Independent analyst Datamonitor claims that Europe’s €146 billion light vehicle aftermarket business is in decline.
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It estimates 2008 revenues will drop by 1% compared to this year, a €1.2 billion decline. Growth between 1999 and 2003 was 3%.
Fast fit, autocentre and tyre specialist sectors are, however, expected to remain growth spots in this contracting market.
Vehicle manufacturer networks currently hold the largest share of the aftermarket across Europe – approximately 40%. While this will still be the case in 2008, their share will decline, with revenues expected to take a €2 billion hit.
In large part the decline will be felt by secondary dealers and agents rather than the core main dealer networks. Independent garages will also see a marginal reduction in their market share and a decline of €700 million in revenues by 2008.
The key negative factors impacting Europe’s aftermarket are lower volumes of replacement parts and highly competitive pricing in the market. The lower volumes are being driven by longer replacement periods on components as better quality parts are fitted to new cars – aluminium or stainless steel exhausts have replaced mild steel exhausts, for example, while traditional copper in spark plugs has been replaced with platinum. As service intervals are extended, volumes of “fast moving” replacement parts are reduced.
In a competitive market, players often focus on price to attract clients/business and the automotive aftermarket is no exception. Heightened competition – amongst manufacturers, distributors, retailers and service providers has resulted in intense price competition, with a resultant impact on the value of the market. Changes by the European Commission to Block Exemption – the rules that regulate the sale and repair of vehicles – are undoubtedly having an impact on the competitive situation in the industry.
The decline in the value of the European aftermarket will result in a shakeout amongst retail networks – Datamonitor estimates a reduction of 39,000 aftermarket outlets across 10 European countries by 2008.
A reduction in the number of independent garages is also expected – and this will be particularly noticeable in countries such as Spain and Italy with very dense networks of small independent outlets, reflected in the low average revenues per outlet.
The fast fit, autocentre and tyre specialist sectors will see an increase in value, with over €1.5 billion in revenues added in the period 2003-2008, as consumers perceive them to be a cost competitive and easy way to maintain a car.
Having undergone significant consolidation in recent years a number of major international competitors have emerged in this sector – KwikFit (including Speedy, PitStop and now Axto), Norauto of France (now incorporating Maxauto and Midas), ATU of Germany and Michelin’s Euromaster network (having acquired Viborg). Even in this sector competition remains intense, and these companies are likely to be amongst the key winners in an evolving marketplace.
