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2017 Global Automotive Aftermarket Outlook- Key Findings


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Frost & Sullivan recently published '2017 Outlook for the Global Automotive Aftermarket'. The outlook encompasses some of the top trends across different regions and also builds a forecast for 2017, looking back at the market in 2016.

Published in: Automotive
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2017 Global Automotive Aftermarket Outlook- Key Findings

  1. 1. 2017 Global Automotive Aftermarket Outlook B2B eCommerce, Uberization of Repair Services will Draw Investment and Determine Competitive Strategy K15D-18 March 2017 Global Automotive & Transportation Research Team at Frost & Sullivan KEY FINDINGS
  2. 2. 2K15D-18 Contents Section Slide Number Executive Summary 3 Research Scope, and Objectives 8 Global Aftermarket Overview 12 North American Automotive Aftermarket Outlook 29 European Automotive Aftermarket Outlook 36 Chinese Automotive Aftermarket Outlook 46 Latin American Automotive Aftermarket Outlook 52 Indian Automotive Aftermarket Outlook 59 Growth Opportunities and Companies to Action 65 Key Conclusions and Future Outlook 68 Appendix 70 The Frost & Sullivan Story 74
  3. 3. Return to contents 3K15D-18 Executive Summary
  4. 4. 4K15D-18 Key Highlights of 2016 Continued adoption of new business models by OEMs and suppliers — especially in Europe — were among the key trends in 2016. Global VIO grew by 3.7%; vehicle age continued to rise in many emerging markets In 2016, total global vehicles in operation (VIO) increased to 1.16 billion, which created incremental growth opportunities for replacement and maintenance-related services. Aftermarket spending took a minor hit due to a slowdown in economic growth Most major markets worldwide saw a lack of domestic demand and a gross domestic product (GDP) growth slump that averaged a decline of 0.4 percentage points. B2C eCommerce revenue increased to $21 billion; about 3.7% of parts were sold online globally The popularity of online sales in the automotive aftermarket continued, growing 15.9% over 2015. OEMs/suppliers increasingly participated in direct eRetailing Many original equipment manufacturers (OEMs) and suppliers established or expanded direct eCommerce platforms and introduced new business models. BMW, Michelin, and Goodyear focused on direct eStore operations, while others such as PSA strengthened initiatives around eRetailing in their long-term plans. Uberization of the service aftermarket emerged Investments in service aggregation grew, with new alliances and entries across regions (e.g., Autobutler and eBay, Whocanfixmycar and UK OEMs, Openbay and Autozone). Source: Frost & Sullivan
  5. 5. 5K15D-18 0.00 1.00 2.00 3.00 4.00 5.00 Implications of geopolitical changes in some of the biggest markets (US, UK) Growing penetration of online sales for automotive parts In-vehicle sales (telematics- based business solutions) Multi-brand vehicle servicing opportunity in some markets Strengthening of traditionally non-automotive participants in automotive aftermarket (e.g., Amazon) Forecasted GDP growth slowdown in most markets globally Strengthening of eCommerce channel in B2B sales Service aggregation, mobile service next-generation business models Automotive Aftermarket: Senior Management Top-of-Mind Issues, Global, 2017 Data collected from 2016–2017 interviews and discussions with senior managers to CEOs from Tier I suppliers globally Key: 0 is no concern; 5 is high concern. 2017 Aftermarket Industry Senior Management Top-of-Mind Issues Implications of a changing geopolitical environment and a possible economic slowdown, and a stronger presence of non-automotive participants in the aftermarket, will be most talked about issues in 2017. Source: Frost & Sullivan
  6. 6. 6K15D-18 1 Trump presidency, Brexit will create uncertainty around parts pricing and availability A changing global political climate resulting from the Trump presidency in the United States, the United Kingdom’s impending exit from the European Union, and similar tension in other EU countries might affect tariffs in late 2017 or early 2018 and create price volatility. 2 Global VIO expected to increase by 3.9% during 2017 The number of VIO globally is expected to reach 1.21 billion, up from 1.16 billion in 2016. At the micro level, an uncertain US economic outlook, marginal contraction in the eurozone, and Japan’s economic growth will reduce some of the demand for replacement and maintenance-related services. 3 Online sales in the automotive aftermarket expected to generate revenue of $24.5 billion globally Led by the United States, Germany, France, the United Kingdom, and China, online sales of aftermarket replacement parts will account for 4% of global revenue at the retail level. 4 OEMs and traditional participants will prepare to compete with marketplaces and tire eRetailers OEMs and traditional companies will look to challenge the dominance of marketplaces and tire eRetailers, which generate almost 50% of all online sales of replacement parts and tires in the automotive aftermarket. Mass-market OEMs such as Ford and Renault and luxury OEMs such as BMW will continue to expand eCommerce platforms in more countries. 5 Small to medium-sized pure players continue to lose US share; outlook is more stable in Europe Pure players selling directly and smaller eCommerce participants selling via marketplaces will continue to get muscled out by bigger participants; in Europe, these competitors will not see strong growth but revenue and market share will remain stable. 6 Continued investment in automotive start-ups , particularly in countries such as India eRetailing is growing in popularity in the Indian automotive aftermarket. Mahindra is investing in digitization of the channel, and more OEM activity is expected. Suppliers and start-ups alike will contribute to the aftermarket’s evolution. Top 6 Predictions for 2017 Increased competitiveness on the back of growth in emerging markets and technological capabilities will drive the automotive aftermarket in 2017. Source: Frost & Sullivan
  7. 7. 7K15D-18 Past 3 Years Next 3 Years Change Customer Strategy Strategic Partnerships New Product Development Technology Strategy New Product Launch Geographic Expansion Competitive Strategy Mergers & Acquisitions Distribution Channel Optimization Vertical Market Expansion 4 p.p. 7 p.p. 1 p.p. 8 p.p. 9 p.p. 2 p.p. 4 p.p. 4 p.p. Stable 4 p.p. Base: All respondents (n=303) Q4. Which key strategies have delivered most growth in the past 3 years in your organization? (MULTIPLE RESPONSES) Q5. Which strategies will you rely on to drive growth in the next 3 years in your organization? (MAX 3) 42% 41% 36% 31% 30% 29% 27% 17% 17% 13% 38% 48% 37% 39% 21% 31% 23% 21% 17% 17% ● Automotive Industry CEO Survey: Key Strategies, 2016 Growth Strategies Most CEOs stress developing strategic partnerships leveraging the use of technology. Aftermarket competition will not be any different and will see an impetus towards adopting these measures in 2017. Source: Frost & Sullivan
  8. 8. Return to contents 8K15D-18 Research Scope, and Objectives
  9. 9. 9K15D-18 Passenger cars and light trucksVehicle Type 2016–2017Study Period 2016Base Year North America, Latin America, Europe, China, and IndiaGeographical Scope Revenue includes parts only and excludes service unless otherwise noted. All revenue is measured at the manufacturer level and is expressed in US dollars Revenue Research Scope Source: Frost & Sullivan
  10. 10. 10K15D-18 d Aim • The aim of this study is to identify the size and direction of the global automotive parts and services aftermarket, and its growth opportunities. d Objectives • To calculate the size of the global automotive aftermarket through analysis of VIO and replacement rates • To update the main Frost & Sullivan research findings for each region • To identify the main industry trends in each region • To determine which regions and segments will enjoy the highest growth potential • To analyze the effect of Mega Trends such as eRetailing and telematics solutions on demand for aftermarket parts and services • To predict major benchmarks that the global aftermarket will achieve in 2016 and beyond Research Aims and Objectives Source: Frost & Sullivan
  11. 11. 11K15D-18 Key Questions this Study will Answer Source: Frost & Sullivan What are the main factors that will influence the size and direction of the global automotive aftermarket in 2017? Automotive Aftermarket: Key Questions This Study Will Answer, Global, 2017 How does the industry outlook vary from region to region? What is the outlook for eRetailing in each region during 2017? What developments in the global automotive aftermarket in 2016 will have an impact during 2017? How are emerging regions being served, or underserved, by automotive parts and services suppliers?