OES are focusing on offering affordable, express service to retain their customer base, finds Frost & Sullivan’s Mobility team

MUMBAI, India – February 07, 2017 – Original equipment service channel’s (OES) main market, which comprises of vehicles 0-3 years old, is expected to shrink from 36% to 27% by 2022. But, vehicles that are more than 10 years old are set to increase from 26% to 42%. As the latter segment tends to seek lower-cost service or repair alternatives, original equipment manufacturers (OEMs) are likely to change their business model from largely dealer focused to aftermarket focused. Many OEMs are aggressively pursuing e-commerce alternatives to attract new customers for maintenance and repair services, which accounts for 40% of dealer profits. Already, Toyota and Mahindra are looking to enhance their customer service in order to facilitate the use of genuine parts anywhere, anytime, and at users’ convenience.

“OEMs are creating new aftersales avenues and platforms to ensure greater customer loyalty and reach through parts e-commerce, online vehicle service scheduling, in-store technology, mobile apps, and telematics solutions,” said Avijit Ghosh, Principal Consultant, Mobility Practice, Frost & Sullivan. “Offer of quick or express service at convenient locations, mobile or doorstep service, aftermarket wholesale programs for OEM genuine parts, and authorized repair shops outside the dealer channel are critical for OES channel’s growth.”

Strategic Analysis of the Indian OES Channel is part of Frost & Sullivan’s Automotive & Transportation Growth Partnership subscription and finds that in 2015, the OES (dealer) channel generated $3 billion and $4.7 billion in parts revenues at the manufacturer level and dealer-net level, respectively, accounting for 37% of the total Indian aftermarket. Other topics under this subscription include real driving emissions, on-demand bus transit, independent aftermarket, IAM, Brexit, public bike sharing and e-Retailing.

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As owners of aging vehicles prefer low-cost service, multi-brand service chains such as Bosch or Mahindra First Choice are posing stiff challenge to the OES channels. Furthermore, OES’ labor rates are 40-60% higher than those of independent garages and 20-30% higher than service chains. OEMs can resolve most of these challenges by tweaking service pricing through a tiered labor rate and opening more quick-service outlets that offer affordable, OEM-quality service.

The OEMs best positioned for innovation and strategic growth are:
Toyota, Mahindra — e-retailing of parts
Ford — vehicle-embedded, call-for-help system using telematics
Tata MotorsNexa — online vehicle service schedule
Nexa — in-store technologies using iPads, tablets
HyundaiGeneral MotorsVolvo — multifaceted mobile app that improves vehicle connectivity

“One of the most prominent trends to emerge in the OES channel is the offer of predictive maintenance using telematics solutions, remote repair and prognostics,” noted Ghosh. “With the adoption of e-Retail solutions, strong economic growth and the consequent rise in vehicle sales, the OES channel is expected to touch $8.50 billion at the dealer-net level in 2022.”

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Strategic Analysis of the Indian OES Channel
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Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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