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The automotive aftermarket is undergoing dramatic changes with evolving customer expectations, acceleration of technological innovation, and shifts in competitive power. These changes reshape the way customers, automotive suppliers, and other aftermarket companies think of cars and driving and how business in the automotive aftermarket is conducted and value is created.
According to Global Market Insights Inc., the increasing average age of vehicles has led to an increase in the need for maintenance & repair services. The company estimates the market valuation of automotive aftermarket industry will cross US$1100 billion by 2026.
The sub-par standard of road infrastructure in some emerging economies, especially in the Asia Pacific, escalates the wear and tear in vehicles, leading to frequent maintenance and repair requirements, driving the automotive aftermarket towards a growth trajectory, explains Global Market Insights.
Meanwhile, the market research firm predicts that the automotive aftermarket from the OEM factory is projected to expand at over a 4% CAGR through 2026, driven by existing consumer confidence and trust toward automotive parts offered by OEMs.
Trends in automotive aftermarket
The transformation from conventional means to the digitization of service channels and interfaces is aiding growth opportunities for the sector's expansion. Modern tools, such as big data and data analytics, allow market participants to store and process vehicle usage data to increase the efficiency of the value chain. The data provides insights on specific vehicle details regarding potential service due date and time spent in workshop per vehicle to increase productivity and effectiveness.
Another emerging trend in the market is remote diagnostics. Remote diagnostics allows for real-time monitoring of parameters of an automobile to evaluate its quality of operations and performance in line with predetermined benchmarks. Additionally, more and more small-scale service providers and shop owners are coming into agreement with largescale fleet operators to procure additional contracts for repair and maintenance and are further anticipated to support the industry expansion.
Increasing stringency regarding vehicle safety in terms of regulation mandated by several countries across the globe is forcing vehicle manufacturers to incorporate new safety technologies & features such as ADAS in vehicles. The adoption of ADAS is expected to reduce road accidents significantly over the forecast timeframe. The rising autonomous vehicle trends are expected to limit the automotive aftermarket growth over the forecast timeframe.
The exhaust segment in automotive aftermarket replacement parts will witness around a 7% CAGR over the projected time frame. The exhaust system in an automobile is exposed to high temperatures as the hot air from a combustion engine exits through it. The component is also subject to replacement from high-end and enthusiast consumers to enhance vehicle outlet acoustics. Major components of the exhaust include engine downpipe, engine manifold, catalytic converter, tailpipe, and muffler.
Asia Pacific E-commerce automotive aftermarket
The Asia Pacific E-commerce automotive aftermarket which estimates the market valuation for APAC will cross US$ 34.46 billion by 2026, reports Global Market Insights. Shifting trend toward digital service-based business models will escalate the regional aftermarket demand. The market research firm says that educating customers by providing informative brochures and visual methods for replacement of products will fuel the demand for the e-commerce automotive aftermarket. Manufacturers are focusing on customer buying behavior (B2B/B2C) to cater to custom need. Superior product promotion and placement in the e-market are improving the internet traffic and conversion rate for auto products. In addition to this, providing customers with the information about the nearest store location, operating hours, product availability, and ability to purchase product on mobile application is the key factor surging industry share.
Third-party retailers’ segment will grow at a modest CAGR and hold around 95% demand share by 2026. Growth can be credited to bulk purchase of the product by auto workshops and independent service providers. The ease in product ordering owing to online development of the Request for Quotation (RFQ) and the availability of customer services will fuel the segment growth.
Increasing trend of automotive filters owing to their benefits, such as lower carbon emission and enhancement in the engine performance, will support industry growth. Filter replacement part will hold a revenue share of US$3.86 billion in 2026. Major components of the filter are oil filters, air intake filters, fuel filters, and cabin air filters.
Conclusion
New technologies and major shifts in the aftermarket industry will be game-changing factors that all players have to react to now in order to maintain strong positions in the future. In order to be successful in the new aftermarket game, automotive suppliers need to take action now. This starts with an assessment of the trends’ impact on their individual organization and defining the future strategy along ten strategic and operational core dimensions.
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