Monday 26 July 2021

Digitalise to survive, say aftermarket experts

Messe Frankfurt, the organiser of the Automechanika events aimed at the automotive aftermarket, recently hosted a webinar discussion on the topic of how digitalisation is altering the way the sector conducts business, and how it can accelerate the pace of recovery following the Covid-19 pandemic.

The event, which was sponsored by ecommerce solutions provider Ecommotors, featured a presentation by Dr Julia Saini, associate partner at research and consultancy provider Frost & Sullivan, on the implications of Covid-19 for the aftermarket, including maintenance and repair providers, and key opportunities emerging as a result.

Dr Saini acknowledged that a reduction in vehicles on the road during the height of the pandemic had reduced demand for breakdown and collision-related parts.

A drop in business had posed a challenge for garages, she said, which need to be operating at 80-90 per cent capacity in order to make a profit – whereas utilisation had gone down dramatically during the outbreak. Digitalisation was proving a vital factor in ensuring survival, providing new channels through which business could be generated.

She identified several key trends and opportunities for which Covid had proved a catalyst, including e-commerce for parts and services, driven in part by the need for contactless deliveries; online marketplaces for booking services; a surge in demand for on-demand mobile mechanics; and a boost for the vehicle hygiene and sanitation market, driven by health and safety concerns.

“We believe the aftermarket definitely has the potential to emerge showing resilience, shifting the way it does business, and engaging and investing in digitalisation elements and new business models,” Dr Saini said.

She highlighted significant increases in the use of various digital platforms for replacement parts and accessories, as well as automotive on-demand services, including mobile mechanics, between April and July this year.

Some platforms offered brokering services between customers and garages, utilising an established and certified network of garages for users to choose from – while others offered an ‘e-servicing’ model, where the provider takes full responsibility for the entire servicing contract, selecting both the garage and also directly procuring the required parts.

“In future services will become more dynamic, more intuitive, more predictive, with greater connectivity,” Dr Saini predicted.

She also highlighted the emerging potential for the on-demand delivery of fuel, and other services such as oil and tyre changes and vehicle cleaning, directly to parked vehicles’ locations.

Due to Covid, customers had become more accustomed to these solutions, and a further shift of expectations towards contactless solutions was expected, driven by both safety and convenience benefits. Investment from big names in these sectors underlined the long-term appetite for these solutions, she added.

During a panel discussion following the presentation, Andrew Rowson, co-founder and head of services at Ecommotors, said: “People who didn’t buy online are now used to buying online, because they were forced to buy online during the pandemic – and they’re not going to stop.”

He added that around 80 per cent of all parts bought were now either purchased online, or influenced by online research prior to purchase in a ‘bricks-and-mortar’ establishment.

The use of social media had also soared during the pandemic, he pointed out, which was also having an influence on the market.

Peter Lawton, senior section manager at the Society for Motor Manufacturers & Traders (SMMT), said it was critical for the aftermarket sector to recognise that demands had changed, adding that digitalisation offered the opportunity to improve customer convenience as well as boosting efficiency for the sector.

“Although it’s obviously important to recognise that digital is critical going forward, there’s always going to be a physical element to the aftermarket,” he added. “We can’t change a timing belt online.”

SMMT had been providing guidance to the aftermarket on how to assure customers, stakeholders and the government that they were able to continue to perform such physical operations safely during the Covid outbreak, he said.

He also emphasised the importance of staff training in embracing digital.

“We’re urging government to overhaul apprenticeship schemes,” he said.

“They’ve not worked to date; they’re not accessed properly by small, medium or large businesses. So a lot of work needs to be done there… Overall, skills has had a very difficult time in automotive and other sectors.”

During the session, several polls were conducted of the viewing audience, comprising professionals from the sector. 70 per cent of respondents said their businesses had invested in new digital technologies this year, 91 per cent said the industry needed to upskill to embrace digitalisation, and 95 per cent said they would increase their spend on digital products and services in 2021.

Messe Frankfurt last month announced new dates for Automechanika Birmingham, which will now take place from 7-9 June 2022, thereby maintaining rotation with the Frankfurt event which has been postponed to next year. Almost all exhibitors had committed to moving their bookings to the new dates, the company said.

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