Aftermarket – signs of change?

The aftermarket is inherently slow to change – analogies with the time it takes for a supertanker to change course are common.  This is to some extent inevitable – the need for repair and maintenance of all types is driven by the number and mix of vehicles on the roads, how far they drive each year, the engineering of the product itself and the service recommendations made by the manufacturer at the time it was produced.

This year, ICDP will update its projection of the size of the aftermarket for repair and maintenance and crash repair at 2030.  There will be some changes for sure, but the largest will probably relate to the lasting effect of depressed car sales due to Covid, three million cars across Europe that have been lost to the aftermarket forever, the pace of electrification and improved knowledge on the effect of advanced driver assistance systems (ADAS) on the volume and severity of crashes.  But whilst the trends affecting the size of the aftermarket have only a gradual effect (putting to one side the disruptive effects of lockdowns last year), there are shorter term opportunities to influence how that work is divided amongst the different players, and there have been a few recent examples of that.

In the light of changing demands for dense dealer sales networks, we have advocated for some years that service coverage needs to be maintained through standalone service points, and that whilst these could operate as satellites of hub dealers, they could also be covered by collaboration with good quality independent repairers.  If fixed cost has been removed from the dealer network, the need to use service as a means of cross-subsidising sales has been reduced, and if cars are leased or sold with a service plan, the manufacturer can dictate that OE parts are still used, so the parts revenue and profit is maintained, even if the labour is now going to an independent.  With the opportunity to take a ‘clean slate’ approach, the new Chinese electric car manufacturer Aiways, has taken this route by appointing independent repairer partners to provide aftersales coverage in France.  Volumes here are low, but the principle of taking new cars to independent repairers is not – it has been the preferred option for a number of big leasing companies in several European markets, at least for volume brands, and has not caused them issues with their clients regarding the customer experience.

Another ‘déjà vu’ experience is the rediscovery of ways of providing a more convenient (and in today’s world, more Covid-safe) approach for customers to have their cars serviced.  Mobile service vans have been common in heavy commercial vehicle and off-highway use for decades, and there has been limited use in the car sector for years, particularly for tyre fitting.  This is another effective way of covering gaps created by the closure of traditional sales and service dealer points without the need for high fixed costs.  Improved product reliability and on-board diagnostics combined with telematics mean that the likelihood of finding unexpected work on a mobile service visit are reducing, and it is clearly the most convenient solution for the customer.  Mobile service units are a growing part of the Tesla aftersales solution, but BYmyCAR, the second largest French dealer group has announced that they are launching a fleet of 18 mobile workshops to carry out services at the customer’s home or place of work.  Combined with over-the-air updates on a growing proportion of vehicles in the future, this approach will enhance retention without the need for a visit to a physical repairer.  However, for those customers for whom this is still a preferred option, BYmyCAR also announced the launch at 53 of their sites of secure lockers allowing customers to drop off their cars at any time, and if required collect keys for a courtesy car from the same locker.  Combined with enhanced online features for viewing condition reports and approving work, such as those that we have shown in the past from CitNow, this would surely be another strong reason for a customer to favour one repairer over another?

In a final example of focusing on customer convenience as a business development and retention lever, the Lueg group in Germany has launched home visits to assess collision damage and provide a ‘no obligation’ quotation.  Although some insurers are encouraging their clients to do their own assessments, uploading photographs of the damaged area, there is always the risk that hidden damage – such as to crash structures behind the bumper skin – is missed.  With the Lueg solution, the assessor is able to prepare a quotation through a tablet and the customer can authorise and book in the repair immediately if they want to proceed.

What these examples and others like them show, is that whilst the aftermarket as a whole may only evolve gradually due to parc effects, there are many opportunities for nimbler and more imaginative players in the market to protect and grow their share of the market.  Anyone who treats their aftersales business as the cash cow that will keep on delivering in the same way that it has always done may be in for a rude shock.