Half of the profits in the automotive industry in Europe come from the sale of spare parts, a new report has claimed.
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Although replacement parts represent less than 10% of automotive industry turnover in Europe, the sector is now critical to the survival of many car and component suppliers.
Selling parts and servicing cars keeps franchised dealers alive. This means that the aftermarket massively cross-subsidises new vehicle sales, the report said.
The ‘European Aftermarket Handbook’ is claimed by authors John McCormack, formerly head of Federal Mogul Corporation’s European aftermarket activities, and John Wormald, a founding partner of Autopolis, to be the first comprehensive review of the sector.
It looks at the wide mix of sales channels and competitors and analyses all aspects of the business.
“The aftermarket is ill-documented because it is so complex” noted Wormald. “That has made it easy for the industry to hide behind”.
The authors said the aftermarket is the ‘Cinderella of the [auto] industry’ and yet it can make or break the economics of the sector. It is also the front line in the relationship with consumers, which car makers often forget.
“Only the fast-fits and auto centres seem to have understood that,” added Wormald.
The sector is also a political football, with the European Commission intervening to try to keep it competitive, the authors said.
