RESEARCH TRIANGLE PARK, N.C. – China’s automotive aftermarket is currently under developed and ready for market contenders to enter, according to Market Analysis, a quarterly newsletter published by the Motor & Equipment Manufacturers Association (MEMA).
Referencing multiple government surveys and certain internet sources, MEMA estimates the value of China’s aftermarket to be worth $12 billion by 2015. This market, which held a value of $4.4 billion in 2005, is predicted to more than triple in size it 10 years.
The current issue of Market Analysis notes that government estimates show China’s in-use vehicle population will reach nearly 100 million by 2015, and by 2030 will almost equal the vehicle population of the United States.
“In the past, China’s automotive aftermarket has been hindered by factors such as parking shortages, fuel quality and road infrastructure,” said Frank Hampshire, MEMA’s senior director of research. The fact that most Chinese people never traveled more than 70 miles from their homes did not help the automotive aftermarket either, he noted.
China’s economy currently is expanding and many of these hindrances are being solved. “On top of the improving environmental conditions, China’s vehicle population is growing so quickly that it doubles every six years and is slated to reach 98.4 million by 2015,” Hampshire said.
Increased aftermarket service is imperative for China’s growing vehicle population. Currently, the capacity for aftermarket service is growing at a rate equal to China’s economy. Robert Bosch entered this market in the 1980’s and has reaped the benefits of its growing potential; it now operates more than 430 service workshops in China’s mainland. ACDelco, Michelin, Jiffy Lube and Valvoline are all prospering from the ripe automotive aftermarket as well, through initial entrance into the market or opening new outlets on the mainland, according to MEMA.
Although 86 percent of the vehicles on the road are government-owned, this should not deter potential entrants, Hampshire noted. Multiple agencies needing vehicle maintenance will visit independent shops in areas without government service centers. A large practice to be considered when entering this market is the propensity of clients to repair parts rather than replace them. Counterfeit products are a bigger problem in China than they are in the United States, due to their general acceptance of use amongst the public.
For more information about Market Analysis, email: [email protected].
