The automotive aftermarket is a beneficiary of the current pandemic and economic crisis in that there is already a visible trend for people to keep vehicles longer – and thus service them more – with this likely to continue for some time.
A recent global article written collaboratively by the Automotive & Assembly practice predicts the automotive aftermarket is still a long way off from returning to demand levels of 2019. In South Africa however the market has recovered remarkably well, with the exception of the new vehicle dealers, and is averaging between 85% – 100% of pre-Covid capacity.
Pieter Niemand, national director of the Motor Industry Workshop Association (MIWA), an association of the Retail Motor Industry Organisation (RMI), says although capacity is up, we are seeing a fundamental shift.
“A change in consumer behaviour, a fairly radical creep in the Age of Vehicle Parc relative to the period of creep, altered supply chain strategies, ongoing technological innovation and consolidation are all factors shaping the workshop of the future,” says Niemand.
Niemand says prior to Covid the talk was about electric cars changing the face of workshops but now other factors have become more pressing. Economic pressure for example is forcing many consumers to postpone new car purchases as evidenced by the current drop in vehicle sales locally.
Year to Date for the comparable period, passenger vehicle sales are down 34,8%. If this pattern continues, the increase in older vehicles could definitely boost the need for repairs and this bodes well for the future.
“People will still need transport, and in the absence of sufficient public transport alternatives, we believe this trend is here to stay for the foreseeable future.”
Looking to the future, Niemand says workshops are having to strategise now on how best to service changing consumer preferences and accommodate the changing marketplace.
“It makes sense to expand our service offering by looking at joint ventures between Parts suppliers and workshops where we can offer a more holistic offering and a virtual one stop shop for customers who could order online.
“Many consumers and businesses have already migrated to e-commerce for parts purchases, and this trend will persist so it is important we get ahead of the curve and take advantage of these emerging opportunities,” says Niemand.
Niemand says supply chain procurement is also under review, particularly with the current uncertainty. He says in Europe and America the trend is definitely to move to near-shore sources as opposed to relying solely on Asian manufacturers.
“Supply security is a priority,” says Niemand.
“With the industry in transformation, it is likely that we are going to see some business closures and some new start-ups. We are also likely to see more mergers and acquisitions as the industry consolidates and a change in the go-to-market approach with some innovative new service offerings. We are going through an exciting change. We need to embrace the new opportunities to keep open the best employment opportunities in the future and ensure the ongoing sustainability of the sector,” he concludes.
I’ve generally had older vehicles (in 2017 I replaced an 04 Hyundai XG with a 13 Ford Fusion). It seems here in North America, the pandemic and the move towards remote work has already caused a shift whereby people are commuting less, and in fact moving out from the cities. That suggests to me cars will be lasting even longer and many will be used mostly for pleasure trips.
Much the same is trending here in South Africa. Thanks for commenting.