New Business Models Will Steer Revenues in Chinese Automotive Aftermarket, Finds Frost & Sullivan

 The total number of passenger, light and mini commercial vehicles in China is likely to reach 282 million by 2021, opening up opportunities for the automotive aftermarket in the country. To tap into this potential, however, aftermarket participants must address the challenges stemming from fragmented distribution networks, regulatory uncertainty, and the presence of counterfeit parts.

“The increasing demand of end users and the enforcement of anti-monopoly policies are expected to strengthen the independent aftermarket channel in China,” said Frost & Sullivan Automotive and Transportation Research Analyst Will Wong. “Automakers are opening authorized workshops and fast-fit chains in order to compete with lower-priced independent workshops.”

Increasing competition and changing consumer behavior will steadily boost the sale volumes of vehicle parts and services. Intense competition will also create a wider range of product and service options for end users to choose from, requiring participants to deliver more than just basic services to consumers and installers.

While vehicle owners demand high-quality products and services, their limited product knowledge and low brand awareness inhibits market growth. In order to sustain profits, service providers and parts suppliers must train end users on the identification of counterfeit parts.

“Further, deploying business models such as ‘bricks and clicks’ will be vital to market success,” concluded Wong. “Foreign suppliers should also consider partnering with eCommerce channels such as Alibaba to develop brand loyalty with consumers in the Chinese market.”