The ‘mega trend’ taking place in the aftermarket

Image credit: Depositphotos.com

The automotive aftermarket’s footprint is changing in a way that one industry expert is calling a “mega trend.”

Speaking during a quarterly call with the media, Automotive Aftermarket Suppliers Association president and chief executive officer Paul McCarthy noted the shift of reshoring, nearshoring and friend-shoring is happening out of sight. “It’s one that may not grab the headlines, but it’s this massive shift that is happening behind the scenes.”

Reshoring means bringing production and manufacturing back to the company’s home country. Nearshoring brings that process to a location near the home country (i.e. a Canadian company moves manufacturing to Mexico). Friend-shoring is when a group of countries encourage companies to develop manufacturing among them.

Moving in this direction was already in the works in the aftermarket — the challenges brought on by COVID-19 accelerated things.

“That’s come to be, and it’s going to be even faster than we expected,” McCarthy said during a quarterly call with the media.

It’s all part of the idea to make the industry more resilient and build greater resilience in the supply chain so that it’s not so badly interrupted during a global crisis.

“So finding that diversification so that we are healthy … because the one thing we know is that there’s a lot of uncertainty and volatility in our world, particularly geopolitically, which affects trade, and footprints,” McCarthy explained. “And that is likely to continue and be a reality of our world over the next generation.”

This isn’t an easy shift. For decades, companies have been moving more resources overseas. Now they’re trying to un-ring that bell.

“It takes a tremendous amount of time, tremendous amount of research and a tremendous amount of capital,” McCarthy observed. “This is a very expensive and time-consuming issue. It takes a lot of attention from suppliers. It takes a lot of investment from suppliers.”

Suppliers have heard feedback from customers about strengthening the supply chain. Naturally, he has faith in the industry finding success.

“I will say, I think the typical entrepreneurial aftermarket is doing a pretty impressive job of finding what is the most competitive, most resilient footprint for the future and starting to move toward that reality,” McCarthy said. “But it’s certainly not flipping a switch.”