Auto Service World
News   February 8, 2019   by Adam Malik

Five things that will change your business

New vehicle sales to slow, used market to grow – good news for the aftermarket but challenges await

For a deeper examination of the issues, read the full feature here.

The challenges are lining up for the automotive aftermarket. But if jobbers play the next few years correctly, they’ll be instead looking at any number of opportunities.

Research firm Frost & Sullivan recently released its Strategic Analysis of the Canadian Automotive Aftermarket, Forecast to 2025. In it, the company lays out five key takeaways for jobbers and service shops.

Vehicle sales

Canada saw a drop in new vehicle sales in 2018, the first time in about a decade. With sales expected to plateau over the next number of years, it’s the used vehicles market that is expected to grow instead.

Used sales are expected to grow 3.5 per cent to 2025, meaning more older cars needing servicing. That means there will be many more cars on the road that the aftermarket can bring through its doors.

Growth in OES market share

But not so fast. A growing older vehicle base and slowing new vehicle sales means the carmakers need to rethink their strategy.

Dealers are going to make a push to get those customers in their bays instead. The competition is going to be fierce, said Kumar Saha, Frost & Sullivan’s research director of global automotive aftersales.

“This is probably the single greatest threat to the independent aftermarket,” Saha warned. “With lower sales, they have to bank upon vehicle repair and maintenance, extended warranties and other types of products to really compete with the aftermarket.”

Value line products. Expanded brands. Read more about what the OEs will do to take business away from the independent aftermarket.

Maintenance parts

Driving growth in sales will come from maintenance parts like brakes, filters and batteries.

Others like fuel pumps and spark plugs are made much better these days and don’t fail nearly as often. But with the demand placed on batteries these days – think infotainment and large screens in vehicles – it’s a category that will be profitable.

“Batteries can die out if you’re using all those systems at the same time,” Saha said.

Market disruption

For now, forget about autonomous and electric vehicles. What jobbers and shops should be thinking about it telematics.

Dealers are already penetrating this area – falling behind now will only mean a bigger hill to climb later.

“When you combine it with their other efforts, the playing field becomes a little tilted towards the OEMs,” Saha said. “Getting themselves in the connected ecosystem is probably what the independent aftermarket needs to do going forward.”

Electronic retailing

Automotive e-retailing penetration is low right now. But it has seen massive growth in the last few years with Frost & Sullivan expecting it to grow 8.6 per cent to 2025. Saha expects penetration to hit double digits soon.

What should a jobber consider before selling online? Read the feature here

Because of how much online shopping is done by Canadians, jobbers should evaluate if or how they can complement their sales by selling online.

“Localized demand can’t be that well serviced by the likes of Amazon or eBay,” Saha said. “If you’re an urban or suburban jobber facing competition, you might want to dip your toes in selling via Amazon or eBay.”

For the full feature, click here