BMW April 2022

According to market research company Frost & Sullivan’s recent ‘Digital Business Models Mitigating Covid-19 Implications on Global Aftermarket Performance in 2020’ report, released in September, aftermarket revenue expanded by 4.1% in 2019.
This was largely driven by a 3.2% growth in vehicles in operation, with the contraction in global gross domestic product growth stifling consumer expenditure on new-vehicle sales.
For 2020, the market was initially forecast to grow at a healthy 4%. However, following muted consumer demand and supply-chain disruptions caused by the Covid-19 pandemic, it is now expected to contract between 4.9% and 11.6%.
New aftermarket demand pockets will rise from the need for customer safety and wellbeing, creating a $75-billion market opportunity for contactless delivery of parts and services by 2025. “The global automotive aftermarket is at a crossroads and has severely impacted stakeholders at all levels,” says Frost & Sullivan Automotive & Transportation research manager Anuj Monga.
Further, supply chain reorientation, financial aid to channel partners and the digitalisation of traditional business models and services can help mitigate some of the adverse effects of the pandemic.
He adds that an increased awareness of the significance of social distancing and enhanced personal hygiene is expected to drive service providers to adopt digitalisation of the aftermarket ecosystem as customers will prefer contactless provision of services at their preferred locations, thus diminishing footfalls at workshops. “A whole new segment of health and wellness in-car care is opening up and looks promising well beyond the immediate aftermath of the crisis.”
He points out that there is ample scope for turning adversity to advantage if appropriate investments are channelled towards the digitisation of existing business models.
E-retailing of parts and accessories, the uberisation of vehicle services on aggregator platforms, and on-demand services are expected to be bright spots in an otherwise dismal business environment.
The global aftermarket performance is expected to temporarily shrink post COVID-19. However, to mitigate risks, companies in this sector should take advantage of the growth opportunities by investing in e-commerce solutions for the e-retailing of replacement parts and accessories.
Aftermarket online retailing is forecast to grow between 15% and 17% in the next five years globally. He adds that the sector should create platforms for the digital retailing of vehicle service jobs, both for repair and maintenance requirements. The platforms would help extend visibility to out-of-warranty customers and soften the impact of reduced new vehicle sales.
The sector should also offer on-demand services such as fuel delivery, oil change, tyre services, maintenance, and cleaning. Such solutions work around customer apprehensions regarding workshop safety while offering the added convenience of ordering a vehicle service at the location of the client’s choice.
Additionally, developing products such as cabin air filters, in-vehicle sanitisers, driver personal protective equipment, and even solutions targeted at workshop sanitisation and technician safety. “Parts, accessories, and services related to the hygiene and in-car care of commuters are expected to generate $2.2-billion globally in the next four to five years,” he concludes.