Before the pandemic struck, the automotive aftermarket was in a state of flux. Evolving car ownership habits were altering the way we use, service and repair cars. In this interview, Alex Ashmore, Senior Vice President and President Aftermarket, Delphi Technologies explains how the industry needs to evolve in the shadow of Covid and what the impact has been.

The coronavirus pandemic has been a once-in-a-lifetime event that has changed the world in unprecedented and unpredictable ways. How has it impacted the automotive aftermarket?

I've been in this industry for 30 years, in multiple different regions from Europe to Asia, to now leading Delphi Technologies' global aftermarket. I've seen many ups and downs in the industry throughout my career, the worst before this being the financial crisis of 2007-2009, which showed us how resilient the aftermarket can be. Within those two years, I witnessed new car sales plummet by 42% in the United States, while aftermarket sales saw a decrease of only 1%.

The coronavirus pandemic, however, has hit the aftermarket more quickly and more severely. It started as a domestic and supply crisis in China, rapidly turning into the biggest ever drop in global aftermarket demand since records began, approaching 20%. We went from production recovery plans to protecting our employees to saving costs and protecting liquidity.

Aftermarket business leaders have said many times that 'the aftermarket is countercyclical and resilient against recession' but this time is different. There has been a sudden and dramatic drop in mobility and the number of vehicles running on the road. Once a country entered lockdown, mobility typically decreased by around 80% for cars.

Despite this short term impact, the aftermarket will recover more quickly than the new car sales business, where demand will be depressed for some time due to economics.

Despite this short term impact, the aftermarket will recover more quickly than the new car sales business, where demand will be depressed for some time due to economics. The aftermarket will benefit as the average vehicle age will increase, meaning more repair and maintenance.

The personal vehicle sector has obviously been most impacted so far, but how are other automotive sectors faring during lockdowns?

Interestingly, commercial vehicle and agricultural markets are not changing much. There are many brave people who have continued to work in order to keep essential services flowing and key workers moving. Consumers are also choosing home delivery services for essential supplies. Because of this, we see an increase in motorcycle and van finance.

I think we may also see an upsurge in green products like remanufactured parts as people exit the crisis with a more caring view of the world and governments use the opportunity to boost these areas of the economy.

Will the automotive industry have to rethink how they operate and conduct business in a post-pandemic world?

Absolutely. The auto industry was already moving toward digitisation, and the pandemic has speeded up the process. We can see a 'step change' in online motor retail with a shift away from showroom-based interaction that will last into the long term. Car dealers are upgrading their online presence and increasingly selling cars virtually. Online service booking alone is expected to increase by 32%, while online part sales are maintaining a 64% increase from last year.

They may never go back to the traditional ways of doing business. Auto part stores and distributors are also seeing a significant increase in consumers using e-commerce. Even in the supply chain, we see how social distancing has created a need for automation and consolidation in production and warehouses to reduce the risk of infection.

We know the auto industry is moving toward electrification and autonomy, and that will continue although it's becoming clear that manufacturers will, in the short term, prioritise green choices and electrification over autonomous technologies. A move towards sustainability and greener mobility is not only driven by consumers but also governments. This would include the concept of the 'clean, green' workshop or garage.

Independent workshops and garages are a huge part of the aftermarket and rely heavily on personal vehicle repair and maintenance. How do you see the pandemic affecting this sector of the business?

On the one hand, we have seen fewer people on the roads and lower vehicle miles travelled which reduces the need for maintenance. With fewer cars on the road, there are fewer collisions and accidents which means less business for crash repair shops.

On the other hand, we can also see an increase in private car use due to low fuel prices and reluctance to use public transportation. Certain business sectors may have decreased due to a change in consumer habits, but these seemingly lost opportunities have effectively just shifted into different markets.

A number of micro-market growth opportunities have emerged, based on delivery vehicles, increasing levels of DIY, older vehicles, online training, electrification, green products, and services. Now is time to look for these micro-market growth opportunities and align marketing and other investments to capture the opportunities presented.

Companies should take time now to join online training sessions that are focused on these emerging technologies to upskill during the downtime. Garages might want to look for more value-added services generated by techniques such as pulling data out of vehicles and joining up diagnostics, parts and services for a seamless consumer solution. Above all, they should make sure employees and customers feel safe through enhanced health and safety protocols.

The aftermarket industry had seen rates of do-it-yourself repairs for many types of jobs decreasing as vehicles become more complex. Do you see this changing now?

It is true that DIY repairs had been reducing, year on year, as vehicles become more complex. However, we've seen auto parts and accessories sales to individual consumers increase during lockdowns as people have more time to spare. This, paired with the convenience of online shopping, means they can do the repairs themselves with video support and save some money doing it.

It may not be a long term change, but something that suppliers and distributors should be aware of to help generate brand awareness and support consumer trust.

As an aftermarket leader, what are your set of priorities during this uncertain time? Can you offer any advice to other leaders?

First and foremost, protect your employees, customers and stakeholders. Set up for a future where your people and organisation are resilient and agile, and invest in technologies and infrastructure to support remote work and virtual collaboration. As companies are ramping back up, ensure a safe return to work with an enhanced focus on health and safety, cleaning, business travel policies and the need for personal protective equipment.

Secondly, I see the need to improve and re-align marketing and go-to-market plans. Routes to market will evolve and we need to adjust quickly by enabling more digitisation both from front end areas of sales, marketing, technical support, and also the back end to help deliver excellent service. Again, we need to identify the micro-market growth opportunities and use them to shape our marketing and other investments, then join up diagnostics, parts and services for a seamless consumer solution.

Finally, collaboration; we're all in this together. The automotive industry's cash constraint this year will make it difficult to fund future investment but together we should take educated risks with cautious optimism regarding stock and capacity levels so we can re-activate the business. Supply chains will shift to eliminate the vulnerability of over-reliance on a single country or vendor, and delayering is necessary. Let's plot a path forward once lockdown regulations start lifting and create mutual plans to make sure the aftermarket bounces back as quickly as possible.

The world after COVID-19 will be defined by the actions we take. We as leaders have an obligation to mitigate the overall economic repercussions and the employment impact of this pandemic. Let's work together to reshape the future of the aftermarket.