How might the Independent Aftermarket ‘ecosystem’ evolve?

ICDP

Publication Number: Management Briefing 149

Author: Rene Herrmann

Date: January 24, 2019

Tags: Aftersales, Channel strategy

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The aftersales strategies implemented by a number of OEMs might finally be showing signs that they could succeed in capturing a greater market share of the available repair and maintenance business.  The recent strength of the new car market in many European countries has fed a more stable supply of younger cars into the aftermarket, with their owners likely to remain loyal to main dealer or authorised repairer (AR) workshops (collectively termed FWS, or franchised workshops), at least whilst the car is still under warranty.  This effect has been reinforced by the broader implementation of loyalty tools such as inclusive service plans, menu-priced service, and extended warranties.  In addition, we see further benefits to FWS retention from both electric vehicles (EV) and connected car technologies.  

However, even though these retention effects are likely to remain in place over the coming years, this will happen against a backdrop of a continued decline in aftermarket volumes, as confirmed by ICDP’s aftermarket simulation model.  Overall, we forecast a market share decline of between 3% and 7% for the independent aftermarket (IAM) between now and 2024 in the big 5 European markets (France, Germany, Italy, Spain, UK).

So, it looks like their strategies might finally pay off for the OEM-franchised sector, and that IAM operators will be pushed back.  This development could accelerate if the independent repairers (IRs) cannot keep up with a variety of looming operational challenges, including access to technical information, fault diagnosis, parts identification, and skills requirements for new technologies.  In the future, it looks like there will be a risk that IAM operators will struggle to preserve their market share unless they are able to evolve in response to these pressures.

This management briefing focuses on how the IAM sector is responding to the ongoing pressures coming from the changing aftermarket.  Will its response be sufficient to safeguard its future survival?  

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