Position Paper Automotive Trade - Radical Market Change in Aftersales

by Thomas Brede, Head of the Automotive Trade Competence Center at unitcell, November 2015.

While the previous unitcell industry reviews in the automotive trade usually had a current trigger from the external environment of the industry (change in the Block Exemption Regulation in 2013, effects following the scrapping premium in 2011, etc.), a radical market change is now taking place in aftersales. Taking up this occasion, in late summer we updated our industry paper, which has been published regularly since 2006.

Workshop platforms on the Internet and the online parts trade are emerging from the shadowy existence they led for years: the days of the Internet pioneers are now over in aftersales as well. Large, market-changing players with a high level of industry and online expertise are revolutionizing the aftersales market.

In recent years, there were already signs of the pressure that online platforms were beginning to exert on the conventional aftersales business. However, in the form of weakened sales growth - compared to the 2000s. However, as the statistics still showed growth curves (albeit in a smaller form), this pressure was effectively "masked".

The second part of the "masquerade," which many market participants did not take note of, was in the comparison of sales and revenue curves. On the basis of the sales curves (number of labor values or wage hours sold), stagnation or decline were frequently observed phenomena in contract workshops. However, these volume losses were usually offset or more than compensated for by price increases.

However, it was essentially only possible to push through price increases because the aftersales market was significantly less transparent for consumers than the highly transparent vehicle trade. However, the triumph of online platforms should finally put an end to this: In the parts trade, price differences and, above all, dealer margins can be directly compared via online portals, and the same applies to standard repairs. And the development step of making even more complex repairs more comparable online should no longer be a question of "if and how" for the platform operators, but merely a question of "when".

From this point of view, questions of customer retention and customer acquisition are posed in a completely new way for contract-based automotive dealers - the answers to these questions require a complete rethink, which must lead to a change in strategy in the existing business models.

The statistical basis as well as our views and alternative courses of action are presented and discussed in our current position paper on automotive retailing. This makes the unitcell position paper required reading for every auto retailer and every stakeholder of retail companies.

Excerpts of the paper can be viewed here free of charge.

Thomas Brede

Head of Competence Center Automotive Trade