What is the impact on the aftermarket?

Original Equipment Manufacturers (OEMs) and International Aftermarket Manufacturers (IAMs) are increasingly concerned that the lucrative aftermarket parts and service business could be on the brink of collapse due to the growing popularity of electric vehicles (EVs). ). This concern is fueled by the fast-approaching end of sales of new internal combustion engine (ICE) cars in several major countries.

Automotive market history

These apprehensions are neither illogical nor historically unprecedented; after all, spare parts for horse-drawn carriages and steam locomotives were once a thriving business. And see where these industries are today.

The engines of battery electric vehicles, also known as BEVs, are significantly less complex than those of internal combustion engine (ICE) cars, which typically have 2,000 moving parts.

Furthermore, they are subject to a lower component wear rate such as brakes and have a reduced or eliminated need for routine maintenance and oil changes.

As electric vehicle (EV) sales continue to grow and are expected to account for approximately 56% of new light vehicle sales in Europe by 2030, the automotive industry appears to be on its way to becoming inherently “low maintenance”.

Impacts on the second-hand market

Consumers can be relieved that they no longer need to take their vehicle in for routine maintenance. But this appears to be bad news for the aftermarket, as it will result in two dips:

  • o of expenses in dealerships or independent garages,
  • and aftermarket sales opportunities for original equipment manufacturers and independent aftermarket distributors.

Evolution and prospects

In light of this information, the projections made by some industry watchers that used car market revenues could fall by at least 30% seem very plausible.

Some factors to consider:

Electric vehicle sales can increase rapidly, but millions of internal combustion engine vehicles are already on the road and still have a significant lifespan; therefore, penetration of EVs into general vehicle fleets will be slower than many expect.

By 2030, electric vehicles (EVs) of all types will represent approximately 10% (4.74 million units) of the total fleet in France (excluding mild hybrid vehicles, hybrid EVs and plug-in hybrid EVs, which are comparable internal combustion engine vehicles in terms of spare parts requirements).

However, only 5% of vehicles over five years old will be EVs. However, ICE vehicles will continue to represent 94% of the global fleet of vehicles aged between 10 and 14 years and 100% of the fleet of vehicles over 15 years old (approximately 14.7 million units).

While it is possible that the switch to all-electric vehicles could cause a drop in component sales of at least 30%, it is highly unlikely that this will happen for a good number of years. In the meantime, there will always be a huge fleet of vintage vehicles at MCI, which will require the typical maintenance and repair work for vintage automobiles.

Conclusion

As it will take some time for EVs to be introduced across the fleet, eventual aftermarket revenue declines slowly enough for component price inflation to make up a significant part of the gap.

According to the results of our research, the negative effects that EV penetration and increased parts reliability will have on the aftermarket will be largely offset by the increase in the size of the vehicle fleet, the increase in its age and, above all, the increase in prices, which will be the most important tailwind.

Leave a Comment