After an automobile has been sold to a consumer by the original equipment manufacturer (OEM), the automotive aftermarket is the secondary market of the automotive industry. It is concerned with manufacturing, remanufacturing, distribution, retailing, and installing all vehicle parts, chemicals, equipment, and accessories.
Factors leading to the significant transformation of the automotive aftermarket
The automobile aftermarket is about to undergo a significant transformation. Changes in competitive power, quicker adoption of new technology, and shifting customer expectations are a few of them. These changes will also profoundly alter how value is created and the business models used in the automotive aftermarket. The pace of consolidation will quicken in the developed economies of Europe and North America, and competition will come from unexpected competitors like digital natives looking to enter the automobile aftermarket. Whole new facets of consumer demand will emerge in developing economies, putting pressure on the aftermarket industry to adapt.
Key players anticipate significant investments in digitized component delivery sales and services and online portals that distribute aftermarket parts in coordination with international auto-part supplier groups. For instance, in the coming years, the demand for industry components will be driven by significant component suppliers like US Auto Parts Network, Inc. and CarParts.com. The online aftermarket enterprises arcade exhibits tremendous potential in emerging countries because of the trade gateways. Additionally, rising online sales of automobile parts are predicted to generate a sizable amount of market demand.
It is projected that the tire category will dominate the market in terms of size and be the largest segment in replacement parts. Due to tires’ shorter replacement cycle than their equivalents in other component categories, it is anticipated that this market segment will continue to dominate the industry. The aftermarket replacement part providers include different accessory, lubricant, tire, and component replacement suppliers.
Areas that can be worked upon while considering the automotive aftermarkets
OEMs must improve their customer-centricity, customer segmentation, and experience strategies to maintain market share and sales volume. Multichannel methods will also aid in defending the top line against competitors with digital genes. Another lever to be pushed is to turn attention to the aftermarket in emerging markets. OEMs must expand their focus beyond new-car sales and participate more actively in the established aftermarket as the share of older vehicles rises.
Workshops will need significant personnel, training, and equipment investments to gain the management skills necessary to handle the rising technological complexity of next-generation cars. On the customer-facing side, they should make investments to enable a genuinely digital customer journey and, concurrently, consider renovating their brick-and-mortar locations to reflect new customer care philosophy. Finally, workshops ought to consider how to distinguish themselves from rival networks.
The trend of strategic alliances and cooperation
The aftermarket service channel comprises participants like raw material suppliers, tier 1 distributors, manufacturing units for car exhaust hubs, and aftermarket units made up of jobbers and, eventually, repair shops. The key players in the service channel are repair centers. To acquire a competitive edge and take control of a sizable portion of the market, the industry is observing a trend of strategic alliances and cooperation between collision repair facilities and top auto insurance companies. For example, Utica Mutual Insurance Company, State Farm Mutual Automobile Insurance Company, and Progressive Casualty Insurance Company have agreements with licensed auto repair shops in every state in the United States.
Several trends will significantly change the future landscape of the automotive aftermarket industry. The time has come for all value-chain participants to act to influence the industry’s future direction, maintain their competitiveness, and possibly even expand into new profit margins.