An unprepared automotive aftermarket may be collateral damage if a future dictated by the Connected, Autonomous, Shared, Electric (CASE) platform bypasses the industry, costing as many as 77,000 jobs and more than $11.4 billion by 2051, says a just released report.
The report, commissioned by the Automotive Industries Association of Canada (AIA) and produced by the Conference Board of Canada, says that this sector is in for a rough ride if moves aren’t made to help it transition.
The report “A CASE of Disruption: Economic Impacts to the Canadian Automotive Aftermarket” is one of the few detailed looks at the aftermarket in the face of significant change in the mobility landscape.
The report is a follow up to the 2017 report “Disruptors in the Automotive Aftermarket” released by the AIA, which warned that automotive technology would coalesce around connected, autonomous, shared, and electric vehicles—the CASE platform.
While automakers and technology leaders are often at the cusp of discussion on the coming technologies and ownership models, the automotive aftermarket is often overlooked. Made up of suppliers, distributors, wholesalers and service and repair sector, the aftermarket in Canada employs some 400,000 and contributes an estimated $26 billion annually to Canada’s economy.
In fact, a granular look at the structure of the aftermarket and its economic contributions forms a considerable part of the CASE report, providing foundational evidence of the aftermarket’s role in the ongoing operation of the vehicles on the road as well as the structure of its workforce. Average income of those without a certificate or degree in the core aftermarket is $31,460 for example, while for those with a university degree, that average is more than $70,000.
The report’s analysis projects $50.2 billion in GDP and about 453,000 jobs in the aftermarket by 2051, but estimates that as many as 77,000 fewer jobs and a $11.4 billion reduction in the aftermarket and supporting industries if the coming shift goes to a full sharing model and bypasses the aftermarket.
Different scenarios were looked at by the report’s authors, various degrees of technology and ownership shifts, but none were viewed as positive for the aftermarket.
The key consideration in the report though is not just the change but whether the aftermarket is bypassed as these changes occur.
Avoiding this, says the report, requires a customized roadmap and transition strategy.
The report says this strategy should address:
- access of vehicle data;
- partnerships with new mobility service providers to provide fleet services and secure access to mobile platforms and technologies;
- exploring industry consolidation opportunities;
- accelerating support for human resources and (re)training opportunities;
- establishing purchasing alliances to strengthen procurement power of repair shops and chains.
The push toward connected vehicles will have consequences for the aftermarket if individuals bypass traditional aftermarket businesses in favour of regular maintenance being performed at the dealership. Strategies involving aftermarket businesses having access to connected vehicle data (similar to dealerships) would. In addition, a strategy around converting existing gasoline stations to charging stations, and having electric vehicle users access these stations at the same frequency (i.e., less charging at home) would also soften the impact.
Overall, the report does paint a bleak picture if moves aren’t made, particularly if government support for access to vehicle data is not secured.
It should be noted that work on that front is ongoing, both through ongoing work with original equipment service repair information today, and for future access to vehicle data as new technologies proliferate, for which the AIA is at the forefront, advocating for the aftermarket.