While the global demand will exceed the pre-COVID levels in 2022, the market will likely increase by 7.1% in 2021, with revenues from online sales in the aftermarket estimated to grow at 14%, says Frost & Sullivan’s recent analysis, Global Aftermarket Outlook, 2021,
The study finds that the global automotive aftermarket will gather momentum this year as a slowdown in new vehicle sales due to the impact of COVID-19 and aging vehicle parc will create more opportunities in the aftermarket space.
With the availability of vaccines and lockdown lifts, the market is estimated to garner $478.8 billion by 2025 from $362.21 billion in 2020, an uptick at a 5.7% compound annual growth rate (CAGR).
According to Frost and Sullivan’s analysis, aftermarket replacement revenue from parts and accessories sales dipped by 8.8% in 2020.
The serious contraction in demand was primarily due to the restraints imposed by the COVID-19 pandemic which crippled the mobility demand. Work from home, higher adoption of the online channel for retail purchases, and large-scale unemployment meant vehicles were used less frequently for personal mobility across segments. Recessionary scenarios pertaining to the economy added to the woes of market participants.
On the flip side, the situation pushed market participants to innovate and invest in increasing the effectiveness of their solutions.
As a result, in 2021, Frost and Sullivan expects growth of aftermarket revenue to be 7.1%, making up for some of the revenues that were eroded in the previous year.
China leads the world in terms of innovating with new business models for retail. Its vehicle population is currently only behind North America and is well poised to overtake it, resulting in tremendous demand potential.
In Europe, EV servicing and repair is in demand, whereas, in North America, the preference for personal vehicles rather than shared mobility will promote used cars sales.
In India, the vehicle Scrappage Policy announced at the beginning of 2021 could boost new vehicle sales and potentially help increase the used and remanufactured parts aftermarket.
For further information on this analysis, please visit: http://frost.ly/5y7
“As customers shifted away from using public/shared transport in 2020, sales of used cars witnessed a boom during the same period across regions, thereby presenting potential business prospects for service providers to engage with independent aftermarket manufacturer (IAM) service contracts,” said Anuj Monga, Mobility Research Analyst at Frost & Sullivan. “In addition, the increasing proliferation of alternative powertrain vehicles is creating new categories in the parts and services aftermarket and promoting newer business models for fulfillment.”
Monga added: “Rising customer exposure to digital channels across lifestyle aspects will push aftermarket stakeholders to invest aggressively in digitization beyond parts retail and even workshop services. Market players should further explore building dedicated digital platforms on offline networks offering standardized quality services for a variety of vehicle types, especially in company and retail fleets.”
Industry players should look into the following growth opportunities:
- Online Sales of Replacement Parts and Accessories: To leverage the heightened exposure to their websites, marketplace and pure-play operators will need to deliver higher value to their customers by ensuring delivery and fulfillment.
- ADAS Sensor Recalibration Services: Though most of the demand for advanced driver-assistance systems (ADAS) sensor recalibration services is fulfilled at the original equipment (OE) dealerships, IAM stands a chance in the medium to long term.
- New Product Categories: Aftermarket products and services related to health, wellness, and wellbeing present a sizeable multibillion-dollar opportunity over the next three to four years.