Changing customer needs, shaped by political, economic, technological and social forces, will have a broad impact on the automotive aftermarket business in the next five to 10 years, John F. Smith, GM vice president and general manager of GM Service Parts Operations, told attendees at the 2001 Global Automotive Aftermarket Symposium, in Chicago yesterday.

On the political front Smith said unsupportable population growth and urbanisation of developing countries would create new waves of immigration to developed countries with workforces and workplaces changing.

Rising populations will increase demand for mobility, but air and water pollution, waste disposal and recycling issues will be magnified, building pressure for policies and regulations that contribute to a "sustainable environment."

Economically, increased global trade will become a source of growth, competition and innovation.

In the car industry, consolidation will mean fewer discrete platforms and drivelines, Smith said.

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To innovate faster, successful organisations will become flatter and will network both internally and with their business partners, utilising creative work plans to retain staff in what will become an employees' market.

Technologically, Smith believes the Internet is transforming our world.

"By 2010, 95 percent of the industrialised world is expected to be on line,” he said.

"The Internet could account for $US6.3 trillion in business-to-business transactions and 10 percent of global consumer sales by 2005. Wireless access may number 1.2 billion users by 2005. There will be a continued revolution in information-related devices, services, and applications yielding 'smart' appliances. Many of these will find expanded customer application when integrated with telematics like those being developed by OnStar.

"We should anticipate the possibilities of 'predictive or preventative' maintenance versus the 'corrective' world we've lived in."

On the social front, Smith said that in 2010, one of every three citizens in the U.S. is expected to be a minority.

"Generations X and Y are living this diversity now and will soon vote their experience both at the ballot box and stores in neighbourhoods. They value the smart buy, word of mouth endorsements and are brand aware but not brand loyal."

The Baby Boom generation at the same time is aging and focused on legacy. Time has become more dear than money, creating additional demands for 'anything, anytime, anywhere' solutions.

This combination favours trusted brands, especially those offering value, 'experiences' and easy links to other problem-solving products or services.

Smith said he believes these forces will shape customer needs and, hence, developments in the aftermarket business.

"At retail, it seems likely that both the do-it-yourself and 'independent' service garage businesses will continue to decline.

"The service landscape stands to be altered by vehicles equipped with both on-board diagnostics and telematics capabilities.

"Brand proliferation will produce significant increases in part numbers with distribution in the automotive aftermarket increasingly emphasising speed over inventory as one means to deal with the exploding part numbers.

"Demand for reconditioned and remanufactured parts also will grow as a partial solution to stocking new.

"Digital supply chains will seamlessly move replenishment and delivery time data from customer to supplier and back again. Three-step distribution practices should decline sharply as distributors attempt to forward integrate to secure their end-user customer bases.

"Distributors will pursue 'co-opetition' with vehicle manufacturers to obtain technical and diagnostic information important to the success of their 'retail' initiatives.

"In manufacturing, increased scale will be important to successfully bid on larger OEM contracts.

"Recycling will be seen as an opportunity to make a buck rather than a regulatory cost to be minimised.

"'Safety, personalisation, infotainment, privacy' become high-demand customer needs for product development activities."

Smith concluded his remarks by sharing his prescriptions on how to position aftermarket businesses for the times ahead:

  • Think about what customers may want in the future and ask what they have come to expect from the products and services they purchase
  • Recognise that convergence, achieved through consolidation or "co-opetition," is no longer a defensive move but rather a requirement to successfully 'compet'
  • Successful organisations, standalone or converged, will be leaner and flatter for speed's sake and connected with their business partners in creating winning solutions
  • Convergence with business partners outside the automotive aftermarket may be advised to broaden the number of customers who can be served over time
  • Reach beyond 'make and sell' and even 'sense and respond' and think in terms of 'anticipate and lead'.