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.

Related Articles

  • posturing and electricity 

    The automotive aftermarket can always use a boost, and there is nothing quite like a motor show to get anyone – everyone – to talk about our industry.
        
    Yes, there’s a world of difference between repairing vehicles and the spangly glitz of the super-rich posing beside the very latest in super-expensive automotive ‘art’. Yet, for every single billionaire there are quite literally tens of thousands of vehicle users.
        
    We have a new automotive industry-specific word – electrification. Not the type of thing that is used to power trains but rather the addition of a tail pipe emission free’ energy source to compliment or even replace the internal combustion engine. The context? The Geneva Motor Show. Indeed, at almost every motor show if one did not have electricity/global warming/ecology associated with each new vehicle reveal, it simply wasn’t news. To see the ‘on the spot’ news coverage from the show could have left us thinking that anything with a piston engine of any sort is utterly irrelevant. However that is not the case.

    Zero emission
    ‘Zero emissions’ has a very specific meaning when it is measuring what comes out of an exhaust pipe. If there is no exhaust pipe, or all it does is eject water, the vehicle is officially described as ‘zero emission’. Forget the fact that energy storage system raw materials are mined all over the world, processed all over the world, built into energy storage packs, fitted to vehicles which are  exported all over the world. Forget the energy used to make a single kWh. Even ‘free’ energy sources need machines to exploit it, which of course require energy to produce.     
        
    The automotive sector all over the world is under attack, and is vulnerable: It is a statement of fact, not a complaint. Some – not all – vehicle manufacturers have abused emission testing, to the point the general public don’t quite know who can be trusted. Governments all over the world see a significant opportunity to not merely fend off lobbyist pressure but actively court it, in the name of ‘saving the planet’.  Empty gestures and half formed policies abound.
        
    Rightly or wrongly, the automotive sector is in quite a fix. OEMs in Europe face from this year paying €95 for each gramme of CO2 for each car built over a fleet average limit (95 grammes of CO2 per km). This is not a one-off, but part of an international rolling vehicle emission reduction policy. More emission cuts will come, and well before 2030.
        
    As Governments complete this social engineering, new forms of user taxation will take place in the none too distant future to recover revenue lost from reduced direct sales of fossil fuels (petrol, diesel, LPG or LNG).

    Who wasn’t there?
    Just in case anyone missed it, even without Brexit the global economy is on the downward slope into recession. The automotive sales slump in China has triggered cutbacks in number of vehicle manufacturers, ranging from ‘let’s keep the lights on for now’ (Ford) through to ‘let’s take action to downsize in an orderly fashion’ (almost everyone else).
        
    In the case of Europe, conforming to the new WLPT emission test combined with the utterly chaotic roll-out of Real Driving Emissions (RDE) has caused vehicle supply issues and unwelcome additional costs due to the convulsion caused by
    re-homologating existing vehicles to the new test methods. As a result some manufacturers chose to spend limited promotion budgets in more effective ways. This meant paying for expensive stand space at a motor show was not a priority. As a result, JLR, Ford, Volvo and Hyundai were not present.
        
    So, our online friends pushed out countless stories about ‘electric’ and ‘lack of support’. In the moment. So, what really went on?

    Most significant
    Why is Volkswagen’s MQB Evo platform delayed? To make way for its MEB platform, as the Group spends its way out of trouble. However, this is where it gets interesting. MEB is engineered as an ‘electrified’ platform, ranging from pure EV through to hybrid drive and PHEV. The MQB Evo platform has a raft of hybrid drive technology ranging from 48V ‘mild’ to more potent hybrid powertrains. However, after the scandal of emission test rigging, along with a steady stream of further negative revelations, the upshot is ‘electricity’ has to eclipse all chat of fossil fuel burning powertrains, if only for PR.
        
    The Volkswagen brand had the ID.buggy concept, a pretty pointless homage to Beetle- based dune buggies, on view alongside previously shown I.D concepts. Politely, the I.D series lack definition which is surprising given they have been rolled out for quite a few years, leaving rather too much to the imagination. The same could be said of the Skoda Vizion iV concept, another MEB platform car.
        
    The star was the Seat el-Born, which had real cut lines, real doors, real trim. It mattered little that the model on display was as much a ‘model’ as the Volkswagen and Skoda versions, because this was real. Seat is used as the lead division for each of the smaller volume platforms, and
    el-Born latterly made history as the birth of a volume EV from VWG. A shot in the dark? Time will tell and the odds are stacked against success, but as a premieres go there are few as significant. The fuss? From MEB, MQB Evo to MLB Evo right across VWG, hybrid drive is going to appear like a rash by 2021 – and it’s already underway.
        
    Geneva is a showcase for smaller companies, many of which take expensive cars, add expensive procedures with the result looking like an aftermarket catalogue on drugs. Carbon fibre? Why yes, we’ll add that to a two tonne SUV and pretend it does anything but look pointlessly terrible. Yes, there’s still big money with no sense of taste.
        
    Rolls-Royce effectively had an exquisite line-up on the opposite side of the hall to parent BMW. They offer LEDs which can be implanted to the headliner to give a starry night from the comfort of the car interior. But what’s this? The BMW 8 series, a glorious car exactly and precisely produced at the absolutely wrong time, is available with headliner LEDs configured to the favourite constellation of the purchaser. BMW really should take care not to dilute its premier brand, nor boost sales to match Bentley with a probably ruinous effect on residuals. Luxury is not all about shifting metal.
        
    Meanwhile Aurus had the ‘large’ car on display as used by President Vladimir Putin (5.7 tonnes with armour) along with the ‘small’ car (2.7 tonnes without armour). So far, this project has cost more than £80 million, with a limited production of the ‘large’ car at 10 units and the ‘small’ car to be made in a limited series of around 500 units. In other words, handmade, almost every aspect uniquely engineered. An interesting discussion quickly demonstrated that Aurus have better connection to super luxury than some very old brands.
        
    This year we had not one but two land mark events. Peugeot revealed the new 208, which will underpin many more PSA vehicles including the next generation Vauxhall Corsa. This has a 50 kWh pure EV powertrain as well as internal combustion engine powertrains – PSA already meet the new fleet average CO2 target, to the point they can sell carbon credits to those manufacturers who can’t meet the target. What will be the highest volume selling powertrain – EV or internal combustion engine?
        
    The answer was to be found at Renault with the unveiling of Clio V, powered by petrol, diesel and a mild hybrid drive options. The pure EV role was filled by the Zoe. The immediate death of the petrol and diesel internal combustion engine has been somewhat exaggerated.
        
    Amid some fanfare, the EU have managed to get another trade deal in place, with Japan. This means Japan-based vehicle manufacturers no longer have to pay steep tariffs to get non-EU built vehicles inside Europe. The deal has an impact on the UK, which has the biggest concentration of Japan-headquartered vehicle manufacturing plants, but Brexit had almost no effect on the decisions. All of the UK based car plants need stable tax regimes and clear incentives to ensure continued investment, and the EU-Japan trade deal has made those pre-requisites irrelevant. The Honda Urban EV prototype was apparently near production quality, in the sense it was not at all. Another plastic model which did little to define the concept first seen more than two years ago.

    Geneva finds its feet
    In 2018 the show reached a low point, the prelude to termination, In 2019 it arose gloriously as a design-led event, where the Swiss fascination for automobiles mixed perfectly with staging the best design show anywhere in the world. Shifting metal in bulk is no longer its primary task. Oh, and yes, the internal combustion engine will continue to exist, and will continue to get cleaner. That, ladies and gentlemen, means adaption – and success – for the aftermarket instead of oblivion.  


  • Changes in tech and training covered by IAAF Industry Briefing 

    The impact of technology on the garage sector and the changing face of training were just some of the topics covered at the first Independent Automotive Aftermarket Federation (IAAF) Industry Briefing of 2019.

  • New appointments at Comline  

    Comline Auto Parts has strengthened its sales marketing and customer service provision to the aftermarket following two new appointments.

  • UFI Filters enhances UK offering 

  • MAHLE adds new references to filtration range  

    MAHLE Aftermarket has added more references to its growing filtration range, including three new fuel filters, four cabin filters, two oil filters and six air filters. The fifteen new part numbers cover applications from vehicle manufacturers including Audi, Mercedes, Hyundai, Kia, Citroën, Mitsubishi and Peugeot. MAHLE uses a wide range of filter mediums that feature its unique profile to ensure the media pleats cannot bond together and reduce the surface area, as well as benefiting from its exclusive hardening process preventing filter ‘collapse’. They also features the latest CareMetix technology.

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