Frost & Sullivan’s recently released study on the “Global Automotive Aftermarket Outlook, 2018” had some ominous news for market participants: a continued slowdown of growth in the most mature and biggest aftermarkets globally, including the US and Western Europe. Promisingly, however, the annual study which covers aftermarkets in North America, Europe, Latin America, China and India found that tapering growth in developed regional markets would be offset by burgeoning opportunities in emerging markets, including in China, India and Eastern Europe.

Our research also identified three trending themes—data monetization, eRetailing and autonomous vehicles—that will create upheaval in 2018, compelling market participants to quickly realign their strategies or lose out on revenue prospects of over $400 billion.

Emerging Markets Offer Strong Growth Opportunities

Market participants should develop repair and maintenance solutions customized to the specific needs of emerging markets.

Shrinking replacement demand across key US and Western European markets will impact the overall growth of the automotive aftermarket. The increasing average age of vehicles in operation (VIO) will make it particularly challenging for OEMs to derive any benefit from this trend as old vehicle owners have typically exhibited high levels of price sensitivity.

At the same time, despite declining new vehicle sales in some developed markets, the global VIO count of passenger cars and light commercial vehicles is expected to increase by 3.9% during 2018. This growth will be driven primarily by brisk sales of new vehicles in markets like China and India. China, in particular, is set to emerge as a hotspot for the automotive aftermarket; over the next couple of years, the majority of VIO in the country will be 4-5 years old, considered the sweet spot for the aftermarket. In Europe, the focus of the automotive aftermarket will shift eastward to Poland and Czech Republic for both manufacturing and consumption.

Data Monetization Represents New Revenue Streams

Market participants should hop onto the data monetization bandwagon to develop, design and deliver more targeted solutions and business models.

Data is the new gold, not just for automotive manufacturers but for the aftermarket as well. Currently, cars provide 200 data points with a potential value of approximately $100 per car. Over the next decade, OEMs are set to accelerate the development of customer data applications and connectivity technologies in bid to monetize such data.

Aftermarket suppliers have an unprecedented chance to leverage on such data by improving their product and service portfolios, designing innovative predictive maintenance solutions and developing new business models. Access to such data will also be critical in helping automotive aftermarket participants devise focused marketing strategies for the fast growing electric/ hybrid vehicles segment.

eRetailing Gears for Takeoff

Market participants should evaluate the digital route and leverage the growing appeal of eRetail channels to reach out to a wider audience.

Our team has been closely tracking the disruptive impact of eRetailing on the aftermarket. Traditional retailers will need to look sharp as eRetailing channels are estimated to generate close to $30 billion by the end of 2018, backed by aggressive year-over-year growth. New business models, especially around offline to online (O2O), together with comprehensive offerings, price transparency, rapid delivery times and services ranging from do-it-yourself (DIY) to do-it-for-me (DFIM) are underlining the growing appeal of eRetailing channels.

During 2018, in particular, we expect to see investments from both OEMs and OES participants. eCommerce giant Amazon created a buzz last year by announcing its entry into the space with its single platform integrating automotive retail and aftersales. OEMs and other industry stakeholders are also likely to adopt this route and converge all their aftersales services onto a single, digital platform, thereby adding impetus to the growth of online sales.

Multiple Challenges Loom Ahead

Market participants should strategically address new automotive technologies that threaten the survival of certain traditional parts repair and maintenance services

The aftermarket will have to proactively address the challenges thrown up by the galloping pace of technological change in the automotive industry. In this context, the increasing penetration of advanced driver assistance systems (ADAS), autonomous cars and electric vehicles (EVs) needs to confronted head on.

Frost & Sullivan estimates that in 2018 the penetration of ADAS / autonomous cars will reach 10% of the total VIO in North America. This will gradually start to have an impact on aftermarket demand, especially for repair services, as such vehicles are less likely to be involved in collisions than their conventional counterparts. In North America alone, revenues of the collision repair industry are likely to fall by almost 30% by 2030. At the same time, EVs will pose a challenge as multiple parts used in conventional vehicles will become obsolete.

Even as the automotive aftermarket market looks forward to new opportunities thrown up by data monetization, emerging regional markets and eRetailing, it is also a time for introspection to determine the best path forward in a highly disruptive automotive ecosystem.

The “Global Automotive Aftermarket Outlook 2018” is an annual research study that provides information on vehicles in operation, replacement demand for top part categories, key aftermarket demand influencers, and also details opportunity areas for different regions including North America, Europe, Latin America, China and India.

For more information on Global Automotive Aftermarket Outlook 2018, please visit ( or write to to order your copy.

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