The UK automotive sector is booming.
In January this year (2016), the Society for Motor Manufacturers and Traders (SMMT) reported a record 11-year high with 169,678 units registered. Whilst this growth is positive news for the industry, motorists are demanding a more seamless service across sales and aftermarket than ever from manufacturers and dealerships.
Consumers are offered convenient, flexible and fast service in the retail sector and are increasingly expecting the same levels of service from other industries. Added to this is the desire for a personal experience and a bespoke product: a car is no longer something to get us from A to B but instead a unique experience, tailored to our needs. It is therefore no surprise to me that analysts believe that the automotive sector will change more in the next ten years than it has in the last 100.
One area that is already experiencing significant change is in the aftermarket. I believe there are three key trends driving these changes and pushing dealerships to evolve: the increasing demand for personalisation and in-car technology; the rise of self-diagnosing vehicles and the advent of autonomous cars.
The personal experience
Let’s first consider the fact that automotive manufacturers are now offering more ways to customise a vehicle. Thirty years ago you might have had the option to change the colour of your seats or add in a sunroof. Now, you can add almost anything you want to your vehicle: TVs for your children; parking sensors to increase safety; and WiFi to stay connected whilst on the go.
The options are almost endless: for example, a typical German mid-class model offers customers 400 trillion possible variations. Personalisation is no longer limited to luxury cars; it’s available to everyone. Drivers of all kinds are looking for the ultimate bespoke experience, be that coloured leather seats, extra coffee holders or added technologies, there is no such thing as a standard model any more.
Of course, options to personalise mean more parts and combinations are required. For aftermarket operations, manufacturers need to ensure that their dealerships have access to the wider range and higher volume of parts whilst ensuring that they continue to deliver a high standard of customer service. Efficient and faster deliveries will be vital to achieving this. Stock needs to be on hand ready for repairs when drivers need it, and supply chain partners need to develop new networks that allow parts to be closer to demand and be prepared to deliver those parts quickly so dealerships don’t have to stock them.
Health check: self-diagnosing vehicles
A positive change that will support manufacturers and their dealerships with the forecasting of stock is the increase in self-diagnosing vehicles. Put simply, self-diagnosing vehicles assess their own state of health. They update dealerships when repairs are required and transmit data about faults ahead of time, making it easier for manufacturers to forecast stock. If they know, for example, that three cars will be returned within a week for repairs to their steering wheels, it will be easier for them to order in the parts and have them waiting for the drivers on their arrival at the dealership.
In this sense, self-diagnosing vehicles are of great benefit to aftermarket operations. To make the most of them, however, manufacturers must ensure that they have a solid information infrastructure in place so they are ready to receive and secure these updates direct from vehicles. The next logical step is to analyse this data and use it to manage and predict inventory more effectively. DHL’s latest whitepaper on the Predictive Enterprise looks at how companies are sitting on a goldmine of untapped supply chain data that has the ability to give organisations a competitive edge.
The advent of autonomous vehicles
Adding to the increasingly digital age of the automotive industry is the advent of self driving vehicles, a real factor that is pushing the aftermarket sector towards change.
Although regulation needs to be agreed, autonomous vehicles are becoming a reality for Britain’s roads. Earlier this year (February 2016), Jaguar Land Rover announced its intention to create a ‘living laboratory’, testing connected and autonomous vehicle technologies on the UK’s roads. In the U.S. officials recently suggested that Google Cars’ Artificial Intelligence system could be considered a driver under federal law.
Whilst debate still surrounds the safety of these driverless cars some argue that in removing human error and by installing active parking and crash avoidance technologies, there will be fewer collisions. If this is the case, dealerships should start to look towards what a new kind of aftermarket service will look like.
Instead of replacing broken parts th.at have been damaged as a result of a collision, over the air upgrades might be required to ensure the technologies in the vehicle remain safe and simple to use. Combined with the fact that many of these cars will be self-diagnosing and able to transmit details ahead of time, dealerships might be able to schedule appointments for upgrade work more easily but must also increase efficiencies throughout their supply chain to ensure motorists’ demands can be met.
Conclusion: aftermarket service in the future
Drivers will continue to demand better service from automotive dealerships as the industry moves towards a more technology focused future. Needing more and varied parts to fulfil aftermarket demand raises logistical challenges whilst the rise in self-diagnosing vehicles offers opportunity. Added to this the advent of autonomous vehicles poses new questions about the kind of aftermarket service drivers’ will need.
Dealerships, manufacturers and their supply chain partners must embrace new technologies, networks and use data to support the drive for operational efficiencies. This will allow them to stay ahead of their competition and prepare for the aftermarket service of the future.
Author: Martin Dougherty (pictured), VP business development & account management, automotive at DHL Supply Chain, UK&I