More data, better connected
When you consider the rapid rate of change in the automotive sector in the last decade, its almost impossible to predict how the next decade will unfold – but we thought we’d have a go (from an automotive aftermarket lubricants perspective, that is).
The new B2B normal is online…
Some people might say the aftermarket has been late to the online sales channel – perhaps because, compared with many other sectors, the very high service level and prices offered from the ‘traditional’ distribution model made the transfer to online sales less compelling. But times are changing – Amazon and e-bay opened platforms that allowed a wider range of players to trade at a lower cost of entry than ever. It has become perfectly possible – and accepted – for businesses to trade entirely online – no ‘bricks’, just ‘clicks’. (Apart from the large number of people that transfer from being relatively ‘front of house’ to ‘back of house’ – be that warehouses, delivery drivers or digital specialists.)
Motorists – more savvy in pursuit of value
Our second prediction is regarding motorists themselves. Whilst motorists have generally never been so disengaged with vehicle maintenance, equally they’ve never been so empowered to question, challenge and scrutinise exactly what ‘good value’ is when it comes to looking after their vehicles. With so much information freely and instantly available in their pockets, the chance to understand the cost-makeup of their services gets easier.
The availability of that information, connected to an online supply chain and the offers of ‘buy now for next day delivery’ lends itself to what had seemed like an outdated model: ‘bring your own’. Whilst workshops might prefer not to take the risks of motorists supplying the wrong parts and the lost product margin opportunities, it may at least improve their cash flows and they might be pleasantly surprised by the saving of time that was once dedicated to sourcing parts!
End-to-end Data rules
More data, better connected – from the start to the end of the supply chain. For many industry parts suppliers, the unattainable holy grail of their sales and marketing approach has been to fully connect motorist, to service centre, to distributor, to parts supplier. Whether due to competition law, data protection law or just limited resources – this has evaded most supply chain partners. But the increase in online service centre selection platforms – independent, supplier-owned or distributor-owned makes this increasingly possible. (Expect declines in ATL marketing investments and far more on data-driven programmes.)
(Self-)Regulation and Industry Representation
Many consider the European Automotive Aftermarket to be a shining example of effective Competition Law in practice – and some suggest that it now no longer requires the same management as it once did. Aftermarket representatives generally argue that this level of effective market participation owes its thanks to the current Competition Law regime and the resulting availability of vehicle data.
Many OEMs and vehicle manufacturers suggest that increasing vehicle digitisation, automation and connectivity require greater levels of restriction around data access. (Indeed, the debate about who owns the actual data itself, let alone who owns the vehicle thanks to varying finance models, is fiercely contested.)
Where there is an absence of meaningful industry-regulation, we anticipate an increasing level of activity for industry self-regulation: indeed, the success and growth of the VLS (Verification of Lubricants Specifications) in the UK, is now taking momentum in other markets – observed not least with the recently launched Australian Lubricants Association. And the relevance and challenges of the IAAF and other FIGIEFA (The European Federation of the Automotive Aftermarket Distributors) members will only become more.
Lubricants
Lubricants will continue to play an increasingly critical, high-value, vehicle-specific role – in some ways this isn’t too hard to predict as it will follow the evolution of previous decades. As for (hopes or) fears about a fully electrified vehicle parc that requires no lubrication, it seems highly unlikely that this could be a reality that faces the aftermarket, within this decade at least.
If there’s anything with any certainty though, it’s that time flies and so whatever unfolds over the next decade, we really don’t have to wait too long to find out.