China’s automotive market is transitioning from a period of rapid growth in new car sales to a slower pattern of expansion going forward. While this slower pattern of growth is a concern for automakers and suppliers, the market remains at historically high levels of sales, and the car population continues to expand at double digit rates annually. In addition, the average age of the vehicle population is rising.
Add to this a recent push by the Chinese government to allow sales of original equipment service (OES) parts by independent service providers, coupled with the emergence of digital platforms for accessing services, the conditions are ripe for discontinuous expansion of the independent aftermarket (IAM).
All of these factors are contributing to a explosive expansion of the automotive aftermarket services business in China. In this environment, automakers and suppliers are seeking ways to offer a clear and differentiated value proposition in order to succeed in the aftermarket, and they must act quickly to compete with new entrants who are seeking to disrupt the traditional service model.