Competitive Profiling of Key Aftermarket Parts:

• Supplier Dynamics: An analysis of partnerships and collaborations among suppliers, highlighting how these relationships influence distribution strategies.
• Megatrends Impact: The report discusses how megatrends are affecting distribution strategies and the overall aftermarket economy.
• Competitive Strategies: Insights into the competitive strategies employed by distributors to counteract the challenges posed by online retailers, including adjustments in inventory and logistics to better meet customer demands.
• Direct-to-Consumer Trends: An overview of the rise of direct-to-consumer sales models and the implications of industry consolidation through mergers and acquisitions (M&As).

Key Findings

Market Dynamics 

• M&As and collaborations have decreased. 
• Increased vehicle use and the aging vehicle fleet drive maintenance and repairs. 
• For example, the growing demand for maintenance and repair services, largely a result of the aging vehicle fleet in the United States, has increased AutoZone's revenue. 
• The shift toward renewable energy sources and CASE-enabled vehicles will increase the vehicle parc of EVs, hybrids, and old vehicles.
• Companies will consolidate to expand their market share and capabilities. Hence, M&As will become more common. 
• For example, National Automotive Parts Association (NAPA) Auto Parts and Qmerit will offer turnkey EV charging installation services through NAPA Auto Parts’ online store.

Technology Integration

• The chip shortage is causing diagnostic devices’ availability issues and high costs, which negatively impact workshops. 
• Companies are adopting advanced diagnostic tools, telematics, and connected car systems. 
• For example, repair shops offer advanced diagnostics and predictive maintenance services by utilizing On-Board Diagnostic (OBD)-II tools and telematics. 
• Companies will adopt diagnostic and repair services for EV and autonomous vehicles; AI-driven predictive maintenance; and AR/VR-based training, maintenance, and repairs. 
• For example, diagnostic tools based on AI and AR/VR training will become mainstream in repair shops to address the unique maintenance requirements of CASE technology vehicles. Bosch and Snap-on have already introduced initiatives.

Product and Customer Engagement 

• Specially equipment and performance upgrades have emerged. 
• The digital transformation and eCommerce are driving revenue growth and customer engagement through customized services and loyalty programs. 
• For example, AutoZone's online platform offers a wide range of products with personalized recommendations and loyalty reward points for online shoppers. 
• Companies will offer data-driven personalized services and marketing. 
• Demand for specialized services (e.g., battery management, software updates, and ADAS-related services) will increase. 
• Omnichannel strategies will seamlessly integrate the online and offline shopping experiences. 
• For example, Advance Auto Parts has a seamless shopping experience where customers order parts online and pick them up in the store (includes integrated customer service). 

Laws and Regulations 

• Emissions standards and regulations are stricter.
• The regulatory landscape for the environment and safety is evolving
• For example, the Environmental Protection Agency in the United States influences product offerings in the automotive aftermarket. 
• The industry will focus on stricter emissions norms, safety, data regulations, and sustainability. 
• For example, regulations (similar to California's Advanced Clean Cars II regulations) will require new vehicles companies sell to meet stringent emissions standards, pushing original equipment manufacturers (OEMs) to innovate and improve sustainability.

The Impact of the Top 3 Strategic Imperatives

Customer Value chain Compression
 

Why:

• Streamlining the selling process by having manufacturers sell directly to consumers will reduce costs, increase efficiency, and enhance customer satisfaction.
• Direct-to-consumer models have significantly reduced the number of steps in the customer journey by deploying advanced technologies and internet platforms.

Frost Perspective

• Aftermarket auto-parts distributors and retailers are adopting direct-to-consumer models, which is vital for benchmarking their efficiency and responsiveness to customer requirements.
• Consolidation in the value chain indicates a shift toward agile and customer-centric business practices essential in competitive markets, such as automotive parts aftermarket.

Competitive Intensity

Why

• Innovating, enabling efficient practices, and implementing customer-centric strategies can overcome growing competition. New start-ups and digital business models bring a fresh wave of competition to the automotive aftermarket and challenge traditional industry players.

Frost Perspective

• Traditional companies must adapt and overcome competitive pressure to reveal their resilience and strategic foresight. The intensity of competition helps identify successful companies that use best practices and strategies to enhance their market position amid growing competition.

Disruptive Technologies

Why

• Disruptive technologies create new opportunities and fundamentally change how industries operate. Advanced technologies, such as remote diagnostics, telematics, and CASE-related technologies, are leading the transformation of the automotive aftermarket.

Frost Perspective

• An assessment of how distributors and retailers are incorporating disruptive technologies into their operations provides insights into their innovation capabilities.
• Benchmarking companies based on advanced technologies helps determine which companies are better prepared and lead in adopting innovations that enhance efficiency, service quality, and customer engagement, thus setting new industry standards.