Friday, 03 April, 2020
Latest perspectives to secure the aftersales business and financial stability
It is impossible to predict how long the COVID-19 outbreak will last. But there are a few things we know for sure – it will have a huge impact on the automotive industry.
Even at the start of 2020, automakers were already under a lot of pressure with flagging new vehicle sales in most markets. But, as long as the global economy was humming along, there was at least money to be made in parts and repair. Now that is off the table as well.
As cities lock down, borders close and financial markets collapse, and usage will reduce. Vehicle owners and fleets are expected to defer their maintenance. Reduced car sales in 2020 will limit the aftersales potential for dealers. A good test case is China – which has hopefully gone through the worst of the outbreak and seems to be emerging from it.
As the outbreak peaked in China in February, the country saw vehicle sales decline by 80%, as per data released by the China Passenger Car Association. A Forbes article predicts that European car sales may decline by as much as 20% this year. Numbers are likely to be similarly dire for North America. The National Automobile Dealers’ Association (NADA) in the U.S. says that new car sales will have likely dropped by as much as 40% in March.
Suppliers also see decline in part sales. According to a survey conducted by the AASA China Aftermarket Forum between February 20 and March 2, suppliers in China are expecting a 24% decline in sales in Q1 2020. While vehicle repair locations have been deemed essential services in the U.S. and Canada, and they will remain open, demand for these services will plunge.
All these market disruptions will have an extensive impact on parts pricing. Eucon’s global pricing experts and specialists are constantly monitoring nearly 80 different markets to understanding parts pricing across various channels. In some markets, such as the U.S., we have already started to notice price movements. It is difficult to accurately say what’s causing this (these may have been pre-determined pricing actions) but, from our experience of analyzing parts pricing data for the last 25 years, we expect the following in the upcoming months:
There may be other outcomes as well which we cannot predict. However, one thing is for certain, in dynamic and unpredictable markets, continuous monitoring is vital for survival. Consequently, mass data-driven systems are essential to derive the right price and market decisions in time. Pricing actions are a critical lever for OEMs, suppliers, retailers and dealers to steer them toward profitability in the remainder of 2020. Accurate and actionable pricing intelligence and analytics will be more important than ever for ecosystem players to increase their revenue potential and maintain market share.
In these turbulent times, Eucon is well placed to provide the guidance you need to steer your aftersales business towards profitability. In the automotive industry we are one of the world's leading providers of best-in-class market information and data-based systems for efficient pricing and product management in the aftermarket. For 20 years now, manufacturers and suppliers worldwide have been benefiting from our data and pricing expertise in the aftermarket. Our solutions such as PartsPool®, PartsPool®Custom, Aftermarket KPI Monitoring, and Eucon Price Surveys & Analysis for more than 80 countries are among the leading solutions in price information systems in the automotive aftermarket.
We wish our aftermarket family – and beyond – all the best in the days ahead. Stay healthy and stay safe! We, at Eucon, are positive that we can all overcome this crisis together.
If you have any questions about our pricing tools and overall market intelligence, we are there for you:
Written by Eucon GmbH