource for members.
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