PRESS RELEASES - AUTOMOTIVE AFTERMARKET
The Impact of Deregulation in the Auto Aftermarket
Industry analysts forecast that global demand in the automotive aftermarket will grow by 7% a year through the turn of the century to almost $113 billion. The emerging Asian economies will provide some of the most robust growth rates for replacement parts, components and accessories due to increasing vehicle ownership, particularly of used cars.
DEREGULATION OPENS UP MARKET
Deregulation is opening the distribution, retail and service markets to new entrants. These are taking share from established operations. The affiliated dealerships dominance in the service aftermarket is being eroded. The OEMs (original equipment manufacturers) share is under threat. Manufacturers of 'imitation' parts are increasing sales. Globally, their 18% market share in 1998 is expected to reach 30% by 2003.
The repair and maintenance market is changing. Developments in Italy and Japan illustrate the main changes. The stricter enforcement of mandatory car safety tests is growing the service aftermarket. In Italy such enforcement will create 10 million newwr tiliated to automakers). In addition, independent service providers now have access to skilled labour. The delicensing of the Japanese garage system included a reduction in the number of registered mechanics garages are obliged to employ.
Deregulation and privatization are opening up the once tightly controlled mandatory test and repair market. For example, in Japan 40% of aftermarket sales are made as test-related repairs in designated outlets.
New operators are benefiting from these changes. For example, in Europe the fast-repair franchise, Midas, is expanding in the lucrative routine maintenance and quick repair/parts-replacement market. Retailers are moving into the service aftermarket, mainly by offering parts installation. The Spanish Tiendas Aurgi uses a fitting service to attract the do-it-for-me (DIFM) motorist. The chain has been extremely successful in a flat market. Between 1987 and 1996 it increased sales by 50% a year.
Vol. 1.No. 10. MCMXCVIII Copyright © 1998 1999 Diagonal Reports Ltd
