Aftersales business growing, but disruption ahead, study says

July 11, 2017 // By Christoph Hammerschmidt
Growing at a pace of 3 percent annually, the automotive aftermarket business is a rather reliable segment. A McKinsey study estimates that by 2030 the volume of this business will reach the mark of $1.3 trillion – up from $800 billion today. Nevertheless, this market is far from being a soft pillow for its players: New business models, predominantly based on digital technology, will radically transform the sector.

The most stable factor in the aftersales market will be repairs and spare parts  – McKinsey’s study “The changing aftermarket game” predicts a constant market share of some 20% of the total aftersales market. The fastest growth will be seen in China (8.1% p.a.) whereas Europe (1.5%) and North America (1.6%) will experience only very modest growth. In the segment of repairs and spare parts, wearable parts will be the strongest pillar with 53% of the total sales. Accident repairs will be wort 12%, diagnosis 9% and services 6%, the study says.

Sounds boring? Not at all, says Andreas Cornet, head of McKinsey’s automotive consulting business. Because “the aftersales market will be transformed completely.” The reason: “New business models like direct sales of spare parts over the internet will reshape the existing division of roles and labor between OEMs, tier one suppliers, distributors and workshops.” In particular, digital, driving data based services such as software updates for the vehicle as well as real-time theft protection will see strong growth, Cornet predicts. Such services will reach a market share of 20% of the total market, he adds. Up to 25 % of the parts will be sold online in 2030.