When we buy a car, we might want to have the best products and services. In this case, aftermarket plays an important role as it involves a wide array of activities including parts replacement, repairs, and maintenance. With a proper aftermarket, automobiles can have a longer lifespan while ensuring convenience and safety for the customers.

Many people increasingly need the aftersales services and widely recognize their importance. That is why the trend for automotive aftermarket market has seen an upward trajectory across the globe. According to a prominent research firm, GMI Research, the automotive aftermarket industry will observe a rapid expansion in the years ahead. This rapid development is owing to the rising requirement for vehicle upgradation and the growing concern among customers about their safety and comfort. In addition, as autonomous vehicles are on the rise, so are the vehicles’ complexities which further require more automotive aftermarket services.

What Drives the Industry?

This market has grown rapidly thanks to various contributing factors.

1.      Sophisticated modern vehicles

Contemporary vehicles feature advanced components, complex electronic systems, and state-of-the-art technologies. A significant number of customers and even a few vehicle maintenance companies may find it necessary to acquire additional knowledge and skills to effectively repair and maintain such sophisticated technology. As a result, there is a growing requirement for after-sales services to address these challenges.

Advances in manufacturing and engineering have extended the lifespan of modern vehicles despite their growing complexity. The requirement for after-sales services grows as vehicles age, necessitating regular repairs and maintenance.

2.      Shifting preferences among consumers

These preferences reflect a range of considerations including shifting lifestyles, economic factors, environmental issues, and technological advancements. There is a rising need for this market because customers are seeking personalized and environmentally conscious transportation options.

As electric vehicles gain popularity, there is a rising requirement for charging stations and related accessories. Likewise, the market for components such as connected car technologies and aesthetic alterations has grown due to increasing demand for customization. Additionally, as vehicles become more complex and advanced, consumers are interested in after-sales services that offer connectivity, safety improvements, and convenience functionalities. This trend has driven the evolution of aftermarket products such as advanced navigation systems and collision avoidance automation.

3.      The rising ownership of vehicles

As there has been a growing urbanization around the world, there has been a rising necessity to own a vehicle. In many parts of the world, almost most of the population needs vehicles to facilitate their daily activities. Therefore, this can also further drive the growth of the after-market sector.

The Challenges

Despite its rapid growth, the market also faces some significant challenges that can hamper its development.

1.      Shortfall in labor availability and relevance of expertise

A shortage of skilled labor in the industry has emerged due to the retirement of mechanics and waning interests among younger generations. However, this challenge offers a chance for positive change. Closing this labor gap requires collective efforts across industry. This involves integrating technology, upgrading training initiatives, and showcasing industry progress like the move towards EVs and sustainability. These measures offer the industry an opportunity to appeal to younger generations, providing early adopters of these strategies with a competitive advantage.

2.      The emergence of electric vehicles

In comparison to standard combustion internal engine vehicles, EV boasts fewer mechanical components in motion. The decrease in demand for parts directly affects merchants and suppliers who rely on the sale of these components. The market for components meant for traditional vehicles is well-established, whereas the market for electric vehicle parts is burgeoning. This poses challenges for aftermarket firms in sourcing and stocking electric vehicle-specific parts, particularly when contending with OEMs that wield significant control over the supply chain.

The Opportunities Ahead

Despite the challenges, the industry offers substantial opportunities to go ahead.

1.      Seize the electrification opportunities

The demand for aftermarket EV parts will rise with the growing number of electric vehicles on the roads. This category includes accessories tailored for EVs, batteries and charging facilities. Increasing EV adoption will lead to higher demand for charging-related infrastructure. The aftermarket segment can take advantage of this opportunity by facilitating advanced charging facilities for public areas, businesses, and homes.

2.      Subscription services and sustainable consumption economy model

Subscription models provide aftermarket businesses with a dependable revenue stream, allowing them to plan finances more effectively and consistently. By offering subscription-based services, aftermarket companies are able to strengthen customer relationships and build long-term loyalty and value. Embracing circular economy principles through the renovation and remanufacturing of used parts instead of producing new ones can help aftermarket businesses reduce waste. Consumers and organizations can save costs by refurbishing and remanufacturing items, which are typically cheaper than producing new products.

3.      Recently established OEMs handling post-service operations

With the arrival of new OEMs, there is a potential overhaul in the management of the automotive aftermarket industry. They strategically approach the aftersales segment, recognizing the significance of delivering a high-quality and convenient customer experience akin to that of established brands.