Shift towards EVs is redefining competition between OEM-authorized 4S dealerships and independent aftermarket (IAM) workshops.
China’s automotive aftermarket is set to transform, driven primarily by the rapid electrification of the vehicle fleet, alongside changing consumer expectations and evolving service models. Such trends are fundamentally altering how vehicles are repaired, maintained, and serviced. The shift from internal combustion engine (ICE) vehicles to electric vehicles (EVs) is meanwhile redefining competition between OEM-authorized 4S dealerships and independent aftermarket (IAM) workshops.
Between 2024 and 2030, China’s automotive aftermarket is forecast to grow at a compound annual growth rate (CAGR) of 9.6%. This outlook is underpinned by steady growth in vehicles in operation (VIO), which reached 344.2 million units in 2024, supported by robust new vehicle sales and a fast-growing used vehicle market. Rising vehicle age, accelerating EV penetration, and continued policy support for new energy vehicles (NEVs) further reinforce long-term demand.
China’s aftermarket landscape has traditionally been split between OEM-controlled 4S dealerships and a highly fragmented network of independent service providers. However, the balance is now shifting. As vehicles age and consumers become more price-sensitive and digitally savvy, franchised and platform-enabled IAM networks are steadily gaining appeal, particularly beyond Tier 1 cities.
Looking ahead, China’s VIO is expected to reach 435.1 million units by 2030, with vehicle ownership rising to 274 vehicles per 1,000 people. EVs will represent a much larger share of this parc, triggering structural changes in service demand, cost models, technician skills, and competitive positioning across the aftermarket value chain.
Expanding VIO and EV Adoption Emerge as Key Growth Drivers
The primary growth driver for China’s automotive aftermarket remains the expanding vehicle parc. In 2024, VIO grew by nearly 13% year-on-year, underpinned by relatively low vehicle ownership compared to developed markets. At the same time, the average vehicle age reached 6.7 years and is expected to rise steadily, increasing demand for maintenance, repair, and replacement services.
Rapid EV adoption is another major growth catalyst. EVs accounted for around 9% of total VIO in 2024 and are projected to represent around 22% of the total parc by 2030. This transition is creating new aftermarket demand for battery diagnostics, electric powertrain servicing, software updates, and charging-related services. In parallel, the expansion of franchised IAM networks and online service platforms is improving service consistency, transparency, and geographic reach, particularly in lower-tier cities where 4S dealership coverage remains limited.
While these are positive trends, the market faces serious challenges. Slowing macroeconomic growth and weakened consumer confidence since the pandemic have dampened discretionary spending, particularly for big-ticket automotive purchases. Authorized 4S dealerships also face pressure from high operating costs, limited multi-brand coverage, and declining ICE vehicle volumes. These factors are spurring consolidation while compelling smaller, less digitized workshops to either modernize rapidly or exit the market.
Service Dynamics Realign in Response to Electrification and Digitalization
Electrification has emerged as a major disruptor of China’s aftermarket. While EVs require fewer routine maintenance services than ICE vehicles, they demand higher technical expertise, specialized equipment, and software-centric diagnostics. Workshops must comply with stricter safety and operational protocols, while technicians need advanced certification and continuous training.
At the same time, digitalization is transforming how services are identified, booked, and delivered. E-commerce and local service platforms such as Tuhu, Tmall Yangche, Meituan, and TikTok are redefining the customer journey by aggregating demand and integrating vehicle and owner data. They are enabling one-stop service models. These ecosystems appeal strongly to younger, value-conscious consumers who prioritize convenience, pricing transparency, and speed.
OEM strategies are also evolving. As traditional 4S dealership networks contract, EV OEMs are increasingly partnering directly with IAM workshops to ensure cost-effective service coverage and faster network expansion. In parallel, domestic EV brands are strengthening local supply chains, driving demand for domestic parts manufacturers specializing in batteries, motors, power electronics, and intelligent driving components. This is strengthening the domestic aftermarket ecosystem.
Channel Shifts as IAMs Gain Momentum
In 2024, nearly 70% of vehicles on China’s roads were aged between zero and seven years, with an overall average vehicle age of 6.7 years. Independent workshops accounted for just over half of the service market, while 4S dealerships served approximately 48%. Intensifying competition from IAM networks, coupled with declining ICE sales, led to the closure of around 4,000 4S dealerships in 2024.
By 2030, rising vehicle age, improving service quality, and stronger franchising models are expected to further reinforce IAM dominance. Online transactions are projected to exceed 60% of total aftermarket transactions, driven by digital platforms that consolidate fragmented service resources. Data-driven analytics and AI-enabled diagnostics are expected to further disrupt traditional service models, improving conversion rates and customer retention. They will increasingly determine competitive success, while smaller, non-digital operators risk losing relevance.
EV-related aftermarket revenues are poised for strong growth as demand for tires, batteries, motors, and electronic components increases with vehicle age. A critical bottleneck remains the shortage of skilled EV technicians. Although EV penetration is increasing rapidly, the availability of qualified personnel has not kept pace. Over time, improvements in training, diagnostics, and modular repair solutions are expected to lower EV service costs by at least 20%, enabling wider adoption of independent EV servicing once these vehicles move beyond warranty periods.
The expansion of the used vehicle market is also supporting aftermarket demand. Used vehicle sales reached 15.7 million units in 2024, extending vehicle lifecycles and driving sustained demand for cost-effective aftermarket services, particularly among price-sensitive consumers in lower-tier cities.
Strategic Priorities to Pivot around Building Capability and Gaining Digital Advantage
Aftermarket players should prioritize developing EV-specific capabilities, particularly in battery diagnostics, refurbishment, recycling, and lifecycle management. Developing standardized online and offline battery evaluation systems will become essential as EVs move beyond warranty coverage. Pilot programs in Tier 1 cities can help service providers refine data models and scale offerings nationwide.
Investment in digital infrastructure and AI-enabled operations will be equally critical. Workshops should adopt intelligent scheduling, predictive maintenance tools, and integrated customer management systems to improve efficiency and service quality. Strategic partnerships with EV OEMs, battery suppliers, and technology firms will be vital for access to proprietary tools, software updates, and structured training programs.
Finally, domestic parts manufacturers and service networks should capitalize on rising confidence in local brands. By focusing on modular design, integrated systems, and intellectual property development, suppliers can secure long-term partnerships with OEMs and expand into higher-value segments. Participants who combine technical excellence with digital reach will be best positioned to lead China’s automotive aftermarket through its next phase of transformation.
To learn more, please see: Automotive Aftermarket Sector, China, 2025–2030, or contact [email protected] for information on a private briefing.
