The pandemic and consequences of Brexit have significantly affected the entire automotive aftermarket but savvy workshops can use record-low new vehicle registrations and their ability to adapt more quickly to their advantage when dealers focus their attention on aftermarket servicing and repairs.
The Independent Automotive Aftermarket Federation (IAAF) urged the entire industry to gear up for change in its virtual conference at the end of 2021, as it presented the opportunities and challenges the trade is set to face and a panel of experts provided advice on how parts suppliers, service providers and workshops can futureproof businesses in the years to come.
Here, we look at how Quentin Le Hetet from market analysts GIPA set the future landscape for the aftermarket after analysing key data and trends that will affect the industry in the short and longer term.
Decimated new car registrations – play to your strengths…
He stressed that first and foremost, the car sales dynamic is having a significant impact: “The car parc is not growing as it should be and is not being renewed as it should be”. The impact of (poor) new car sales is an aging car parc, which gives the independent aftermarket an advantage – the number of cars aged 0-3 years, which typically end up at the dealers, is shrinking – a car’s average age has increased to over 14 years in the UK, presenting an opportunity for independent workshops to take on more technical and profitable jobs as major parts deteriorate and require replacement. Quentin stated in the UK, with a strong emphasis on the word ‘currently’, that many franchise dealers are not geared, and do not have the right strategy in place, to attract work on cars within the 5-9 years old segment. It follows that vehicle manufacturers suffering from poor vehicles sales will want to claw some of this aftersales work back.
VMs gang together – promote your independent status…
One major shift in recent years to extend the VMs influence and consumer reach is the consolidation of vehicle manufacturers. The PSA and FCA group merged in 2021 forming the Stellantis Group – the world’s 4th largest car manufacturer incorporating 18 vehicle brands, representing over 20% of the UK car parc. “Consolidated together, their power is much bigger. This is very important to have in mind because they will use this to invest in the independent aftermarket in the UK. The Volkswagen Group’s aftermarket strategy involves increasing parts sales to the independent workshop, using its TPS factor network to supply genuine parts via its 100+ branches.
The Stellantis group have Distrigo providing genuine parts, Tier 1 OE manufacturers and aftermarket all-makes Euro repar brand. “On top of this, they are developing a garage network Euro Repar Service, aiming to service all makes using their Distrigo distribution.”
The rise of electric vehicles & subscription models – prepare for fleet work…
“The disruption of the market is coming from plug-in hybrid and battery electric vehicles, which are really going to make a huge difference to the workshop”. Quentin uses the term disruption because of the change in ratio between labour and parts turnover when repairing Battery Electric Vehicles compared to ICE vehicles, around 65% labour, 35% parts with BEVs. As parts revenue decreases, VMs are adapting their business models. Quentin states that it is still too early to understand the disruption entirely but VMs, such as Volvo, are testing the water with vehicle subscription models, which obviously tie motorists into the dealer network. “I think more and more, independent garages need to think more about fleets, consolidation of the car parc owned by companies… Fleet managers want to stretch their assets to the minimum running cost… Garages will need to adapt and have a commercial discussion directly with them because there’s going to be much more of this in the future.”
The importance of training and preparing to take on EV repairs and maintenance was stressed. “We are still relatively far from the mass adoption of Electric Vehicles so there is still time to get ready, but I think it’s good not to leave it until the last minute. We are already seeing more and more independent workshops seeing electric vehicles… it is very important to be aware of all these trends, to have a plan to be ready for all these vehicles.”