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Aftermarket Responds To Coronavirus
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By Counterman
MAHLE Aftermarket Inc. recently unveiled a new microsite to provide automotive service shops with a resource to educate vehicle owners on the importance of having qualified technicians inspect and service their air-conditioning systems annually.
Consumers benefit from their air-conditioning systems functioning properly not only to enhance cabin comfort, but also to avoid damage that may be costly to repair. A well-maintained air-conditioning system also is critical to ensure the proper temperature range for drivetrain batteries in electric and hybrid cars.
In addition to a comprehensive checklist for proper A/C maintenance, service and installation, the MAHLE
link hidden, please login to view features a multitude of useful resources including articles, easy-to-follow tutorials and industry statistics, as well as background on some of the company’s latest solutions, including premium MAHLE cabin air filters and the MAHLE OzonePRO professional sanitation system. “Shop owners can direct consumers to the ‘A/C check’ microsite for information about yearly service of their air conditioning system from a qualified auto technician,” said Ted Hughes, director of marketing MAHLE Aftermarket North America. “The site was also created to provide vehicle owners with information about the design and operation of the automotive air conditioning system, why regular maintenance is necessary to ensure its reliability, and details on do-it-yourself inspection and service guidelines.”
The “A/C check” microsite also includes detailed information about some of the latest technologies from MAHLE, including the company’s expanded range of cabin air filters, as well as the MAHLE OzonePRO professional sanitation system. This innovative technology uses ozone gas to sterilize a vehicle’s interior and eliminate odors. In addition to its lightweight and automated operation that controls ozone levels and process time, it offers digital integration with mobile devices and report generation when the sanitation process is complete.
From a small test workshop to one of the top 20 automotive suppliers, MAHLE is proud to celebrate 100 years of delivering superior quality products around the world. For more information about MAHLE Aftermarket and its brands, visit
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By Counterman
Electric vehicles. E-commerce. Vehicle complexity. Consolidation. Autonomous Driving. Connectivity. How will these and other trends affect the automotive aftermarket over the next decade, and more importantly, how should aftermarket suppliers respond?
A new study – “The U.S. Automotive Aftermarket in 2035” – attempts to answer these questions, with aftermarket suppliers “facing more inflection points than we ever have before,” in the words of Automotive Aftermarket Suppliers Association (AASA) President and CEO Paul McCarthy.
“And the reality is we can’t handle them all,” McCarthy said at the 2022 AASA Vision Conference in Dearborn, Michigan. “So we need to understand which ones are really going to disrupt us and which ones may matter less. Because if there’s one thing we know, the aftermarket in 2035 is not going to look like the aftermarket today.”
Conducted by the management consulting firm
link hidden, please login to view, the study looks at the current and future states of the automotive aftermarket. One of the most alarming conclusions from the study is that aftermarket suppliers aren’t ready to deal with nine high-impact trends: BEV (battery-electric-vehicle) penetration; e-commerce and o2o (online-to-offline); consolidation; labor shortages; supply chain disruption; data access; autonomous driving; supply chain footprint; and sustainability. Barry Neal, senior partner at Roland Berger, and Neury Freitas, principal at Roland Berger, presented an overview of the study findings at the AASA Vision Conference. Here are some of the highlights.
Battery Electric Vehicles
How much and how soon will BEVs affect the independent aftermarket? That all depends on which part of the market you serve.
By 2035, the study projects that only 2% of 12-year-old vehicles and older will be electric, while 11% of 8- to 11-year-old vehicles will be electric. However, the impact of BEVs will be more pronounced in newer vehicles, with 32% of 0- to 3-year-old vehicles expected to be electric.
“The more you are dependent on the OES or OEM channel, the more or sooner EVs will actually impact your business,” Freitas explained.
At 100,000 miles, BEVs require 50% fewer service visits than internal-combustion vehicles, based on OEM service recommendations. By 200,000 miles, that gaps shrinks slightly to 47%.
“There clearly are services that will disappear in an EV,” Freitas said. “Anything that’s related to the engine, anything that’s related to combustion will go away.”
BEVs will need battery coolant, but due to regenerative braking, brake systems typically last longer on electric vehicles.
“The tire players are really happy,” Freitas added. “They are waiting for EVs, because either you have a heavier vehicle that needs a stronger structure of the tire, therefore they’re more expensive, or if you use a normal tire, that’s going to wear faster. So, that’s a positive.”
Online-to-Offline Business Model
The pandemic has accelerated the growth of o2o in the automotive aftermarket, as more consumers embraced buying parts and booking appointments via their mobile devices. The linkage between the offline and online worlds “brings a lot of benefits and a lot of convenience for consumers,” Freitas asserted.
The increased convenience for consumers, and the cost savings along the value chain, will continue to drive the growth of o2o in two phases: parts efficiency, as proactive diagnostics and digital parts/service selection and scheduling enable a lower cost structure; and labor efficiency, as advanced booking/scheduling and predictive maintenance improve labor utilization and throughput.
“If you get the higher convenience for consumers, together with the potential cost savings, at a first step, if you know which parts will be needed and where they’ll be needed before they are actually needed, you can cut a few steps [from] the value chain and in the supply chain, and you can actually save some real money, as you don’t need hot-shot [delivery], for example,” Freitas explained. “And then in a second step, once we get to a large enough critical mass, and the shops are able to schedule similar services back to back, we might get some efficiencies from the technicians as well.”
Consolidation
According to Roland Berger, the United States is leading the way in terms of consolidation, with the top 10 distributors in the U.S. independent automotive aftermarket (IAM) commanding 75% to 80% of the total market share. Europe is a distant second, at 30% to 35%, while China is at 5% to 10%.
Roland Berger sees more consolidation ahead for parts suppliers and service providers (mechanical and collision). Going forward, there won’t be as many opportunities for large retailers to acquire distributors, Freitas asserted.
“Therefore, if one of those big companies has a hiccup over the next 12, 13 years, we see as a chance of two of those top four or five players actually merging and becoming an even larger player,” Freitas added.
Labor Availability
Looking at the big picture, U.S. unemployment rates were at historic lows in the years leading up to the COVID-19 pandemic. When the pandemic escalated in early 2020, it skyrocketed. Since then, the unemployment rate has been declining steadily. According to the U.S. Bureau of Labor Statistics, the unemployment rate in March dropped to 3.6%.
Neal and Freitas showed two charts that don’t bode well for the future of the IAM. One chart showed a steady decline in the number of students completing postsecondary degrees for automotive repair since 2010. The other chart showed the imbalance between the supply and demand of technicians since 2010. While the technician shortage is nothing new, the gap between supply and demand is projected to widen in 2025 and beyond.
Freitas concluded: “If the industry does not really get organized, we don’t think this problem is going to get solved anytime soon.”
Supply Chain
The headline here is that China appears to be losing its cost advantage – even without tariffs.
For the past decade or so, if you wanted to manufacture products on the cheap, China was the obvious destination. However, when you factor in the rising costs of outbound freight, raw materials, manual labor and other variables, China will lose its cost advantage to Mexico as soon as this year. By 2035, due to the projected increase in China’s labor costs, it will be significantly cheaper to manufacture goods in Mexico compared to China, according to Roland Berger.
Not surprisingly, Roland Berger projects that the percentage of U.S. auto parts manufactured in Mexico will grow from 24% in 2020 to 31% in 2035.
Data Access
By 2035, nearly 100% of new vehicles sold in the United States will be connected, meaning they’ll have the capability to receive and transmit information. Extrapolated to the total U.S. vehicle parc, 66% of vehicles will be connected.
How we get to that point – and how it will affect the IAM – is less certain. Currently, the automakers control most of the data generated by vehicles, which is bad for consumers, bad for IAM suppliers and good for the OEMs. In the medium term, Roland Berger anticipates a shift to open APIs (application programming interfaces) and “mixed control” of vehicle data.
In the long term, a move toward open APIs and open data would be best for IAM suppliers. However, where we land will likely be determined by federal lawmakers and the OEMs.
Action Steps
In light of the study’s findings, Neal and Freitas outlined a number of potential steps that IAM suppliers could take.
“In terms of individual responsibilities, there’s the importance of reviewing the portfolio and product strategy,” Neal said. “As you look at the influx of new technologies, both in terms of electronics, battery-electric vehicles, ADAS and autonomous, how are you adjusting your portfolio to adapt to those and what is the strategy you have, whether that be a last-man-standing strategy or looking for a third leg in terms of other opportunities, or the development of an EV strategy to attack some of the new opportunities that are coming out?”
Regarding the technician shortage, Neal also emphasized the importance of supporting trade schools “as well as supporting of advocacy at the high school and the middle school level for robotics programs and mechanical programs to ensure the interest of that technician force of the future, as well as an industry-level support for new entrants and opportunities, supporting aspects such as augmented reality and remote support for technicians in the field to allow some of those newer solutions to support a broader labor force in the future in terms of the capability set in technology.”
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By Counterman
The Charles Dickens classic “A Tale of Two Cities” produced one of the most famous opening lines in all of literature: “It was the best of times, it was the worst of times … ”
More than 150 years after “A Tale of Two Cities” was published, the phrase is an apt description of what life has been like for aftermarket suppliers, distributors and retailers during the COVID-19 pandemic.
As Paul McCarthy, president and CEO of the Automotive Aftermarket Suppliers Association (AASA), kicked off the 2022 AASA Vision Conference in Dearborn, Michigan, he observed that the line “rings true in this age of uncertainty.”
“It has been some of the hardest times to simply do our jobs – to just get our products to the customer – yet it has also been some of the greatest prosperity that the aftermarket has ever experienced,” McCarthy said.
Stimulus-driven DIY sales have led to the best of times for the aftermarket’s publicly traded parts retailers, and they reported record growth in 2020 and 2021. At the same time, supply chain disruptions have made it challenging for some suppliers and distributors to get their hands on parts and raw materials.
“Typically, part of our industry’s appeal is our slow, steady, reliable growth – our consistent cash-flow generation,” McCarthy said. “During the pandemic, we seem to have found another level of demand for our products. And we’ve also been in a battle for availability. The reality over the last two years is that if you could get the part to the customer, they would likely buy it.”
While the past two years have been prosperous for many aftermarket participants, it’s also been the worst of times in the sense that the economy has been hit with “a flock of black swans.” Even before this once-in-a-century pandemic hit, the aftermarket was grappling with tariffs on imported Chinese goods as well as the biggest changes to U.S. trade policies in decades.
“We haven’t had a supply chain disruption of this magnitude for 75 years,” McCarthy said. “It’s been over 40 years since we’ve seen inflation like this. It’s been decades since we’ve seen a job market this tight. If that wasn’t enough, members tell us that we’ve experienced some of the highest levels of government intervention in the aftermarket, maybe in our history.”
On top of that, there’s a land war in Europe, and U.S.-Sino relations are as tense as they’ve been in decades. Potential curveballs on the horizon include more interest-rate hikes, gas-price increases and the specter of Russian cyberattacks.
Still, although it’s “an environment where it may not be easy for us,” it’s one “where we can do very well.”
“Our ability – despite all these obstacles – to fill orders, to keep our businesses running, to sustain our teams, to work together up and down the value chain, it’s frankly amazing how well the aftermarket has performed,” McCarthy added. “It proves our resilience and our endurance. So don’t expect things to get any easier, but the aftermarket and aftermarket suppliers, we’ve shown that we matter.”
A New Golden Age?
Despite all the “bumps in the road,” McCarthy posed this question to AASA Vision attendees: “Is there a chance that these strong sales that we’ve seen are not a blip, that instead they are the start of a new golden age?”
“The transformative cultural shifts that we’re seeing as a result of the pandemic, we think they bode well for the future of the aftermarket – that we are leaving the pandemic with a more auto-centric lifestyle than when we went into it,” McCarthy asserted.
To buttress his point, he noted that used-car prices are higher than they’ve been since World War II; there are more than 280 million vehicles in operation in the United States; and the miles-driven recovery “has exceeded all forecasts.”
With commuters and travelers still fearful of mass transportation, “Americans are moving toward more car-centric locales and lifestyles,” he added.
“We see it in consumers’ desire for more space. We see it in the house prices, in people moving to the West, to the South, to smaller cities, to exurbs. Coming out of COVID, where most Americans now seem to want to live, they need a car or a third or a fourth car. They need us, the aftermarket.”
While technology might be a source of angst for some, “this unstoppable march of increasing vehicle content has been incredibly powerful for the aftermarket ticket,” McCarthy declared. “And we think that will continue.”
And the increasing in-vehicle connectivity “is making our time in the car more entertaining, more productive, more appealing.”
“We would argue that this is a global opportunity that the pandemic underscored to consumers around the world: the safety, the appeal of individual transport and the freedom that it brings. So we think we could look back in 2040, 2050, and say that this was the start of a new golden age of transportation. And we could say that we grabbed this opportunity and we created new ways forward.”
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By Counterman
When it comes to advanced driver-assistance systems (ADAS), there’s good news and bad news for the automotive aftermarket.
First, the good news. The total addressable market for ADAS replacement parts and service is projected to skyrocket from $317 million in 2021 to $1.1 billion in 2030 – expanding at nearly 17% compound annual growth rate.
Those projections come from
link hidden, please login to view, an Ann Arbor, Michigan-based consulting firm that conducted a study on ADAS opportunities in the aftermarket. The Automotive Aftermarket Suppliers Association (AASA) commissioned the study, which included interviews with 350 repair shops, an in-person focus group and a review of 91 journals, articles and academic papers on the subject. Speaking at the AASA Vision Conference, Jim Fish, lead partner at Innovatrium, asserted that ADAS is “singularly the highest growth opportunity in the aftermarket.” In 2021, more than 1 million vehicles required ADAS service in an aftermarket shop, according to the Innovatrium study.
And now for the not-so-good news: More than 90% of ADAS work that comes into mechanical shops is outsourced to a dealership.
On the collision repair side, the researchers found that more than 75% of ADAS services coming into an auto body shop are performed elsewhere. In 2021 alone, auto body shops outsourced $177 million worth of ADAS calibration work. While mobile technicians might pick up some of that work, the majority likely goes back to a dealership.
The researchers concluded that ADAS features such as automated emergency braking, blind-spot detection, lane-departure warnings and rear cameras will lower crash rates by 20% in 2030. What’s noteworthy about that data point is that 45% of ADAS features are deactivated by the consumer.
Factoring in the independent aftermarket’s limited capabilities for ADAS service – and the likelihood that some consumers will forego ADAS repairs if their vehicles are drivable – the total “likely” ADAS opportunity for the aftermarket is $236 million by 2030.
“This is a radical reduction from the total available market to the total likely market,” said Matt Ballard, head of research at Innovatrium. “ … We’re starting off with this low capability in the aftermarket, and it’s growing slowly. And presently, there doesn’t appear to be anything that would change that.”
Still, the researchers concluded that ADAS is a problem worth solving. They identified three major problems that are inhibiting growth of ADAS business in the independent aftermarket.
Problems Worth Solving
1. Cost of ADAS Repairs
The cost of ADAS replacement parts and equipment are out of reach for most shops, the study found. In many cases, only OEM parts are available, and the lack of standardized calibration processes add to the complexity of performing ADAS work.
“Our call to action is we need aftermarket alternatives,” Fish said. “We need parts that can do this. … And then standardized processes are going to increase aftermarket adoption.”
2. Low Shop Competency
ADAS is a new and intimidating technology that requires a high-end diagnostic skillset to properly service it. Some shops say there isn’t enough volume of ADAS work to develop in-house capabilities.
The researchers asserted that more training for technicians is needed to bring shops’ ADAS competency up to speed.
3. Consumer Usage of ADAS
More and more mass-production vehicles now come standard with potentially life-saving ADAS features. However, the real-world application of this technology is troubling, with 45% of ADAS features being deactivated for various reasons.
According to the study, 41% of consumers are shutting off ADAS features because they don’t believe they actually work, while another 41% find these features distracting and 30% believe they’re not needed.
The researchers recommend a combination of consumer education/information; regulations to ensure that ADAS features are being used as they were designed to be used; and verification.
Fish argued that ADAS is on a trajectory that’s similar to the aftermarket’s gradual adoption of the SAE J2534 standard for reprogramming vehicle ECUs. Fifteen years ago, most ECU reprogramming was being sent to a dealership. Today, 80% of mechanical shops with six or more bays are performing their own J2534 reprogramming.
“We have a long way to go, but we’re not going to get there unless we do something about it,” Fish said. “And no one company is going to solve this. It’s just not going to move the needle. We really need all of us together.”
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By Counterman
Continental offers the Autodiagnos TPMS SE service tool as an ideal solution for multiple-bay shops that want to increase their TPMS-service capabilities and profits.
Designed to work with 100% of OE sensors and aftermarket sensors from REDI Sensor and EZ-sensor, Autodiagnos TPMS SE can perform relearns on over 95% of domestic, Asian and European models, according to the company.
The Autodiagnos TPMS SE was developed for multi-bay shops that require more than one TPMS tool in service at a time. It provides direct (OBD, auto, manual) and indirect TPMS relearn procedures and displays sensor ID, pressure, temperature and battery status in a matter of seconds. The tool also utilizes a cabled connection to perform OBD II mode relearns.
“Diagnostic tools can offer great service opportunities for shops, but often come with a hefty price tag. The Autodiagnos TPMS SE tool is an affordable option that allows larger shops to provide critical TPMS service to multiple customers simultaneously,” said Christopher Bahlman, head of diagnostics and services for Continental. “Plus, the tool is backed by Continental’s TPMS and OEM expertise, giving technicians peace of mind when servicing this critical safety system.”
In addition to the Autodiagnos TPMS SE, Continental also offers the Autodiagnos TPMS D tool as a solution for shops that only need a single tool for their service and diagnostic needs. This tool reads and clears TPMS codes and has a built-in VIN scanner for faster make/model/year lookups. It also can program sensors from historical data and features an OBD II mode that streamlines relearns for all of a vehicle’s sensors in under two minutes. The TPMS D works with 100% of OE and aftermarket sensors from REDI Sensor and EZ-sensor, according to Continental.
Continental Diagnostics & Services (D&S) was founded nearly 10 years ago to address the needs of service providers for advanced diagnostics, service information, connected services and specialty solutions, such as PTI (periodic technical inspection). D&S has developed diagnostics and service solutions for North America under the Autodiagnos brand. Key product offerings include professional aftermarket scan tools, TPMS diagnostic and service tools and a connected-vehicle data platform.
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