As the competition for new car sales gets fiercer, the aftersales service market too get affected. It is becoming one of the factors critical for closing a sale. In such a scenario, it is imperative for all players in the automobile industry to assess the trends and challenges in aftersales services and devise viable coping strategy.
China overtook the United States as the world’s largest automotive market in 2009 and has maintained its position for the past seven years. For 2015, total automotive sales have been estimated at 24 million units, of which 21 million are passenger vehicles. While in absolute terms the numbers seem impressive, the growth rate in sales has slowed from 9.89 percent in 2013 to about 3 percent—and the market has entered a “new normal.” With rising vehicle service life, the aftersales market—including auto parts sales, maintenance and value-added services—is playing an increasingly prominent role in the automobile industry.
Trend One: Increasing market size and profit Contribution
The automotive aftersales market in China is expected to see high growth and reach 1 trillion yuan (US$154 billion) by 2020. Its contribution to the total profits of the automobile dealerships too will keep rising. It is estimated that aftersales services will account for about 80 percent of the overall profits of automotive dealerships.
Trend Two: Further opening of the market
The timelines for implementation of the related laws and regulations for the automotive aftersales market as well as the extent to which these will be implemented will be closely watched by the various stakeholders in order to adjust their business strategies well in time.
Trend Three: Certification and management of auto parts and accessories of same quality
Certification of auto parts is expected to be adopted more widely and recognized by more consumers. This could lead to industry leaders cornering a large chunk of certification qualifications.
Trend Four: New technologies and increasing importance of data analytics
New technologies or applications such as Internet of Vehicles, mobile Internet, Big Data and online payment technologies will take the aftersales market to the next level of growth. In addition, the continuous development of new energy-powered vehicles will facilitate the use of innovative technologies
Trend Five: Changes in consumer demand
As the automobile consumption keeps increasing, consumer demand for aftersales services tends to become more heterogeneous. Also, the proportion of young automobile owners is expected to grow. Younger consumers often prefer personalized products and services over the standardized and undifferentiated.
Trend Six: O2O commerce to gain momentum
Since 2014, most startups in the automotive aftersales industry have been built on the O2O model, with a focus on tires and gasoline and other frequently used, highly standardized parts and accessories. With the aid of Big Data analytics, the O2O model will enable aftersales service operators to cover more of this category. This will have a profound impact on the aftersales service industry.
In the short term, the competition among different participants lies in operational efficiency, but in the medium and long term, it lies in the business models. Therefore, in order to build up their competitive advantages, service operators should focus on a number of strategic goals consistent with market conditions and development of new technologies.
Adoption of new technologies, including,
Internet technologies should be adopted across the board to achieve “Internet + Aftersales Service”
Adoption of data analytics to maximize the value of data
Transformation of business models, including,
Building auto aftersales service and channel brands
Aftersales service outsourcing
Separation of sales and aftersales services
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