Autopromotec 2022 has turned the spotlight on the automotive aftermarket sector. With FUTURMOTIVE Talks, the broad program of conferences and workshops, organized in cooperation with the Italian Trade Agency (ICE Agenzia), Autopromotec provided a comprehensive analysis of the most topical and relevant issues for the market, by bringing together some of the world’s biggest players in technological innovation.
With the workshop “Aftermarket outlook throughout and beyond disruptions,” during the IAM – International Aftermarket Meetings panel, held in coordination with ANFIA (Italian Association of the Automotive Industry) and CLEPA (European Association of Automotive Suppliers), Autopromotec offered a strategic analysis of the global automotive industry. It provided a precise snapshot of the current market, followed by an analysis of the possible scenarios for automotive aftermarket professionals in the near future.
Introducing the workshop was Massimo Pellegrino, coordinator of ANFIA Aftermarket, the ANFIA section that encompasses all association activities related to the world of automotive spare parts. Nicola Morzenti, partner from the strategic consultancy firm Roland Berger, quickly ventured into the depths of the automotive aftermarket world, providing the audience in the prestigious FUTURMOTIVE Arena (Hall 22) with a detailed view of the current macroeconomic context, with a specific focus on the automotive sector, and a forecast on its medium to long term trend. The presentation began with the observation that the automotive aftermarket, in spite of many other sectors, has held up well against the pandemic, driven also by an increasing and ageing vehicle fleet, and forecasts for the next five years anticipate a growing market.
Analyses also show a steady increase in the share of the independent aftermarket compared to the OEMs, although new trends could be challenging for independents in the forthcoming decade.
Morzenti’s wide-ranging speech also examined the various factors that have led to a restriction of independent market suppliers’ margins over the past three years: macroeconomic trends, global automotive trends and increased competition.
Macroeconomic trends, first and foremost, concern uncertainty about production volumes due to microchip shortages and COVID-19, but also the war in Ukraine and rising raw material and energy costs. All these aspects will create further pressure and uncertainties on the independent market margins.
As far as global automotive trends are concerned, electrification is currently the main challenge for the automotive aftermarket sector. The sales of electric cars are rapidly increasing, although the impact on the total car fleet will only be felt over a longer period of time. In the future, given that electric vehicles are equipped with more valuable components than conventional vehicles with internal combustion engines, but in significantly smaller numbers and requiring less maintenance, there could be a significant decrease in turnover for independents.
At the same time, digitalization presents itself as a potential opportunity, which to date seems to have been mainly a prerogative of manufacturers. For the connected car to be an opportunity for the independent market as well, it must have free access to data. What happens next will be decided by future legislation in this regard.
Regarding trends related to the competitiveness of the sector, the constant search for new profit pools is pushing manufacturers to enter the aftermarket in an even more resolute way, through specific initiatives that may include extending warranties, offering new services as well as building their own aftermarket channels to reach new customers. The analysis also underlined the impact for the aftermarket of new mobility solutions such as Car as a Service and Mobility as a Service, which will lead to an increasing need for end-to-end integrated services.
Finally, the resilience and profitability typical of the aftermarket is also attracting new players, such as e-commerce platforms; this will eventually lead to more players being involved in the aftermarket. On one side, it will become larger but, on the other one, with a profit pool to be shared among several actors. In response, existing independent market players will have to form partnerships with the fleet world, leveraging on the ancillary strengths such as network capillarity and product range expansion.
After this wide-ranging and in-depth market analysis, in order to better examine how the market is reacting to all the changes taking place, Autopromotec brought together different representatives of the automotive supply chain in a round table discussion that definitely caught the attention of the IAM workshop audience. Moderated by CLEPA’s Frank Schlehuber, the round table saw a unique moment of confrontation between the heads of some leading companies in the world of components, distribution and workshop networks. Dayco, LKQ Europe, Metelli and Motrio provided a comprehensive and diverse view of the market, made up of precise points of view, and also offered interesting insights into how best to prepare for the challenges facing the industry.
In particular, the speakers commented on key topics of the moment, such as their business forecasts in relation to the post-pandemic recovery, the business strategy related to the electrification trend, the competitiveness of the industry, as well as shortages and rising raw material costs.
With a view to preparing for the challenges of the future, Ruggero Semola, Aftermarket Director EMEA at Dayco, emphasised the importance of diversification. A diversified approach to the market, extended to different aspects of the business, such as opening up to new micro-mobility customers, partnerships with companies operating in the fuel cell sector and, more generally, extending the portfolio with products that are also suitable for new motorization. Ruggero Semola also dwelt on the great resources that the aftermarket business has always involved and how important this is in ensuring freedom of choice for the motorist.
In the opinion of Ferdinando Imhof, Chief Product Officer at LKQ Europe, the approach must be fast, proactive but above all holistic, at all levels of the supply chain, based on strong partnerships with suppliers and customers and targeted training support for workshops facing technological and digital transitions. An end-to-end collaboration, from the manufacturer to the end customer, will guarantee success in the aftermarket. As far as new market players are concerned, especially B2C e-commerce platforms, their presence will increase commercial pressure, thus favoring the motorist. In Imhof’s opinion, the independent aftermarket will not be particularly affected by these new players and its lean logistics will be the key to its success in this multi-channel business scenario.
Sergio Metelli, CEO at Metelli S.p.A., thinks that the value of being a family business was crucial in making quick decisions, especially during a challenging time like the pandemic. Metelli has managed to maintain high standards of customer service through high inventory levels, giving the company a competitive advantage. Investments in Research and Development are also strategic to offer the market a product portfolio in line with the needs of future mobility. Metelli’s growth forecasts in the aftermarket also confirm Roland Berger’s predictions, albeit with the unknown factor of new technologies and commercial challenges.
Olivier Pontreau, Motrio Retail Director, gave an insight into the market from the point of view of a network of independent garages successful in the market thanks to their flexibility, competitiveness and the relationship of trust they manage to establish with the motorist. Pontreau also emphasized the importance for independent garages to be part of a network, which supports them with marketing and training activities. The economic crisis will give even more impetus to the independent aftermarket, which will, however, have to prepare itself now for a car fleet that will see an increasing presence of hybrid and electric vehicles in the next five years. The ability to financially analyze their business is also fundamental for workshops, avoiding devaluing the labor-costs in favor of margins on spare parts only. In fact, at some point, it is likely that new entries will arrive on the market, becoming the Ubers or Deliveroos of car maintenance. The workshops will have to be ready to face new business models.
