Managing the aftermarket parts supply chain is a challenging task. The industry has a complex set of challenges that includes the difficulty in storing, moving and tracking countless numbers of parts. Which is making it difficult to predict which inventories are required on hand.
European aftermarket primarily has 2 channels, the authorized and the independent. Authorized channel consists of vehicle manufacturers (VMs) along with their country organizations, dealer networks, and repair shops. While some of the independent players are authorized to service a single brand, majority still services multiple brands. Secondly, the independent channel largely consists of independent service providers. It also includes companies that collect, process and sell data.
The market is largely dominated by independent repair shops, which has more than 50% market share in countries like Poland, UK, France & Germany. The market is fragmented with intense competition and there doesn’t exist a clear winner. The intense competition has forced many of these players to consolidate and transform the situation in individual channels.
With the on-going changes happening inside the industry, it has become clear that the biggest change has occurred within the small fully independent shops, they are unaffiliated with the large franchises and they also lack the scale and resources to compete against large automotive centers. This development will drive the consolidation within the channel, the factors which are likely to fuel includes,
1) The need of a diagnostic tool – Since June 19, 2011, the automobile industry in Europe has been subject to EU Regulation 566/2011, which instructs manufacturers to release electronic data that enables the exact identification of replacement parts required for vehicles. In addition to this, the vehicular complexity is increasing with every year, electronic components are becoming more & more prevalent as diagnosing a problem requires more tools which are getting expensive as well.
2) Broad Changes in Maintenance Pattern – As a result of technical complexity and longevity of parts today’s cars require more complex and less frequent maintenance. Now, how can players realign themselves in the market to compete more efficiently?
- Transforming the Repair Business – More and more non-traditional players like, insurers, fleet operators and leasing companies are entering into special condition contracts or partnerships with selected repair shops. This is not only helping non-traditional players increase their revenue, but also increase business opportunities for repair shop partners.
- Crafting new service offerings – VM are offering specialized service packages, with the broad menu of items for new car owners and relatively limited selection for used vehicles. These packages usually combine warranty extensions, maintenance, financing and leasing services. The trend of service packaging can be considered as a growing trend, but it’s not as popular as it is in the new car segment.
- Expected Penetration of After Sales Telematics – Automotive experts and executives across Europe agree to the fact that trend of connected vehicles is penetrating at an increasing rate in the market. The most common use of technology in the aftermarket sector will be to perform remote diagnostics and maintenance functions. When we consider the case of maintenance, in fact, interactive maintenance, telematics will allow for continuous and remote diagnostic of operations.
- Digitization of channels and interfaces – It has become quite clear that Digital Channels are becoming increasingly important in determining customer’s purchase journeys, in both developed and developing countries. Consumer’s use online communities & reviews with an aim to improve their purchase decisions. This is going to prove extremely beneficial to the automotive aftermarket since connectivity and will help them get closer to the end consumer and open access to a huge repository of data. And day by day car is becoming a platform for applications and software, meaning, profit is highly likely to shift to tech giants and software makers.
- Operational Excellence with Digital – It can help the stake holders in the aftermarket to gain operational and cost efficiency by collecting data on parts inventory/warehousing and fleet operations digitally. Which can further help them gain a tactical advantage over their competitors to build solid leads, fine-tune their operations and in turn boost sales.
Although, recently the market size has returned to the level that it was in 2007, and the major players have remained fairly stable as far as the competition is concerned. The rising complexity of cars, growing role of nontraditional players, and the increase in online sales are transforming the aftermarket.
Gateway’s Auto – data accuracy platform (AutoDAP) enables precise identification of vehicles for 95% vehicle identification accuracy and 90% parts accuracy. Its modules offer:
– Accurate vehicle information
– Accuracy for vehicle parts mapping
– Reduction of cost due to reduced returns
– Relevant search infraction of seconds
AutoDAP is for aftermarket part suppliers to overcome such challenges and provide the right part for right vehicle at the right time. It reduces your auto part returns by 80% providing parts accuracy.
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