Surging passenger vehicle demand and consistent regulatory efforts to facilitate progress in the auto industry will fuel authorized car service center market trends. Major investments by auto manufacturers to broaden their manufacturing scope are driving demand for car servicing facilities.
Global authorized car service center industry from the organized multi-brand service provider workshop segment is expected to grow at the fastest pace over the predicted timeline given the superior vehicle repair services for myriad auto brands offered by key industry players at economical price points.
Major multi-brand service companies such as Mahindra, Bosch, TVS Automobile Solutions and more are shifting focus towards expanding their service departments and offering lucrative servicing packages to car fleet operators.
To cite an example, Bosch inaugurated their new CoCo Bosch car service outlet in Bengaluru, in January 2017, equipped with top of the line servicing equipment including tire changers, nitrogen tire inflators, headlight aligners and wheel aligners, all designed to cater to a vast array of vehicle brands.
Owing to the robust demand for car repairs associated with scratches and dents in the current scenario, the car body services application segment is set to take a leading position in the overall authorized car service center industry share.
The engine service sector, on the other hand, is anticipated to account for more than 12% of the overall industry share by 2025, as a result of strong resistance in high pressure and high temperature applications. Furthermore, turbochargers fitted on engines require adequate maintenance in order to ensure efficient engine performance by regulating and enhancing exhaust gas flow, which is likely to support segmental market growth.
Due to the need for periodic upkeep of such vehicles for proper functioning and compliance with strict regulatory standards, vehicles aged over 3 years are poised to hold a significant share of the overall authorized car service center market in 2025.
Routine and preventive servicing is paramount in older vehicles in order to maintain their resale value and prevent unexpected breakdowns. This is a key factor leading to higher demand for authorized OEMs as well as independent garages over the forecast spell.
Meanwhile, the evolution of next-generation automobiles with sophisticated mechanical and electrical systems is expected to contribute heavily to the growth of the organized OEM workshops segment.
Given the increasing vehicle sales in emerging nations like China, India and Australia, the APAC authorized car service center market is projected to show the highest growth rate over the estimated timeframe, accelerating demand for auto repair and servicing facilities. For example, as per the Australian Automotive Aftermarket Association’s (AAAA) 2017 data, the country recorded the highest car ownership levels in the region, with nearly 764 cars per 1,000 individuals. Another significant contributor to authorized car service center market expansion is the high traffic density and automobile congestion culminating in the degradation of car parts, leading to an increase in repair service demand.
The European government’s rigorous measures to enhance the fuel economy have also compelled car owners to invest in regular preventive vehicle maintenance services. Moreover, as a result of the growing vehicle population in countries including the Czech Republic, Poland, Romania, Hungary and Croatia, the Eastern Europe authorized car service center industry is also expected to witness prolific gains.
The growing emergence of creative business models is one of the pivotal factors propelling e-commerce automotive aftermarket industry share. At present, the store, brokerage, and social commerce models have been intensely contributing toward the growth of online commerce. Taking into account the growing popularity of electronic commerce across the automotive sector, many giants in e-commerce automotive aftermarket have been making heavy investments to enhance their storage capacity by developing new warehouses. For instance, the U.S. e-commerce automotive aftermarket player, Turn5 has recently decided to invest USD 8 million to build a facility in Kansas. In addition, in 2017, the firm also expanded its distribution facility in Las Vegas to improve lead times and provide a faster shopping experience to customers. As of now, Turn5 is operating three aftermarket automotive websites, which are mainly devoted to the branding of popular automakers Jeep Wrangler, Ford, and Mustang. In this regard, the newly developed corporate headquarters will help company to gain more growth benefits through vehicle customization tools. It would thus be apt to state that the unique approach of players in e-commerce automotive aftermarket would impel this business vertical over 2018-2025.
U.S. E-commerce Automotive Aftermarket, By Consumer, 2017 & 2025, (million units)
Considering the increasing adoption of internet-based commerce services, the biggies in e-commerce automotive aftermarket industry are developing new advanced e-commerce platforms with convenient tools for next-generation users. For instance, in 2017, Dana Inc. launched a new e-commerce platform comprising an enhanced e-catalog system. This added module has helped many customers and distributors to identify the required component of various automobiles rather quickly. Through the development of such advanced and digitally transformed e-commerce platforms, the players in e-commerce automotive aftermarket are looking forward to gaining more competitive benefits in the ensuing years.
Focusing on the growing competitiveness in e-commerce automotive aftermarket, several industry contributors including Denso Corporation, Flipkart, Advance Auto Parts, AliExpress, Amazon, Bosch, O’Reilly Auto Parts, E-bay, Auto Zone, and Napa Auto Parts have been entering into strategic joint ventures to enhance their product and service portfolios. For instance, an offline to online integrated social media platform operator, Moxian Inc., partnered with a leading offline to online automotive aftermarket e-commerce platform, Baoyanghui to improve its customer base mainly across China. Through this alliance, this e-commerce platform connects auto owners to the service center, auto dealers, independent mechanics, repair shops, and part stores. In addition, Baoyanghui will use Moxian’s media partner, Xinhua News Media in order to promote its services. In fact, Baoyanghui’s prominent presence in the automotive aftermarket vertical will help Moxian extend its regional presence across China e-commerce automotive aftermarket industry.
In the future, the increasing adoption of emerging technologies such as IoT and artificial intelligence is likely to stimulate e-commerce automotive aftermarket trends. The Germany based automaker, BMW, for example, recently launched its e-commerce pilot project to check the popularity of the brand outside Germany. Considering the fact that many automakers are now officially penetrating the aftermarket business, the intensity of competitive in e-commerce automotive aftermarket is slated to increase tremendously in the years ahead. As per estimates, the overall e-commerce automotive aftermarket industry is expected to surpass USD 30 billion by 2025.