Wednesday, 09 December, 2020
Building on the analysis of a comprehensive real market data sample of nearly 356k data points across two regions, 14 international OEM brands and 8 product types, the new study entitled “Tapping the China Opportunity” provides astonishing insights into the pricing and brand positioning dynamics of the Chinese aftermarket.
The COVID-19 outbreak that struck early in 2020 posed a major challenge to China's auto industry, which had been the world’s most vital car market over the last decade. However, with the effective control of the pandemic, China's auto market has taken the lead in the global recovery. China is now – more than ever – the key driver of the global automotive market both in terms of new vehicle sales and car parc. Securing continuous growth in China is therefore the top priority for all automotive players.
The past months have shown that two elements are vital for the growth and profitability of the entire automotive industry: regionally, it's the importance of the Chinese market, and looking at the industry's value chain, it's the importance of the aftersales and aftermarket business, which is considered to be the most profitable segment for most automotive players.
As the world's most important growth market, China is currently the automotive industry's greatest source of hope. According to our analysis, already today, the Chinese market accounts for 31 percent of all new registrations and this figure will continue to rise (33 percent in 2030). The share of the global car park is growing even more strongly, from 20% in 2020 to 26% in 2030. At the same time, the average car age is rapidly increasing (from 5.3 in 2020 to 6.6 years in 2030), which leads to structural changes in the aftermarket. So far, premium providers of aftermarket services have been able to benefit from the lucrative business with spare parts and workshops in China. However, the growth dynamic is changing as the Chinese aftermarket structural landscape is altering rapidly.
Older vehicles, more price-sensitive consumers and a high level of transparency through digital offerings are posing a challenge. At the same time, automotive players are not approaching spare parts pricing in China in a coherent and strategic way. Our analysis provides evidence that pricing inefficiencies are limiting the market potential realization of these players.
Automotive manufacturers and suppliers need to adapt to be able to survive the changing tide with ever increasing digital disruption in China. To successfully target the challenges in the aftermarket, players must implement a holistic pricing strategy where pricing decisions are based on data driven scenario models and big data analytics. Our findings suggest important lessons for automotive players in the aftermarket seeking to successfully tap the China opportunity.
Would you like to understand how to position yourself as a relevant aftermarket stakeholder in the highly complex Chinese market? Download our full report with key findings and recommendations.
Photo credit: Dmitriy/Adobe Stock
Written by Eucon GmbH