The future of aftersales – “connected” but not in the way you might think

We are in the final editing stages of our “Aftermarket of Tomorrow” report which is the stage when you have to think about the “so what” after pulling together all the data and analysis.  What are the implications of all the changes we see ahead of us for the many different types of players involved in producing and distributing parts, and servicing and repairing cars?  What should the distributors, workshops and bodyshops be planning for in the decade ahead?

The pressures on the aftermarket are well known and extensively covered in ICDP research.  Due to changes in usage and technology the number of operations in repair and maintenance (R&M) and crash repair will reduce to 2030 in most markets.  Within this, the mix of work will change as BEV penetration increases, affecting R&M, particularly through the elimination of oil revenue and profit, and the level of heavy repairs in bodyshops reduces to the effects of Advanced Driver Assistance Systems (ADAS).  More sophisticated vehicle technology will affect all types of operations with even simple anti-roll bars that were bits of bent metal with  a couple bushes being replaced by a complex active system requiring a separate 48 volt electrical supply round the vehicle and its own control module to adjust the stiffness of the bar.

Changes in new car buying behavior will force changes in franchised dealer networks, with a reduction in the number of traditional sales/service/spares points, regardless of the direction chosen for the ownership and commercial relationships of the points that are retained.  Without further actions, this would inevitably lead to a loss of retention in the franchised system, so manufacturers and their dealer partners need to find solutions which provide aftersales coverage without the related overheads of glitzy showrooms attached.  Continuing growth of private leasing in any form will increase the proportion of cars that are part of managed fleets, at least for R&M, and in some cases also for insurance.  This means that the bill-payer for work is not the car driver but a third party – the manufacturer or a leasing company, and their priorities will be different to those of the private motorist.

Increasing technology will also drive reducing capacity for both R&M and crash repair.  We already see investors pushing back against the investments required in technology and training to handle BEVs and systems calibration.  Although the business case will improve as BEV penetration in the parc improves, that will happen over a period of years, and for Authorised Repairers and Approved Bodyshops who may already be questioning their future due to low returns or lack of succession, this additional investment need will be the trigger that causes them to sell or shutdown the business completely.  That maybe good news for those who stay in the business, but it will still result in less choice and poorer geographical coverage.

We therefore see the future of aftersales as depending on more connections – not in the sense of connected cars (although that will happen and have its own impact) – but in terms of more connections and relationships between parties who traditionally have seen themselves as competitors.  Simple jobs may be performed by one provider, whilst more complex work is directed to better resourced, larger or specialist providers.  Original parts and private label parts may be delivered through the same channels as the distinction between authorized and independent repairers becomes less distinct.  Customers, whether individuals, fleet operators or insurers, will use a range of providers to meet their needs, but managed in a way that makes their experience seamless.

We will expand on these in the forthcoming report, and look forward to debating them with our members.