Quarter after quarter, year over year, the Automobile Aftermarket Parts Industry continues its climb to new sales heights.
Consumers now have the choice of a huge array of parts and accessories for every automobile produced in 2020. Varying degrees of price points and quality are in every type of product available, both online and in traditional brick and mortar establishments.
Worldwide, the Automotive Aftermarket Parts Industry is forecast to achieve $723 billion in sales by 2020. The US alone accounts for $296 billion. The industry includes both OE and aftermarket parts, equipment, service, and collision repair to name just a few.
No time in history has there been such a diverse and technologically advanced line-up of cars, trucks and commercial vehicles. Most manufacturers are doing their best to reduce carbon footprints.
New materials, advanced technologies, and e-commerce have captured the buying eye of every vehicle owner: each consumer wants better gas mileage, louder sounds, and shinier wheels.
Exciting trends for the Aftermarket Parts Industry are coming into focus.
Hybrids on the Rise
Technology improvements in propulsion mean more opportunities for the aftermarket. Even though gas engines remain in the lead, electric and diesel are gaining ground. The Aftermarket Industry must develop new injection systems and new breeds of turbochargers to reinforce these powerplants.
Cylinder deactivation, all-wheel-drive vehicles are showing marked sales improvement in the marketplace. Manufacturers are now using cylinder deactivation on all trim levels, not just the eight cylinders.
Intriguing technologies are coming from Delphi Technologies in their Dynamic Skip Fire On-Demand Cylinder Deactivation. Boria Exhausts has designed cat-back exhausts specifically for cylinder deactivation models.
- Gas and Hybrids represent 3.6% of all new vehicle registrations, with diesel at 2.9%. While other powerplant registrations have remained stagnant, hybrid registrations have increased by 64%.
E-Commerce has Changed the Automotive Aftermarket Landscape
The digital influence has transformed the way a consumer makes a purchase. Prospective aftermarket customers read everything possible, including reviews and videos. Year after year, consumers are besieged with online advertising, both on desktops and now their smartphones.
Wheel and tire websites are one of the fastest-growing segments in the industry. Wheel-Size.com is tailored to the shopper searching for the perfect fit of wheels or tires for their automobile. The site allows searching by tires, wheels, or vehicle type. Once the consumer has drilled down to specifics, the site routes them to a preferred retailer.
Service and information loaded websites are building customer-friendly environments throughout the industry.
Embracing Mobile Technology
The Aftermarket Industry is catching up to the rest of the world by using smartphone and e-commerce technologies. Automakers are using mobile technology to make driving and owning a vehicle easier. Most automakers provide owners manuals and other essential information on their smartphone for easy retrieval.
- 94% of consumers head to a manufacturers website first to get product information and specific details on warranty. 84% wants to check and see if the part fits their vehicle, and 57% of consumers want detailed installation instructions.
CARiD.com has taken the integration of online e-commerce and aftermarket parts shopping to standard. The site maintains a comprehensive selection of parts, both OEM and aftermarket, for a wide assortment of brands.
- In 2020 aftermarket e-commerce is expected to eclipse $12 billion in annual sales and over $19 billion by 2022. The online digital influence is projected to be 160 billion by 2022.
- Over $7 billion in Automotive Aftermarket Parts will come from mobile technologies in 2020.
Stats Source: Hedges Company
Average Age is Going Up
A positive trend for the aftermarket industry, the average age of vehicles continues to climb. Passenger cars and the light truck segment, average age stands at 11.3 years. The older vehicles become, the more parts it requires to remain on the road.
Positive signs for the industry say there has been a 14 percent increase in the age of automobiles for the past six years. A downside, manufacturers are producing a better product with less need for mechanics and parts.
The World is Getting Smaller
Globalization of the aftermarket auto parts industry has impacted every intersection of the globe. Companies wishing to succeed must discover alternatives to reach the global market.
Automakers are supporting modular architecture. Meaning, similar parts from various manufacturers can be applied in the same vehicle.
This standardization is particularly advantageous in automotive electronics and military vehicles. Generic Vehicle Architecture has several long-term benefits to the aftermarket industry. 1) Reduced time to implement and integrate innovative technologies. 2) Increased global competition 3) Reduced costs.
- 68% of consumers planning to make a parts purchase head to the manufacturer’s website first, even if they are planning to buy from a brick and mortar. 92% of enthusiasts perform multiple searches to locate the best price.
- Entrepreneurs seeking information for new websites have made auto parts SEO the third most popular search term for shoppers. Enthusiasts want detailed product information. Entrepreneurs should not ignore this powerful trend.
Balance of Power
Customer landscapes are evolving for the aftermarket industry. The balance of power is changing. Consumers are not heading to automakers websites to make a purchase, simply to find additional data.
Consolidation of online and brick and mortar is now the name of the game.
Technology has leveled the aftermarket playing field. Major players once considered untouchable, are finding themselves in a fierce battle for market share. 1) Niche markets: Only a few established online merchants are prospering under the new market paradigm. Customers are scouting for precisely what they need. 2) Location is not everything: Businesses no longer require a physical address; technology has eliminated the need. 3) Home solutions: Global supply chains exist for everyone who wants to set up a shop out of their garage.
- No other market segment will advance more from blockchain technology than aftermarket auto parts. Why? One of the fastest-growing areas of the world desperately needing auto parts is third world countries. Blockchain will revolutionize the security of money transfer.
Amazon & eBay: Leading the Way or Taking over?
In the enlightened world, if an individual has not heard the word Amazon, living under a rock is the least of your worries. No other entity on the planet has disrupted more industries than Amazon or eBay. Both online giants have aggressively pushed into auto parts. Major players have given up the ghost and moved entire platforms to Amazon.
Mechanics use online retailers for accessing third-party and OEM product information along with shopping the best price. The DIY (do-it-yourself) market is in decline, mainly to the complexity of modern vehicles. Shopping and buying trends are moving online.
Technologically advanced aftermarket companies are discovering their path to success by not challenging the titans. Instead, these firms use vast distribution channels, and the marketing clout Amazon and eBay provide.
The Aftermarket industry is the most data-driven in the world so it’s not surprising that it is embracing digital transformation. Smart vehicles collect information on every facet of your experience, from detailed driver data to routes, traffic patterns and the type of oil used in your car.
- In reality, little has changed in the overall scheme of the internal combustion engines and powertrains. Aftermarket parts suppliers have shifted tactics in recent times, however. Modern power control modules, PCM executes over 2000 procedures per second. Example: a GM PCM contains over 500 thousand lines of code and delivers 60 million calibration values per year.
- Assisted-driving technology systems are expected to save consumers upwards of one trillion dollars in the next few decades, and over 900,000 lives.
In the not too distant future, autonomous vehicles will become technological marvels. Vehicles capable of guiding themselves offer a future of unmatched safety and driver comfort. Aftermarket players are working frantically to make the future happen now.
Visionaries such as Elon Musk, predict autonomous vehicles will become commonplace, much in the same way elevators once were. In the beginning, elevators operated with the assist of a human inside the carriage. A few added electronics, and we have the comfort of modern elevators.
Car Buying; Not What it Used to Be
Stressed out car shoppers, dreading a trip to the dealer’s lot are becoming a thing of the past. A few years ago, the only information a consumer possessed, was a local newspaper ad and their negotiating skills. Consumers now can purchase a car, have it delivered, take your trade back to the dealer, without stepping foot on a dealer’s lot.
Finding the perfect floor mat, performance part, or your favorite team logo emblazoned on a trailer hitch has never been easier. Parts suppliers and producers are finding imaginative ways to add value-added benefits to their product. Websites show what that new set of wheels look like on your vehicle or the performance boost of switching brands of oil.
A glimpse into future technology. Audi has introduced virtual showrooms at every one of their dealerships.
Automotive Aftermarket Industry; Past & Future
Decades ago, automobiles, trucks, and commercial vehicles were simple systems with no computer. Buying a part meant heading to a dingy shop and greasy countertop. How times have changed.
Rather than an onerous task, buying a car or spotting that perfect performance part has developed into an exciting endeavor. The aftermarket industry is radically different thanks to an extensive array of emerging digital technologies.
Supply chains and improved manufacturing processes are delivering products to the market quicker with less overhead. The traditional paradigm of consolidated regional manufacturing has been supplanted with decentralized global production. Improvements in shipping and supply chains have taken the aftermarket parts industry to a global market.
- The Aftermarket Industry digitization has decreased defect rates and boosted production. Aftermarket manufacturing plants are rapidly becoming over 75% automated. Smart factories use AI and advanced algorithms to expand annual production rates by nearly 8.5%.