New energy and fuel vehicles replace the old and new, where is the next outlet in the automotive aftermarket?

In recent years, with the increase in sales in the automotive market, the automotive aftermarket has also ushered in a spurt. According to the "Medium and Long-term Development Plan for the Automobile Industry", by 2025, the proportion of the service value chain in the mainland automobile aftermarket will account for more than 55% of the entire industrial chain, and the scale will reach 1.7 trillion yuan.

In this context, the profit point of the mainland automobile industry will be tilted from vehicle manufacturing, sales and services to the aftermarket, which is a change in the automotive industry and a major trend.

The automotive aftermarket ushered in scale

As early as the time when the auto service market had not yet exploded, some insiders predicted that "only 200,000 of the 400,000 repair shops remained in three or five years", and as a result, by the end of 2021, the number of repair shops did not decline, but there was a growth trend. This is also due to the increasing number of cars in continental. According to the Ministry of Public Security, by the end of 2021, the number of passenger cars in mainland China will reach 262 million, making it the world's largest automobile market. However, according to the CIC consulting report, the number of passenger cars per 1,000 people on the mainland is only 171, which is lower than developed countries such as the United States (775 per 1,000 people) and EU member states (553 vehicles per 1,000 people). As a result, mainland passenger car ownership is expected to continue its growth momentum and reach a further 347 million units by 2025.

In addition, with the steady growth of ownership, the age of passenger cars has been extended, and the demand for automotive service aftermarket will also increase year by year. China Insights Consulting expects that by 2025, the average age of Passenger Cars in China is expected to reach 7.6 years, while the average age of the United States and EU member states in the same year is 12.2 years and 12.1 years, respectively, which means that the market after the auto service will usher in an inflection point in the next 3 years. Zhang Qiang, chief commercial researcher of Roland Berger's automotive industry, pointed out that the overall size of the maintenance service market is expected to increase steadily under the influence of factors such as the increase in car ownership and the growth of vehicle age. Among them, the after-independence market penetration rate will also be further improved. He said that from the overall market environment, the distribution, retail and service of the overall spare parts still occupy more than 50% of the overall market share. This is also the market opportunity that auto parts and auto repair companies are focusing on.

In addition to the increase in ownership, national policies are also further promoting the development of the automotive aftermarket. On December 31, 2021, the Ministry of Commerce and 22 other departments issued the "14th Five-Year Plan for Domestic Trade Development", which proposes to promote the transformation of consumer goods such as automobiles from purchase management to use management, encourage qualified areas to carry out automobiles going to the countryside and replacing old with new, improve the recycling system of scrapped motor vehicles, increase the promotion and application of new energy vehicles, and actively develop the automotive aftermarket.

Judging from the current market development, many local governments are vigorously supporting economies such as auto repair and auto parts ecological parks, with the intention of transforming and upgrading traditional auto parts cities. Moreover, after the scale of the automotive aftermarket, it is also conducive to solving employment and promoting economic development.

In addition to the real industry, e-commerce is also a force that cannot be ignored in the automotive aftermarket.

As early as 2016, Internet players such as Tmall, JD.com, Didi, and Tuhu Yangche laid out the automotive aftermarket. At the beginning, these e-commerce companies only played a supplier role, and later after mastering the upstream accessories resources, they began to develop like a delivery platform, because user data and maintenance needs are in the hands of e-commerce, offline stores can only play the role of installation and processing. However, although offline stores have lost the profit of selling accessories, in order to seek a stable source of customers, stores still need to rely on online platforms to dispatch orders. At present, most e-commerce platforms have obtained the authorization of some accessory brands, which means that they can obtain lower prices, which will cause a lot of price crushing for some non-cooperative offline stores, and may even lead to inability to survive. However, the advantage of this is that the offline automotive aftermarket can be integrated, so that consumers can also get better services.

Through the advantages of accessory resources, customer source information, brand appeal and so on, e-commerce has begun to promote the merger and elimination of the aftermarket industry. And during the low tide, it is also the best time to fight the horses.

Under the background of the new four modernizations, the automotive aftermarket has accelerated its evolution

In addition to the evolution of the automotive aftermarket environment, the rapid popularization of new energy has also made the automotive aftermarket service mode begin to change.

From the supply side, the number of new energy vehicles in the mainland has shown a rapid growth trend. According to the statistics of the Ministry of Public Security, by the end of 2021, the number of new energy vehicles in the mainland will reach 7.84 million, of which pure electric vehicles account for 80%. It can also be seen from the data that the surge in the ownership of new energy vehicles will also drive the demand for a large number of after-sales maintenance.

From the demand side, the structure of electric vehicles in maintenance also needs to be reformed on the service side. Compared with fuel vehicles, electric vehicles are not equipped with engines, gearboxes and other components, and the basic maintenance is relatively simple. According to Roland Berger data analysis, from the perspective of bicycle output value, electrification will reduce the demand value of maintenance demand by 1750 yuan (35%), of which the impact of maintenance parts is the most significant, and the demand value will be reduced by 78%, which in turn will affect the growth rate of the entire maintenance parts market. In addition, most electric vehicles are mainly intelligent, and the number of components used will also increase, which will also lead to an increase in the failure rate of on-board intelligence. However, the core components of electric vehicles usually have a manufacturer's warranty, which will have a certain impact on maintenance stores.

In the face of changes, some after-sales service providers have also begun to lay out the aftermarket for new energy vehicles. Among them, Tuhu Yangche has reached cooperation with manufacturers such as Zero Run and Polar Fox. Tmall car will also make efforts in new energy vehicle services. Li Yi, chief operating officer of Xinkangzhong, said: "In 2022, the after-sales service of new energy vehicles will be a breakthrough point, and Tmall Car has reached cooperation with many new energy vehicle manufacturers and battery manufacturers. On the one hand, it provides delivery services including maintenance and branding, and on the other hand, it provides supporting services such as washing, sheet metal spraying, and charging piles after delivery. ”

At the same time, the head car companies have also begun to lay out their own after-sales outlets. Among them, NIO has built 32 NIO centers and 285 NIO spaces. And this year will continue to expand, covering second- and third-tier cities. Ideal Auto has also built more than 80 direct maintenance centers in 2021, covering 70 cities across the country, and will further expand.

In addition to new energy vehicle companies, in the face of a huge market gap, home appliance giants such as Haier, Gree, Midea, and Skyworth have also begun to invest in the aftermarket of new energy vehicles. This also shows that in the battle of new energy vehicle after-sales, there will be more entrants. If enterprises can gradually add new energy vehicle after-sales projects to the industrial chain on the basis of fixed business, they may be able to swim in this blue ocean.

Responsible Editor: Li Yan'an Editor-in-Chief: Yu Jianping