The automotive industry has undergone huge transformation over recent decades.
We have seen design to production timescales reduced, the global sourcing of parts, and greater levels of vehicle personalisation impacting how the industry operates. As a result, production levels are close to reaching pre-recession highs.
The onset of technological progress is set to accelerate this change further, as we see the convergence of the automotive and technology sectors.
For this to be a success, we need to fully understand the future conditions of the aftermarket, and how technology can help meet increases in volumes and changing customer demographics.
One of the biggest changes we will see in the automotive industry over the next few years is a shift in car ownership. A recent report from KPMG revealed that over half of today’s car owners will not want to own a vehicle by 2025, bringing significant change to the aftermarket as we know it.
A decline in car ownership is being matched by an increase in car clubs and car sharing. There are currently 140,000 car club members in London alone, but this is set to rise to over 1 million by 2020.
Triggered by the introduction of technology allowing people to easily see local car availability, the growth of car clubs brings new challenges to the automotive aftermarket, with questions around who owns the shared vehicles, and how they are maintained.
Supply chain providers, such as DHL, are exploring how the aftermarket can adapt in response to these changes.
New technology is opening up the possibility of dealerships being able to deliver new parts straight to a vehicle during the night, without the need to transport them to a repair shop.
As ecommerce continues to grow exponentially in the UK and shape the way we buy products and get them delivered, we are seeing the automotive aftermarket move towards a retail model. As a result, motorists are buying new cars online without visiting a dealership, for the first time ever.
With a number of major manufacturers having already launched ecommerce platforms in response to demand for a fast, efficient and personal service, ecommerce is challenging many of the industry’s established distribution models.
It is allowing customers to choose the exact specification they want, and delivery location, at the click of a button.
We are seeing aftermarket suppliers bypassing regional distribution centres and directly shipping to customers, presenting a new challenge to dealerships.
For example, the sheer variety of parts per car, and the unpredictable nature of what will be in demand, continues to present logistical challenges for companies developing ecommerce platforms to directly service customers.
To ensure they stay ahead of the curve, franchised car dealerships need to think ahead, and consider how they can adopt ecommerce technologies and work alongside their manufacturers.
With customers demanding a more convenient and personal service than ever before, they need to adapt their offering, such as through the ability to take payment on a website or book appointments digitally.
While the increase of online sales presents a challenge to dealerships, the introduction of self-diagnosing vehicles presents a huge opportunity.
Put simply, self-diagnosing vehicles assess their own state of health, with the ability to update dealerships when repairs are required, and transmit data about faults ahead of time.
Self-diagnosing vehicles bring a number of benefits to the automotive industry. Manufacturers and aftermarket providers are able to forecast more accurately, thanks to advance warnings about what parts might be required and where, increasing their ability to fulfil consumer and commercial demand efficiently and supporting with stock management throughout operations.
To make the most of the technology, dealerships need to make sure they have adequate information infrastructure in place so they can accurately receive and secure updates directly from vehicles.
They also need to start thinking about what skills and resource they need in place to service this trend, and upskill their teams so they can work with the more complex technology involved.
The convergence of the technology and automotive industries has resulted in rapid and significant changes to products and operations.
Dealerships should take advantage of all data at their disposal to develop not just a proactive operational model, but a predictive one.
By working in partnership with supply chain partners, aftermarket providers can adapt to the challenges and opportunities at hand, and prepare for a new future defined by technology.
Author: Martin Dougherty, vice-president Business Development and Account Management, Automotive, DHL Supply Chain