THE FUTURE OF THE AFTERMARKET
With the national running fleet stagnating, breakdowns tend to reduce. But maintenance, especially for tires, will increase its importance as the fleet continues to age
What are the current trends in the field of spare parts? What is the future of the aftermarket in Italy? All these questions were considered at the IAAM15, the International Automotive Aftermarket Meeting, held in Bologna on May 21, 2015. Judging by the report presented by Luca Montagner, research director of ICDP Italy, the aftermarket is currently featuring two opposing trends: on the one hand an increasing level of quality of both new vehicles and automotive components in general, making breakdowns and downtime in workshops less frequent, while on the other hand, a longer vehicle average life resulting in an increased level of maintenance: by 2020, in fact, 60% of all vehicles running in Italy will have an average age of over 10 years, the highest figure in Europe after Spain. In short, the development of the aftermarket by 2020 will fluctuate between the two above-mentioned situations, while the economic crisis, between 2008 and 2012, took center stage.
According to Gianmarco Giorda, managing director of ANFIA, 17 million vehicles were produced in Europe in 2014, an increase of 5% compared to 2013, and sales on the European market also grew by 5.4%, reaching the 13 million mark. Still in Italy, in the first quarter of 2015, 241 thousand vehicles were manufactured, +33% over the same period in 2013. Taking advantage of this moderately positive trend, the Italian components industry has also managed to increase its turnover by 3.6% in 2014, reaching a total value of 40 billion euro, half of which due to exports. Meanwhile, the national aftermarket has registered a business volume increase of 1.1%.
The trends leading up to 2020
But now back to the Montagner report. Between 2009 and 2012, the aftermarket sector saw business volumes drop by 4% in France, 7% in Germany and 6% in Spain. Only the United Kingdom went against the tide with an increase of 1%. And Italy? A slight decline of about 1% was recorded, thanks to the old average age of our national fleet. By 2020 Montagner foresees, in Italy, "a significant reduction in sales volumes in the aftermarket sector, with a decline of 9%; but, in terms of value, the figure is much more limited and inferior to other European countries: 1% ". In short, this means less spare parts sold and less maintenance work on vehicles although more complex and expensive. The good news is that, in this framework, tires will have the lion's share: if, in fact, as a whole, maintenance will decline by 6.4% and repairs by 6.8% in terms of value, tire sales volume will grow by 13.8% as a result of an increased focus on safety – especially in winter- on this important vehicle component. Surely, these figures will not be ascribable to an increase of the number of vehicles in circulation, which in Italy will grow by just 1.8% in 2020, much in line with new lifestyles, especially among youths, who are no longer putting the car at the center of their lives and interests.
Independent workshops to the forefront
The aftermarket, in short, keeps going. But what are the expected consequences for workshops? The aging of circulating vehicles will continue to benefit independent garages, at the expense of the official manufacturer’s networks. According to Montagner, "in terms of volumes, the turnover of independent garages will grow by a further 5% by 2020". Nowadays, in fact, customer loyalty towards official networks varies according to the age of the vehicle: with a high percentage (more than 80%) for new cars, dropping to well below 50% for vehicles between 3-4 years of age. Beyond that, motorists disappear almost entirely from the radar of official workshop networks, choosing the regular local workshop. Today the situation is this: in Italy there are as many as 10,500 independent workshops, to which 5,300 tire dealers and 2,500 multi-brand workshops affiliated to non-official networks must be added: all together they account for over 55% of the Italian market, as it is also in Germany (57%) and France (54%), even if in the latter case there are less workshops of significantly larger size.
Manufacturing companies fight back
Of course, car manufacturers will not just stand there doing nothing. Besides marketing campaigns and maintenance contracts, it is expected that they will take advantage of their "special" relationship with vehicles. That is what Neil Pattemore, advisor of Figiefa, the European association of independent garages underlined. "Manufacturers, agreeing with internet providers, are developing ‘network cards' to record all the diagnostics information and data from vehicles." These could be available to motorists, but independent garages will not have any access to them. "For this reason, in Brussels, we are now talking about the creation of a single platform that allows unmonitored access to all, as well as allowing motorists to view in real-time the maintenance status of their vehicles".