Development Status and Trend Analysis of Automotive Aftermarket in 2018

Ⅰ. Development Stage of Automotive Aftermarket

The domestic automotive aftermarket can be roughly divided into four stages of development:

First Stage (1990-1996): the beginning of the automotive aftermarket

Second Stage (1997-2006): the high-speed development stage of the automotive aftermarket

Third Stage (2007-2010): the shuffling stage of the automotive aftermarket.

Fourth Stage (after 2011): the automotive aftermarket is developing smoothly. Private cars are the main target of service. There are 2-3 regional leading stores in each region. Brand fast repair and fast insurance stores are parallel with 4S stations. Foreign automotive service chains enter into China. Other individual stores should choose their own development path.

 

ⅡCurrent Status of Automotive Aftermarket

As is known to all, buying a car is not a one-time consumption. After buying a car, insurance, maintenance, repair, car wash and beauty expenses follow. Compared with the rapid growth rate of China's automotive manufacturing, there is still a lot of development space in the domestic automotive aftermarket.

1. Consumption Prospect

According to the statistics, the current car ownership in China has attained 250 million vehicles, and the domestic car sales are growing at an annual rate of 6%. It is estimated that by 2018, the transaction volume in the automotive aftermarket will reach 150 billion yuan. After delivery, automobiles get into the automotive aftermarket. The automotive aftermarket, such as auto parts city, automobile maintenance, automobile refitting has broad prospects, which belongs to a billion-level market.

2. National Policy

With the policy of the National Development and Reform Commission (NDRC) on “Guidance on Promoting the Transformation and Upgrading of Automobile Maintenance Industry and Promoting Service Quality” and “Some Opinions on Promoting Parallel Import of Automobile”, the aftermarket monopoly position of 4S automobile shops will gradually be lightened. At the same time, the NDRC is determined to rectify the development of the automotive aftermarket in an orderly and competitive way. The state is the strongly supportive of the attitude in the automotive aftermarket. A series of measures, including the introduction of the guidance and opinions, are aimed at breaking down barriers to the automotive aftermarket and introducing free competition.

3. Internet Penetration Level

In 2017, the scale of Internet users in China reached 792 million, and Internet penetration rate reached 55.9%. Meanwhile, the scale of mobile phones in China has reached 739 million people, and 97.8% of Internet users use mobile phones to access the Internet. The proportion of rural netizens is 30.4%, and the scale is 250 million people. The proportion of urban population is 69.6%, and the scale is 542 million people. The development of mobile Internet promotes the change of consumption mode. For example, it promotes the consumption of automotive aftermarket, such as on-line door-to-door car washing, on-line scheduled car repair, on-line help to 4S shop maintenance, designated driving, etc.

4. Consumer Demand and Psychology

With the continuous improvement of social income level, vehicles are no longer luxury goods, but tools of life. More and more consumers buy cars to travel more conveniently, so driving mileage has increased dramatically. At the same time, because of the increasing pressure of social competition, consumers hope to enjoy life after work, so they are willing to spend more on safe driving in order to save time.

（1）(1)Young groups, represented by the “post-80s” and “post-90s”, have active consumer behavior and weak brand presupposition, which provides a good space for enterprises to develop innovative products;

（2）(2)There are significant differences in consumer behavior among various markets. Brand loyalty in the first-tier and second-tier markets keeps increasing, and the categories related to perceptual needs are growing rapidly.

（3）Family monthly income of 7000 RMB becomes the watershed of consumption activity. Consumers above this level pay more attention to collecting product information as well as perceptual demand consumption.

（4）With the rapid development of online shopping, the differentiation of online shopping is obvious.

 

Ⅲ The Factors in Influencing the Development of Automotive Aftermarket

1、Price of goods or services: Generally speaking, the price of goods in the automotive aftermarket changes in the opposite direction with the demand in the automotive aftermarket, that is, the higher the price, the less the demand, and vice versa.

2、Reasonable Density and Capacity of Automobile

Reasonable Density of Automobile: Reasonable density of automobile in a country or city refers to the density of automobile when driving in a country or city without traffic jam. If it exceeds the reasonable density of the car, the country or city will often have traffic jams. The reasonable vehicle density of a country or city is directly proportional to the total road mileage of a country or city, and inversely proportional to the total population of a country or city and the average vehicle length. Because the total mileage of highway, the total population and the average length of automobile in a country or city are all variable, the reasonable density of automobile in a country or city is also variable.

Reasonable car capacity: The reasonable car capacity of a country or city refers to the capacity of a car when it is not in traffic jam when driving in a country or city. If we exceed the reasonable capacity of the car, there will be little room for growth of the car, and the aftermarket will basically enter a saturated state.

3、Car Ownership: Car Ownership refers to the number of cars already owned in a country, region or city, which determines the actual demand of the automotive aftermarket.

4、The income level of consumers: When the income of consumers increases, the demand for automobile decoration and refitting will increase.

5、Prices of gasoline and electricity: Gasoline and electricity are the most relevant commodities in the automotive aftermarket. When the price of gasoline and electricity rise, the demand for vehicles and electric vehicles will decrease, meanwhile, the demand for products and services in the automotive aftermarket will decrease.

6、Consumer preference: When the owner's preference for a certain commodity increases, the demand for the commodity will increase; on the contrary, when the owner's preference for a certain commodity decreases, the demand for the commodity will decrease.

7、National policy orientation: When the consumption tax on automobiles increases, the demand for automobiles decreases, and vice versa.

8、Consumer expectations: When the owner expects future revenue to rise, the current demand for products and services in the automotive aftermarket will be increased, and vice versa.

9、Population factors: Because of urbanization or immigration, when the population of a city increases, the demand for products and services in the automotive aftermarket of the city will rise.

 

 Ⅳ The Painful Points of Automotive Aftermarket Development

The core pain point of the automotive aftermarket is not the price, but what value the enterprise should create for the users. So, how to win the value campaign for enterprises after developing automotive market?

1、Increasing user trust

There is no doubt that increasing user trust is the most important appeal. The users see your brand, after enjoy your service and have trust in you, and finally stickiness to you. But as a businessman focused on the benefit often minds benefit and neglects the user trust. User trust comes from "profession". Profession is not only a technical profession, but also a service profession. Sometimes your technology is not so good, but your staff's service attitude is very good. I can ignore that point of lack of technology and give you trust.

2、Good price performance

The cheapest price is not equal to the best performance-price ratio. It is necessary to make the product of higher quality at the same time of cheaper price. Of course, the so-called "good" is not that the lower the price is, the higher the quality is, but what is in line with the consumer psychology, controlling in the "appropriate" range. If the price is too low, users will not trust you so much, and even suspect you are a liar.

3、One-stop service

If I can enjoy the services in the same store that integrate various services of different stores, I will definitely give priority to this store. Of course, one-stop service is not so simple, and car service is definitely not traffic behavior, nor can it use short-term capital to burn subsidies. The one-stop service under the Internet + mode of thinking is definitely not a simple service integration. It should focus on API interface resource docking.

 

Ⅴ Future Trends of Automotive Aftermarket

Capital is speeding up the layout of the automotive aftermarket, and the popularity of household cars is rapidly expanding the scale of the automotive aftermarket. Industry insiders said that the automotive aftermarket has brought huge imaginary space to the industry, and the industry will still restructure or shuffle at a certain stage. Although there is a huge space in the automotive aftermarket nowadays, investors still need to keep rational and enterprises need to keep positive and keep forging ahead.

2018 is a year of rapid development of automotive aftermarket. Influenced by the core technologies as Internet, big data and cloud computing, more and more enterprises are moving towards the intelligence and transformation way. With the change of the automotive front-loading market, the automobile aftermarket must also meet new challenges. Following as below:

1. Base on core business, further integrate resources, enrich service content, realize business linkage between platforms and platforms, and finally form an online integrated service platform for automotive aftermarket;

2. Accelerate the network layout, establish unified service standards and shape the service brand;

3. Give full play to the data advantages, accelerate the deep application of artificial intelligence technology, optimize the efficiency of the operation system, and accurately obtain customers, provide intelligent recommendation products and services.

 

Generally speaking, the market of automotive after-service has huge space and stable growth. In the future, the automotive service cluster may replace the traditional single and fragmented operation mode, and rely on the open and transparent characteristics of the Internet, establish perfect pre-sale and after-sale services, optimize its own business processes through management software, and provide users with humanized services and inexpensive high-quality products.