This article explores the dramatic transformations occurring in this segment. When we examined the 12 key trends shaping the automotive sector, we found that four changes related to technology are likely to have a great and enduring effect on the automotive aftermarket, leading to shifts in demand that will vary in size and direction across all defined categories of automotive components:
Electrification will lower demand in six categories: accessories, chassis (brakes), electrical/electronic (E/E) starter batteries, E/E starters and alternators, fluids, and traditional powertrain (internal-combustion engine, or ICE, parts). In contrast, demand for other chassis components, powertrain (electrified-vehicle, or xEV, parts), thermal parts, and tires will increase as a result of electrification.
Autonomous driving will make vehicles less customizable and reduce collision frequency. That will result in lower demand for appearance accessories and higher demand for E/E (advanced driver-assistance system, or ADAS, components).
Shared mobility implies more standardized electric-vehicle (EV) fleets and makes the case for incorporating autonomous driving into these fleets. That will mean lower demand for accessories and higher demand for E/E (ADAS components) and powertrain (xEV parts).
Digitization of interfaces and channels will lead to new revenue opportunities for those aftermarket players that move faster than their peers. We expect to see new platforms and channels. However, it could also trigger price pressure for components where replacement is not urgent. That will drive down demand across more component categories than any other trend and will not drive up demand in any category.
Acceleration of the trends could cut into aftermarket growth
The net effect of these changing demands is overall growth in the automotive aftermarket. To reflect uncertainty in the degree to which these technology trends will proliferate, we have prepared forecasts for two very different growth scenarios: a base case and an accelerated case. In both cases, growth varies by region (see exhibit).
The base-case scenario sees nearly 50 percent growth in the combined aftermarkets of China, the European top four (the United Kingdom, Germany, France, and Italy), and the United States, rising from $463 billion in 2019 to $675 billion in 2030.
In the second scenario, the proliferation of the four trends accelerates, and growth in the automotive aftermarket is expected to be somewhat less robust. An acceleration of the trends would reduce the overall size of the car parc but increase the share of electric vehicles. Within this smaller car parc, the acceleration also results in a larger share of autonomous vehicles and shared vehicles. Together, these shifts reduce the size of the market to $588 billion in 2030—still representing a growth of approximately 30 percent in market size compared to 2019.
How to get ready
To navigate the expected changes in revenue pools in the coming decade, aftermarket players will need to build new capabilities and infrastructure through long-term investments in both people and equipment. To position themselves optimally for their industry’s new paradigm, aftermarket players can take a three-step approach:
- Assessment of their organizational performance and full potential. Holistically assess your organization’s starting point and full potential by benchmarking in the areas of strategy, top-line excellence, sustainability, operating model, digitization, and cost efficiency.
- Initiative generation and action planning. Derive initiatives from the organization’s priority action areas. The set of initiatives can differ for each organization but might have similarities for players within a category (such as OEMs, suppliers, or independent aftermarket players).
- Initiative implementation and value capture. Ensure value capture through rigorous implementation, including the right governance system, tracking and management tools, and incentives.
The four technology trends discussed are already shaking up the new-car market. It is only a matter of time before disruption is seen in the aftermarket. Industry players that promptly begin assessing their organization’s starting point and full potential as they examine the impact of this shift on tomorrow’s revenue pools will be in a profitable position to mitigate the risks and capture the new value.