THE AFTERMARKET TO COME, AND THE CHALLENGES FACING THE OPERATORS
International Aftermarket Meeting 2017
The IAM 17 meeting took place at Autopromotec and provided all operators timely updates on the automotive industry’s latest trends and technological developments. Changes are taking place faster than ever before and soon enough workshops will also be affected
Connected cars, electric cars, self-driving cars. Considered mere wishful thinking only a few years ago, these concepts, thanks to an acceleration worthy of a Formula One, have become a rather large portion of the market, forcing their presence, one way or another, on all manufacturers. Soon enough, all producers started announcing new models and new production philosophies. And the aftermarket? Is it ready to take up the challenge? Will it be properly equipped to face a fast approaching revolution? The 2017 International Aftermarket Meeting, held during the last edition of Autopromotec, brought together the world's leading international experts to review the existing scenario.
"By 2020, the whole "Generation C", (C for connected), will have grown into a predominantly digital world. This aspect, which will transform our working and purchasing habits, can already boast many connections with the automotive industry and its aftermarket, so much so that most manufacturers are to be found not only in automotive salons but also at the CES fair, the Consumer Electronics Show in Las Vegas, "explains Josef Frank, a prominent figure in this sector and former director of the market segment of CLEPA (European Association of Automotive Suppliers). According to Tim Armstrong, vice president of IHS Automotive’s Planning Solutions, a leading consulting company with subsidiaries all over the world, what we are experiencing "is a second revolution in the automotive industry. The industry is changing and we are expecting exciting times, we are going from selling cars as products to selling cars as mobility service". New companies are entering this sector (just think of Uber or Didi, not to mention Apple and Google) forcing the aftermarket to rethink its business model. In the future the Aftermarket sector will probably limit the range of action of smaller spare parts and tire dealers as well as car wash services, rewarding, at the same time, road-side emergency services, while autonomous vehicles will likely make preventive checks less necessary. "Success in the future will no longer be measured by the number of cars sold but by the number of kilometers traveled, and consumers will increasingly rely on large fleets – says Armstrong -, therefore, the way assistance and services are provided must change - says the expert – turning into a mileage-based service, as is already the case for transport vehicles". Yet this process is not taking place with the same pace around the world: emerging markets can boast 35% of active users in this service sector, continues the IHS expert, against a mere 10% in more mature markets.
What about Italy? According to data illustrated during the event by Gianmarco Giorda, director of Anfia (the National Association of the Automotive Industry), aftermarket components manufacturers currently involved in the sector amount to around 2.000, producing a 39 billion Euro turnover. Despite a 3.6% drop in 2016 following a 4.3% increase in 2015 (a difference related to the a typical industrial cycle) the sector is currently enjoying a growing trend: new cars produced last year were, in fact, over 1,1 million (+8.8%) while new registrations grew by 16% to over 1.8 million. “There is a positive sentiment for the future – explains Giorda – and we are set to pass the 2 million mark in new registrations”. This while the total number of cars circulating in Italy in 2016 was over 32 million, which is an all-time record, but it also means that the average age of cars now circulating on our roads has progressively risen. In 2017, in fact, only 16% out of the total number of cars are less than 3 years old, while vehicles with an average age of over 15 years have gone from 9% in 2007 to 18%, with an average annual mileage per vehicle that has remained substantially the same at 12,500 kilometers. "By 2022 about half of the vehicles in circulation will be over 10 years old, and replacements will not take place quickly. This will produce a split market: “unconnected vehicles” lacking even the most common driver-assistance systems, side by side with newer advanced and “fully-connected models”. Yet, preparing for the technological challenges ahead remains paramount. Success belongs only to those able to adapt to the fast approaching changes”.
Beyond our borders, among the companies that have certainly adapted to the changing conditions we find Bosch and TomTom. The German giant has already developed numerous systems to enhance connectivity among vehicles, and is currently focusing on connecting vehicles and workshops through the Internet of Things. “Connectivity will allow drivers to receive immediately the assistance they need, following in real time all maintenance procedures performed on their vehicles, while workshops will be able to plan operations well in advance thus streamlining all activities improving the system’s efficiency – says Matthias Knirsch, director of business development at Bosch Automotive Aftermarket -. All these changes entail opportunities but also risks for some of the main players, from manufacturer to distributor, not to mention workshops. For example, as far as data protection, here at Bosch we have developed encryption systems able to secure information from hacker attacks". “With the appearance of Google Maps and Garmin many predicted that TomTom would have disappeared, but we are still here and we continue to shape the industry”, adds Sebastian Ruffino, TomTom Bridge business unit manager. Navigation is still very important for TomTom, but database real-time up-dates as well as the implementing these platforms according to customer needs are and will be increasingly important. This is what is already happening on ambulances in Germany or with London firefighters who are guided towards the place where their assistance is sorely needed. "Everything moves much faster than we had expected," says Fotios Katsardis, president and Temot International, a German aftermarket group. "Both component and car manufacturers will have to face each other on different sales channels, some of which were, until recently, considered the exclusive domain of one or the other”, he explains. “The difference between B2B and B2C will be gone and replaced by a ‘B2everyone’. However, we are still expecting a perfect storm in future, as everything we are anticipating or presenting today will soon become obsolete".