Global aftermarket growth and changing production
We are in the midst of the largest increase in global motor vehicle usage in history – not just vehicles currently in operation but also vehicles in production. Consider this: it took the automotive industry 110 years to reach 50 million units produced per year – but it will only take another 20 years to add the next 50 million.
This explosive growth of the global automotive industry was one of the subjects addressed by two of the automotive aftermarket industry’s top thought leaders at the Global Automotive Aftermarket Symposium (GAAS) in May. Bill Long, president and chief operating officer of the Automotive Aftermarket Suppliers Association (AASA), and Mark Seng, global aftermarket practice leader of IHS Automotive, shared their perspectives about growing global opportunities as part of their GAAS presentation, “What’s Driving Change Now? Top Trends and Aftermarket Shifts.”
Long noted that global growth is a significant driver in the industry today, as well as a notable strategic shift. “We are projecting that by the year 2020 there will be 1.5 billion motor vehicles around the globe. This historical boost in global motor vehicle usage spells lots of opportunity,” Long said. “OEMs are examining how they think about vehicle platforms and how they manufacture vehicles in order to keep pace with the growing global demand.”
As the OEMs pursue increasing global demand, they also are trying to contain costs, Seng said. “It is forcing OEMs to leverage global platforms more and more – but not developing more platforms, simply leveraging them more.”
In fact, the number of platforms will decrease, possibly declining by 32 percent over the next eight years, Seng said. “Ford is leading the way … nine out of the Big 12 OEMs are basically doubling their average per platform.” He noted, “By 2020, the Top 10 platforms will represent 30 percent of total global production,” compared to approximately 21 platforms in use today.
Global platforms will not be the only shift OEMs employ, Seng said. “OEMs also are moving to a new production technology and process – modular architecture.” OEMs are working toward standardizing the specifications of areas such as the engine compartment, front and rear underbodies, and the driver cockpit, he noted. “OEMs are looking to use more standard components across these global vehicles – more chance that vehicles around the world will use the same parts.”
This standardization ultimately will reach the automotive aftermarket where it will have a big impact for the aftermarket companies, Seng noted. Those aftermarket suppliers that can follow what the OEMs are doing and figure out areas where the parts may be the same may benefit, he said.
This trend may impact the long-standing issue of SKU proliferation and excess inventory, Long said. “Over the last 10 years, the aftermarket has seen a reduction in the number of unique part numbers added,” he said. “It appears that the number of SKUs will continue to fall even further, thus providing opportunity to address the growing level of inventories and decreasing inventory turns in our industry.”
A copy of the presentation, "What's Driving Change Now? Top Trends and Aftermarket Shifts," can be downloaded here.
Editor’s note: Curtis Draper is the vice president of industry analysis, programs and member services at the Automotive Aftermarket Suppliers Association (AASA) and executive director of AASA’s international aftermarket councils: the China Aftermarket Forum (CAF) and the Overseas Automotive Council (OAC). The CAF is a consortium of full-service suppliers that meet on a quarterly basis to discuss opportunities within the Chinese aftermarket and to identify ways to address challenges in the growing segment. For more details about CAF programs and initiatives, click here.
The 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 cars and trucks. OAC has more than 350 members in more than 40 countries. More information is available through its website, www.oac-intl.org.
AASA 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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