Automotive aftermarket: publication of BCG study shines new light on the European aftermarket

Passenger car and commercial vehicle users and owners are particularly discerning customers, with 90% of consumers satisfied with the repair and maintenance offerings of the market. They make informed decisions about where to repair their vehicle based on factors such as price, convenience, quality and the age/value of their vehicle.

Consumer’s preferences are not fixed, and change as their vehicle ages. Accordingly, Vehicle Manufacturers do not dominate the aftermarket in any substantive way, and it is clear that over the entire life cycle of the vehicle that they only have a strong market presence for the first four years of the vehicle lifecycle. In any case, these early years of the vehicle are not a lucrative repair segment, and repair under warranty is its dominant characteristic.

The above are just some of the many conclusions of a Boston Consulting Group study that analysed the current automotive aftermarket. This study, demonstrating the structure of the market and its highly complex, competitive make-up is available at http://www.bcg.com/documents/file111373.pdf.

More information

To meet the wide range of consumer needs, the automotive aftermarket is made up of various aggressively competitive parties that provide different levels of service; ranging from the authorised networks of the vehicle manufacturers, independent repairers, repair franchises and a mix of original and non-original parts suppliers.

Independent and authorised repair shops, come in a variety of shapes and sizes. Operators of independent repair shops range in size from huge multinational corporations with outlets on every corner to ‘mom & pop’ small family businesses just around the corner. Contrary to popular understanding, the authorised network of vehicle manufacturers (OEM network) is made up of independently owned and operated small to medium enterprises (SMEs). The number of OEM-owned repair facilities is surprisingly small. On the other hand, there is strong evidence of aggressive consolidation in the independent repair market with a handful of companies seeking to gain greater influence and control.

Background

The small and medium enterprises that comprise the authorised repair networks are an integral part of the total aftermarket and provide a valuable service for those customers who value the quality, transparency and expertise they provide. Customers choose to visit the authorised repairer network based upon their own set of deciding factors in the same way that other customers choose to use the services of the independent network.

Authorised repairers add value by focusing on a limited number of brands and by agreeing to meet the high service, training, equipment and customer service standards of the OEMs. It is this concentration on quality repair and maintenance which is responsible for consistently higher quality and consumer satisfaction ratings. Authorised repair network customers appreciate the transparency regarding price and parts quality offered by the OEM networks. The independent operator lobby claim that vehicle manufacturers block access to critical VIN-based parts information is a falsehood. The OEMs provide the independent repairers with exactly the same repair and maintenance information as is provided to the authorised networks and they meet all legislative requirements. In fact, both the Irish and German vehicle registration agencies recently audited the available repair and maintenance information from two OEMs (in response to complaints from the independent operators) and noted no significant deficiencies. An independent repairer can input a VIN number and see exactly the same parts list that an authorised repairer can see. The call for more information in different formats is just an effort to simplify business processes and enhance profits by the large companies that make their money selling parts and services in the independent aftermarket.

The independent aftermarket lobby is also starting to cry foul regarding current and future remote communications, diagnostic and repair features on cars (E-call, B-call). Even though all current systems require the vehicle owner/operator to input or accept the choice of “preferred” provider, the independent aftermarket lobby apparently believes the driver should be “bombarded” by a host of offers whenever a vehicle problem is detected. Their prediction for a potentially drastic change in the market position between authorised and independent repairers fails to consider the experience of these systems to date and current market conditions. BMW has had such remote diagnostic and communications systems for almost 10 years and yet BMW has not experienced a dramatic improvement in their aftermarket business during this time. All players should keep in mind that these systems have been developed to improve the driving experience of the customer and that all aftermarket players have an equal chance to influence the service and repair choices of the car owner before the need for urgent action due to a breakdown or accident occurs.

In order to explore the realities of the automotive aftermarket, ACEA commissioned a study by the Boston Consulting Group (BCG) that looked to quantifying the structure of the market. Its findings show that consumers are aware of, informed and wholly satisfied with the repair and maintenance options open to them. This study, demonstrating the structure of the market and its highly complex, competitive make-up is available at: http://www.bcg.com/documents/file111373.pdf.