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China automotive aftersales market: A key growth driver in future

It is imperative for all players in the automobile industry to assess the trends and challenges in aftersales services and devise viable coping strategy.

Overview

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.

Background

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.

Analysis

Suggestion

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