Automotive Aftermarket Industry to Hit $1,420 Billion by 2024
Leading market research and strategy consulting firm, Global Market Insights Inc has published a report projecting that the Automotive Aftermarket industry will exhibit over 5 percent CAGR from 2018 to 2024 to hit USD 1420 billion by 2024.
The increasing number of ageing vehicles is expected to increase the necessity for maintenance and scheduled servicing. Other factors spurring this growth will be growing customer expectations, more rapid pace of technological innovations, and rising competition across the automotive industry. More and more OEMs are venturing into aftermarket activities and there is a trend of consolidation of parts distributors. These factors are also expected to contribute to the positive outlook for the sector.
The North American automotive aftermarket industry accounted for over 30 percent revenue share in 2017. This can be attributed to the increasing production of new vehicles as well as the enhanced performance of old vehicles. Ongoing technological innovation in the automotive sector will create new opportunities for aftermarket companies to grow globally. Increasing customization of vehicles, digitization, demand for Bluetooth devices, and other accessories are driving automotive aftermarket industry in the U.S. and Canada. Better fuel economy in the new models is likely to increase the average miles driven by a customer. This will lead to more wear and tear in vehicle parts, thus driving up the demand for automotive aftermarket industry products.
Strong demand for automobiles from emerging economies is also likely to favor automotive aftermarket industry growth. According to OICA, global LCVs and passenger cars registered sale over 86 million units in 2017, an increase by 2.4 percent when compared to 2016. The increase in demand was supported by the rapid expansion of global players in Asian countries, especially in China, India, Australia, and Indonesia. Moreover, rising eco-friendly techniques in automotive manufacturing owing to the advent of stringent environmental regulations will lead to a surge in the demand for alternative automotive parts.
Consumers are showing a greater preference for upgrading existing cars with newer technologies and this is also expected to contribute to the growing automotive aftermarket industry size. Suppliers and workshops will benefit from the growing demand for electrification and software installation. Increasing popularity of connectivity/telematics, ADAS, info- and entertainment systems among young will further support the market growth.
Increasing competition among automotive industry is driving the exponential development of online sales platform for automotive components. Manufacturers are expected to offer convenient shipping options, flexibility, and a seamless online experience to boost their product sales. Consumers are anticipated to compare products and prices before buying decision. Increased convenience coupled with no-cost ship-to-store pricing are the major factors supporting automotive aftermarket industry product sales.
Replacement parts was valued at around USD 844 billion in 2017. Increasing maintenance requirements owing to excessive strain with vehicles’ aging and poor road conditions provides a positive outlook for aftermarket parts. Factors such as low production cost, rising number of manufacturers and increase in number of accidents will drive the segment growth.
Professionals are estimated to hold a major share of automotive aftermarket industry; representing over 65% of the total demand. The rest of the demand is generated from OEMs and DIY. Professional includes quick lubes, garages & services, dealers, government services, commercial fleets, and other professional outlets. Consumer preference for economical services, closer to home advantage and personalized services likely to augment garages, service stations and automobile dealerships growth rate. Service quality, high quality parts and technical skills are the major factors propelling professional segment market size.
The major automotive aftermarket industry players include Yazaki, Lear Corp., ALCO Filters, Magna International, 3M Company, Continental AG, and Denso Corporation. Other notable players include Copper Tire and Rubber Company, Akebone Brake Corporation, and Magneti Marelli. Industry participants are undergoing strategic collaborations to expand their regional presence. For instance, In December 2016, Faurecia announced its third joint-venture with its Iranian partners to strengthen its presence across the country.
This story, by Manu Mathew, first appeared on tiresandparts.net