Auto-motives: Looking ahead to stay ahead

key challenges, ambitions, and expectations for the aftermarket in the year ahead...

Published:  02 April, 2018

It would be tough to overstate the impact and importance of the automotive aftermarket. Its success not only contributes to the success of its parent industry, but it stimulates competition throughout the manufacturing, distribution and wholesale sectors.
As technology has improved, the aftermarket has only become more versatile and more attractive to customers. The growing trend towards custom vehicle modifications, environmentally friendly cars, and Internet of Things-enabled smart sensors have only contributed to the range and depth of opportunities available to businesses and their customers alike. But with new opportunities invariably come new challenges, and the automotive aftermarket must find its own way to tackle them.

To find out how the industry intends to handle the obstacles ahead, we surveyed 233 senior executives and managers within the supply chain, including automotive aftermarket professionals.

Entitled Manufacturing, Distribution and Wholesale in 2018 and Beyond, the report shed light on their motives, ambitions, and expectations for the year beyond – and the long-term future.

Acquiring (and keeping) customers
Customers, prospective and existing, remain an obvious focus for the aftermarket industry. Some 59% of those surveyed consider finding new business a principal challenge for 2018, and 79% expect to make it a top priority. But as important as acquisition is, aftermarket suppliers recognize the need to improve their existing customer relationships. Overall, 38% are having difficulty with up and cross selling to these customers, and accordingly, 71% are investing in their retention strategy.

Aftermarket businesses are acutely aware that there is a finite pool of customers, and that competition for them is as strong as ever. In 2018, boosting sales is a matter of gaining deeper insight into customers and their preferences: on the macro level (examining wider trends, market movements, and events), and on a micro level (figuring out what the individual customer wants).
Aided by technology, aftermarket sales and marketing teams can move from approaching customers in a passive, reactive fashion to a more proactive and pre-emptive approach – one that meets their needs before they’re even aware of them.

Skilling them softly
Skills shortages are nothing new. As demand for technology improves, the supply of technological talent becomes more coveted in turn.  Nonetheless, our survey reveals that skills shortages are just as much of a problem across other functions. Some 62% of our respondents reveal a shortage of talent in areas such as sales, and that 25% are struggling with underperforming sales teams. As a consequence, 65% of respondents are making hiring new salespeople their recruitment priority for 2018.

For the automotive aftermarket, it’s difficult to find successful, talented salespeople at the retail end, and for parts manufacturers and OEMs. Alongside a generous helping of charisma and industriousness (requirements for any serious salesperson), the role requires broad and deep knowledge of the products and services required, market movements and buying trends, and an understanding of relationships throughout the supply chain.

This complexity means that some 30% of companies are focusing on getting the best performance levels out of their existing employees as a top business priority for 2018. Technology will play an essential part in both boosting the operational effectiveness of automotive aftermarket staff, and in improving the hiring process and identifying potential employees.

According to Global Market Insights, the e-commerce automotive aftermarket is expected to reach a value of $30bn (£21.5bn) by 2025. There’s no doubt that B2B e-commerce is a growing trend and, fortunately, 70% of respondents see this move towards predominately online sales as an opportunity rather than a threat.
This confidence in the digital future is also visible in the adoption of other new technologies. The rise of automation and smart factories won’t necessarily cause as much disruption as expected. In fact, 61% of respondents think these innovations will provide significant benefits to efficiency and productivity. Almost all agree that investment in other areas of the digital technology landscape, such as big data analytics, IoT and cloud computing, is also critical to their future business success.
Nevertheless, some long-lasting issues persist. With more companies able to target the same pool of customers, commoditisation is becoming increasingly tricky to overcome. This problem is exacerbated by the trend towards discounting products and services to make quick and easy sales.

The world is yours (maybe)
In a globalised marketplace where products and services can often seem very similar, it’s easy to enter a race to the bottom, commoditising goods and services to the point where price is the only meaningful differentiating factor. In the world of automotive technology, imitation and innovation go hand in hand.

To get ahead, aftermarket businesses will therefore need to get clever about how they acquire and retain their customers. Differences in product offering will be important, and technological investment must remain paramount. Sales strategy – and investment in data-driven technology –  must be considered equally important. In 2018, aftermarket businesses can’t expect their products to sell themselves.

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