COVID-19 crisis presents new opportunities for aftermarket e-commerce
According to a McKinsey & Company analysis, COVID-19 has created an economic situation that is fundamentally different from any previous crisis; as a result, it will introduce five additional aftermarket-relevant factors that were absent in the 2007 to 2009 financial crisis: a drastic reduction in vehicle miles traveled (VMT), fewer collisions, lower retail traffic, a significant increase in digital channels and e-commerce volumes, as well as lower public transportation use.
Many consumers and businesses have already migrated to e-commerce for parts purchases, and this trend may persist. In the United States, more end-consumers are now shopping for parts online, which helps mitigate the adverse effect of curfews and closed workshops. This trend was already prevalent in the B2B market, especially those in Asia and Eastern Europe, before it hit B2C.
Aftermarket players will likely offer omnichannel models similar to those of retailers—for instance, the ability to make purchases online and then make a quick pickup. The increased affinity for internet purchases may create an emerging opportunity for new business models or service options.
Furthermore, increasing internet penetration and growing online product portfolio of auto parts manufacturers are expected to fuel the growth of electronic retailing (e-tailing) in the global automotive aftermarket. The availability of a wide range of products and hassle-free transaction options, with timely delivery, as per the consumer preference, will further result in a shift of consumers from traditional brick-and-mortar stores to e-commerce platforms. Equipment such as headlights and lighting components and dashboard instruments are easily available on online portals. Due to these factors, the global automotive equipment aftermarket is expected to grow from $78.18 billion in 2019 to $145.07 billion by 2030, according to market research company ResearchAndMarkets.
On the basis of distribution channel, the online distribution channel category is expected to progress with the higher CAGR, of 8.36%, during the forecast period (2020-2030). Online distribution channels allow consumers to directly buy the components from a seller, over the internet, using a web browser or a smartphone application. Customers can shop online using a range of devices, including desktop computers, laptops, tablet computers, and smartphones. With the rise in the internet penetration, especially in developing countries such as Brazil and India, the automotive aftermarket is expected to witness an increase in the online sale of products during the forecast period.
Based on component, the equipment category is expected to progress with the highest CAGR, of 5.89%, during the forecast period. Dashboard instruments, under the equipment category, are expected to witness the fastest growth during the forecast period. With the rapid installation of technologically advanced and connected aftermarket instruments, including smart instrument clusters, central displays, and warning and information lights, in passenger cars, the automotive aftermarket is expected to witness significant growth during the forecast period.