The Coming Global Aftermarket Boom
 

The Coming Global Aftermarket Boom

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The Coming Global Aftermarket Boom The Coming Global Aftermarket Boom Presentation Transcript

  • The Coming Global Aftermarket Boom TOTAL VEHICLE POPULATION TO GROW 30 PERCENT BY 2020 Stephen Spivey, Program Leader Automotive & Transportation April 9, 2013© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • Today’s Presenter Stephen Spivey, Program Leader Frost & Sullivan• Fifteen years of combined experience in growth consulting, market research, journalism and consultative sales.• Focused expertise in: -- Market Sizing and Forecasting -- Market Entry and Strategy Development -- Competitive Analysis• Industry experience in: -- Automotive Industry and Automotive Aftermarket -- Public Transportation and Logistics -- News Media 2
  • Focus PointsGlobal Light Vehicles in OperationGDP per CapitaMotor Vehicles per 1,000 PeopleTop Global TrendsTop 20 PartsDistribution StructureMarket Size PotentialGlobal Hot SpotsConclusions and Future Outlook 3
  • Briefly Discuss Occasion for the Analyst Briefing• Total light vehicles in operation worldwide (passenger cars and light trucks) to increase by 30 percent by 2020• This will generate increased global demand for aftermarket parts and service to meet the maintenance and repair needs of so many more vehicles• However, in regions forecasted to have the highest vehicle population growth, there are often few parts and service options for vehicle owners.• The landscape suggests there are emerging growth opportunities across the aftermarket value chain in many parts of the world. 4
  • Global Light Vehicles in Operation Growth in the overall vehicle population will drive demand for parts and service across the world, but particularly in China and throughout Asia. VIO: VIO: 1.02 billion 1.32 billion Others 144.7 Others 116.9 Asia Asia 250.0 427.5 Eastern Europe Eastern 96.1 Europe 118.4 Western Europe Western 211.5 Europe 228.2 South South America America 55.7 83.9 North North America America 286.0 321.9 2012 2020NOTE: Asia includes: China, India, Indonesia, Japan, Korea, Malaysia, Philippines, Taiwan, Thailand, New ZealandEastern Europe includes: Bulgaria, Bosnia, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia,Slovakia, Slovenia, Turkey, UkraineNorth America includes: United States, Canada, Mexico,South America includes: Argentina, Brazil,Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, UK NOTE: All figures are rounded; the base year is 2012 Source: LMC Forecasting / Frost & Sullivan 5
  • GDP per CapitaGDP per Capita has more than quadrupled in Brazil, China and Russia and has more than doubled in manyother countries over the past 10 years, giving hundreds of millions more people the chance to own vehicles. Source: World Bank 6
  • Motor Vehicles per 1,000 PeopleIn China, the number of vehicles per 1,000 people has jumped from 15 to 58 between 2003 and 2010, withsmaller increases in the other emerging countries. 900 Motor Vehicles per 1,000 People 796 797 800 695 700 644 607 582 600 537 500 400 357 300 275 271 209 203 202 184 200 164 165 135 127 100 58 15 12 18 0 2003 2004 2005 2006 2007 2008 2009 2010 Source: World Bank and Frost & Sullivan analysis 7
  • Key Regional Market – Emerging Economies (BRIC Vs. N5):Unit Sales (Million) 8.0% 2.5% 6.0% 6.0% 6.0% (12.0%) (5.0%) 5.0% 0.5%• China: The continuing economic growth is expected to push the market by another 8% to reach the 20 Million mark in 2013. SUV. Pickup and premium vehicles will continue to be the buzz word for the Chinese market. Low vehicle penetration, increasing income levels and urbanization will continue to push the market for vehicles.• Economic growth of about 3.5% owing to the infrastructure developments for FIFA World Cup in 2014, slash in interest rates and local production of Brazil specific models will maintain the YoY growth in Brazil for 2013.• Replacement market and high customer confidence to push the Russian Light Vehicle market to join the 3 Million club in 2013. Budget cars and premium model will continue to drive the market.• Rising inflation is one of the key reason to slow down the growth rate in the Indian market for vehicles. Source: LMC forecasting, Frost & Sullivan analysis. 8
  • Vehicles in Operation by Geographic Region Based on current trends, Asia will be home to one in three personal-use vehicles by 2020, while more mature regions will see their share of total cars and light trucks decline.Automotive Aftermarket: Vehicles in Operation by Automotive Aftermarket: Vehicles in Operation by Region, Global, 2012 Region, Global, 2020 Rest of Rest of World World 11.5% 10.9% U.S./Canada U.S./Canada U.S./Canada 22.4% 26.1% LATAM Asia 24.6% Western Europe Asia LATAM Eastern Europe 32.3% 8.2% LATAM 7.5% Asia Rest of World Western Eastern Western Europe Europe Europe Eastern 17.2% 9.5% Europe 20.8% 8.9% Source: Frost & Sullivan analysis. 9
  • Top Global TrendsThe global aftermarket is ripe with opportunity, but there are also challenges to address, such as the lack ofskilled labor and changes in the mix of vehicles that will require parts and service. Increasing vehicles Increased electronic content in operation 10 9 Strategic sourcing New, complex component technologies 8 Trade barriers Need for technician training, skilled labor 7 Shift in vehicle segment mix Changing consumer behavior 6 Proliferation of vehicle Emergence of new Certainty makes and models distribution, service 5 channels Economic rebound Rising fuel prices 4 3 2 1 0 0 1 2 3 4 5 6 7 8 9 10 Impact Source: Frost & Sullivan analysis. 10
  • Top 20 Parts The top 20 product categories only represents about half of all revenues, illustrating the total size and diversity of the aftermarket. Audio Exterior Accessories Receivers 1% Exhaust Components 1% 1% Wiper Blades Remanufactured Engines 1% Interior and Transmissions Accessories 2% 1% Motor Oil Suspension 10% Components 1% Spark Plugs 1% Waxes/Polishes 1%Starters/Alternators 1% Collision/Body 6% Steering/Linkage Brakes Components 4% 1% Antifreeze/Performance Chemicals Tires 1% Wheels 15% 1% Others Batteries Lighting 47% 3% 1% Source: Frost & Sullivan analysis. 11
  • Distribution StructureThere is a lack of aftermarket distribution structure in many regions of the world, suggesting possiblelucrative opportunities to consolidate these players or invest in new start-ups. Automotive Aftermarket: Distribution Structure, Frost & Sullivan finds that there is weak competition in Global, 2012 these markets outside of the mature North American Offshore and Western European aftermarkets. Manufacturer Manufacturer Domestic Est.Exporter OEM Parallel Parts Remanufacturer Salvage Yard $322.4 billion Importer Manufacturer Step 1 Service Chain OES Auto Mass Warehouse WD’s & PGs Dist. Centers Retailers Merchandisers Clubs WholesaleNew Car Dealer Internet / Mail Production Engine Collision Parts Re-Distribution Parts Depts Order Rebuilders Distributors Jobber Est. $496.1 billionNew Car Dealer Body Shops Step 2 Jobbers/ Service Depts Wagon Jobbers Service Chain Retailer Service Independent Outlets Bays Installers Retail Est. $992.1 billion Step 3 Vehicle Owners Source: Frost & Sullivan analysis. 12
  • Market Size Potential Growth rates will be comparatively low in the early years of the vehicle life cycle, but the revenue potential will increase more as they age and enter the aftermarket in greater numbers. Automotive Aftermarket: Manufacturer-level Replacement Parts Revenues by Category, Global, 2012-2020 •The aftermarket is benefiting CAGR from the slow recovery of the Revenues (2012) Revenues (2020) (2011 – 2018) economic recession.Tires $ 63.3 Bn $ 128.2 Bn 9.2% •More existing vehicle owners are keeping their cars longerBatteries $ 14.0 Bn $ 15.6 Bn 1.3% instead of buying a new one, driving demand forBrake Parts $ 20.0 Bn $ 34.0 Bn 6.9% maintenance and repair services.Filters $ 7.9 Bn $ 18.6 Bn 11.3% •Products in the maintenance categories are expected toCollision Body $ 19.5 Bn $ 21.9 Bn 1.5% grow at strong rates, includingStarters & brake parts, tires and exhaust $ 8.3 Bn $ 9.4 Bn 1.5% components.Alternators •Some low-growth categories,Lighting $ 6.0 Bn $ 6.5 Bn 0.9% such as batteries, lighting and starters/alternators areWheels $ 3.5 Bn $ 3.9 Bn 1.4% threatened by low-costExhaust competition. $ 3.5 Bn $ 7.7 Bn 10.4%Components •Others includes a wide rangeSpark Plugs $ 3.0 Bn $ 3.9 Bn 3.4% of different products, including accessories, electronics, fluids,Others $ 173.2 Bn $ 217.2 Bn 2.9% tools and remanufactured components, among manyTotal $322.4 Billion $466.9 Billion 4.7% others. Source: Frost & Sullivan analysis. 13
  • Global Hot SpotsThere are still attractive growth opportunities in mature regions such as North America and WesternEurope, as well as the emerging areas of Asia, South America and Eastern Europe. North America Increasing average vehicle age driving demand for Eastern Europe more expensive repairs. Lack of independent distribution, service chains suggest attractive market potential for new entrants. Western Europe Advanced vehicle technologies, components entering the aftermarket. Asia Rapid increase in vehicles in operation suggests high growth potential for vehicle maintenance and service. South America Lack of independent distribution, service chains suggest attractive Others market potential for new entrants. New distribution and service channels to support growth in countries such as Australia, South Africa. Source: Frost & Sullivan analysis. 14
  • Conclusions and Future OutlookThe table is set for solid, long-term growth of the automotive aftermarket throughout Asia and LatinAmerica, with ongoing new opportunities in mature regions such as North America and Europe. Global Automotive Aftermarket, Conclusions and Future Outlook, 2013–2020 Total personal-use vehicles inRising living standards across operation will increse by about the world, as measured by 30 percent over the next 5-7 Vehicle populations will growGDP per capita, will allow tens years, reaching 1.3 billion. the fastest in China, India,of millions more people to own Russia and Latin America. a vehicle for the first time.Manufacturer-level component Many of the fastest-growing revenues now worth $322.4 Global Automotive regions lack wholesale buyingbillion worldwide, with sales to Aftermarket groups, service chains andvehicle owners estimated at $1 other infrastructure. trillion. Demand for routine Emergence of new distribution maintenance parts such as and service channels needed tires, filters and brakes to OEMs are strongly positioned to to serve vehicle owners andincrease sharply in the coming capture and consolidate much of technicians. years. the increasing demand for vehicle parts and services. Source: Frost & Sullivan analysis. 15
  • Next StepsDevelop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities 16
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  • For Additional Information Jeannette Garcia Stephen Spivey Corporate Communications Program Leader Automotive & Transportation Automotive & Transportation (210) 477-8427 (210) 247-3845 Jeannette.garciay@frost.com Stephen.spivey@frost.com 19