According to Capgemini what’s happening in the emerging markets like Eastern Europe, Russia, China and India & established markets like North America and Western Europe decides the basis of the global market. With flat sales in Western Europe and increasing importance of emerging markets; the global aftermarket industry is expected to see significant change. Emerging markets offer relatively high growth rates and moderate competitive intensity except China where growth rates are high but competitive intensity is also high. To take advantage of the high growth rates the management needs to take action before the competition make it difficult to sustain. The competition is expected to grow to similar level as Western Europe and then saturate. Western Europe automotive market needs to focus on marketing and sales activities & innovating new services such that customer remain loyal to dealers and repair shop throughout the lifecycle of the automobile. Rather than a globalized strategy each of the emerging market requires a localized strategy to succeed in the respective markets. Eastern Europe market has marketing and sales, sourcing, distribution, planning and reverse logistic issues. Russian market needs to improve on the distribution processes & network; a denser distribution network would enable better penetration for the aftermarket industry. To succeed in China one would need to restructure marketing and sales, sourcing, distribution and planning process to become and stay competitive where processes are designed to achieve low costs and high service levels. India on the other hand is underserved market and is increasingly led by top performing Asian Companies.
Globally aftermarket sales are growing including retail sales and are becoming increasing important for the automotive companies to focus on aftermarket because of higher margins compared to new car sales. According to FMI report on “Automotive Aftermarket: ASEAN Industry Analysis and Opportunity Assessment, 2016-2026″ the $19.3 Billion ASEAN nations aftermarket is estimated to surpass $48 billion in revenues by 2026 maintaining a CAGR of 9.6%. These high values do attract the attention of the automotive companies to invest in the region. Other than South East Asian Nations the Chinese automotive aftermarket has experienced an explosion and to be able to penetrate the Chinese market the initiatives need to focus on “1) Improving the relationship with wholesalers 2) Adapting service offerings to local requirements 3) Increasing market penetration through setting up local organizations 4) Improving and extending the service offering.”In Chinese market the main market differentiator is the price; the prices have to be attractive along with service level. Thus it gets challenging as low priced products with high requirements for logistics, marketing and service quality do not provide high margins. Otherwise, the global automotive aftermarket is projected to achieve $722.8 billion by 2020. Few of the global trends observed in 2016 are newer subscription software services to address vehicle service delivery, rise in emission control components, parts e-commerce growth in emerging markets, service aggregators to research and fix service appointments, e-Retail in B2B space and private label brands is expected to reach 33% of sales in North America.