Consumer trends, emerging technology and the need for more efficient logistics to deal with both, are set to have a huge impact on the automotive logistics aftermarket. Consumers are not visiting dealers as often but that is not an indication of a drop in sales as much as it may be an indication of how fast e-commerce is growing.
According to Alfonso Serrano, head of instock management for automotive at online retailer Amazon, online aftermarket sales are expected to more than double in the next ten years, and by 2025, will account for 20% of total aftermarket sales.
Serrano was speaking at this year’s Automotive Logistics Europe conference in Bonn, Germany where other industry leaders were discussing what that drive in online sales means for the logistics sector. In the short term, Marcel Megan, European logistics manager aftersales at Adam Opel said that visibility, transparency and faster crossdocking needed to be improved to cope with the demand set by consumers who expected the fast-paced and information rich Amazon phenomenon in online purchasing as a norm.
The growth in alternative technology inside the passenger vehicle is also something those supplying the aftermarket are having to consider. Alternative powertrains are expected to require different or fewer parts and this will impact production requirements. Improved safety standards are also going to affect the aftermarket as more cars are fitted with forward collision warnings and other updated safety features. To take one example cited, this will have an impact on how many exterior parts, such as bumpers, an OEM sells, as there will be fewer collisions. Nick Beard, corporate account industry director, at logistics giant TNT, said that as cars get safer, the demand for body panels and other parts goes down.
But it is not just cars getting safer that is affecting business. Some OEMs are reducing component numbers and adopting standardisation, and components in general are becoming more durable. Meanwhile many functions performed by mechanical parts are now handled with digital technology, meaning a simple software update can solve any problems with them.
“As logistics people, can you imagine if everyone ended up with a Tesla? Our business would collapse,” said Beard. “Although I admire what Tesla are doing, we’re going to have to change within our network. How can we move this safely and at the right cost?” Beard said.
OEMs are desperate to get car buyers back to the dealers as often as possible. Beard said that of total revenue, the aftermarket makes up anything between 15-48% of dealers’ overall profits. “The aftermarket is the key differentiator in repurchase decisions and brand loyalty,” he said. However, independent service shops, and e-commerce, are changing the way people buy components.
Consumers themselves are also changing. Amazon's Serrano explained that consumers of today have less free time. They want more information, to have easy access to that information and have higher expectations.
“Retail has evolved from the physical space to an online marketplace,” he said. “In this change, manufacturers and brands have more opportunities to be closer to their customers and promote their brand and products.”
Recent research shows that 76% of consumers now research a product online before purchasing, and the Amazon-effect means that convenience is more important than ever. “The whole shopping experience must have clear and tangible benefits,” Serrano said.
There are many other factors to take into account. Autonomous cars will impact every part of the supply chain, the growth of 3D printing has the potential to change the aftermarket industry, and consumers are looking to car sharing schemes instead of ownership, which means the demographic of individual car owner aftermarket purchasing will change. All these things have the potential to affect the sales of parts and will have a huge impact on the automotive logistics companies reacting to these sweeping changes in the interest of their own survival.
Beard suggested that it is time logistics companies increase the reliability of their services. Otherwise he said, “we could be left holding the baby.”