Automotive Aftermarket and Shift in Business Model
The automotive industry is getting transformed with respect to the Autonomous, Connected, Electric and Shared Mobility (ACES) business model. As the primary market is changing from internal combustion engine to electric vehicle with respect to autonomous, connected, electric technologies, the aftermarket is also not very behind. In response, the automotive market and independent aftermarket is also witnessing transformative change. The current parc size of the vehicle is aging and the service interval is getting bigger. On the other hand, the vehicles are getting much more complex which also has the implication with respect to its repair and service.
The opportunities present by the connected vehicle are changing day by day, it is presenting the new way to engage with the customers and their vehicles. Based on the vehicle usage, automakers and suppliers both are keen to understand the performance of the vehicle. Electric vehicles are gaining traction as it reduces the vehicle parts and also changes the way the supply chain used to operate. Furthermore, the increase in vehicle complexity and introduction of advanced technology such as advanced driver assistance system is also increasing the skills gap mainly in the aftermarket segment.
Customers are demanding for greater comfort and convenience. They expect for the end to end seamless journey, demand for the personalized offering, need finance options to be implemented in the service and repair section. Thus with respect to the customer and technology standpoint, the aftermarket will witness the transformation.
The parts of the automotive value chain will change once the aftermarket starts to transform. The manufacturing segment is being disrupted by direct e retail stores and 3D printing. The new manufacturing technique helps to witness the reduction in production cost. In the distribution arena, new processes are emerging and the business models are changing with services such as Click and Fit/Click and Collect. With service aggregators coming into the picture, the parts delivery service will also change. The automotive aftermarket will witness new players entering the market whereas the conventional players will start offering digital solutions.
Automo expects that e-commerce will witness incredible growth in the future. Companies who are not ready to respond to the new trends will face a lot of hurdles in growing their business revenue. The participants need to identify a new channel and ways to get the services and parts delivered to the end user within the promised time.
E-Commerce companies such as Amazon and eBay will focus on end to end vehicle solutions. They will be witnessed as strong competitors in the distribution space of the automotive sector. These companies are also positioning themselves as service aggregators and building the ecosystem to provide timely and efficient services. Furthermore, the service strategy will drive the business in the future; as service helps to drive the upstream parts business, this will also help the service aggregators to reach vehicle owners.
Now shifting from the holistic view, the automakers are shifting from one-time sales business model to creating valuable business model i.e. creating value for the entire life cycle of the vehicle. This trend can be witnessed from the increase in revenue for the automakers from financial services, mobility services, vehicle services domain. The market sustainability will be ensured with the help of value creation business model.
John Doe
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