*NOTE: Aftermarket Market
Custom Cars: Vehicles that have changes made only to their appearance, without altering parts related to driving performance such as the engine or suspension.
Tuned Cars: Cars that have been enhanced for better driving performance.
This article focuses solely on custom cars.
Automotive Original Equipment Manufacturers (OEMs) can no longer rely solely on selling cars to generate profit. The foundation for further growth can only be established with the support of new business models, technology, and policies. In the United States, the average household owns 1.88 vehicles, equating to approximately 0.99 cars per eligible driver. This demonstrates the deep-rooted car culture in the US, suggesting that automotive OEMs cannot meet their financial targets through car sales alone.
Today’s article introduces a new business model for automotive OEMs: the aftermarket. The automotive aftermarket industry provides parts, equipment, and services to extend the life and enhance the performance of vehicles. Through this market, consumers can customize their vehicles with part replacements and accessories, allowing automotive OEMs to build relationships with customers beyond just selling cars.
- Market Size and Growth Forecast
- Changes in Consumer Behavior
- OEM Aftermarket Examples
- The Importance of Quality Assurance and Certification
- Implications
1. Market Size and Growth Forecast
The automotive aftermarket industry plays a significant role in the global economy and is showing continuous growth. According to Market Research Future, the global automotive aftermarket industry is expected to grow at an annual growth rate (CAGR) of over 4%. This growth is primarily driven by technological innovations, an increase in vehicle ownership duration, and a rise in demand for customized vehicles. Additionally, the emergence of new vehicle technologies like electric cars is creating new demands for aftermarket parts and services.
2. Changes in Consumer Behavior
Consumers’ behaviors and preferences are evolving, significantly impacting the automotive aftermarket industry. Nowadays, consumers prefer customized vehicles that reflect their personality and functionality, leading to an increased demand for high-quality aftermarket parts, accessories, and personalized services.
3. OEM Aftermarket Examples
Tesla’s Aftermarket Services
- Online updates and software sales: Tesla leads in enhancing vehicle performance through software updates. The company remotely provides vehicle software updates to add new features and improve performance. Tesla also generates revenue by selling additional software packages, such as autonomous driving features.
Ford Performance
- Performance parts and accessories: Ford sells a variety of performance parts and accessories through its aftermarket brand, Ford Performance, allowing customers to customize and enhance their vehicles, thereby increasing Ford’s aftermarket revenue.
Mercedes-Benz Digital Services
- Connected car services: Mercedes-Benz offers various digital services connecting cars with smartphones, allowing customers to remotely control their vehicles, monitor vehicle status, and access convenience features. These digital services enhance customer experience and create additional revenue streams in the aftermarket.
BMW’s M Performance Parts
- High-performance parts and accessories: BMW sells high-performance parts and accessories through its M Performance Parts, designed to improve vehicle performance, appearance, and driving experience, playing a crucial role in BMW’s aftermarket business segment.
4. The Importance of Quality Assurance and Certification
The quality of aftermarket parts and services is directly linked to consumer trust, crucial for the success of the aftermarket industry. Many aftermarket manufacturers and service providers obtain international standard certifications to ensure consistent quality. Certifications like ISO 9001 for quality management systems play a vital role in guaranteeing product and service quality, building consumer trust, and fostering success in the competitive aftermarket market.
5. Implications
Automotive OEMs cannot solely rely on car sales for revenue and growth. The growth and changes in the automotive aftermarket industry offer new opportunities for OEMs. They can build long-term relationships with customers and generate additional revenue through aftermarket services. Moreover, the expansion of the aftermarket industry provides consumers with better products and services while promoting new technologies and innovations. Recognizing the importance of the aftermarket industry and continuing investment and innovation is essential for the sustainable growth of the automotive sector.
