The auto aftermarket is poised to emerge into the greatest beneficiary of the tough economic conditions now widely touted to be the new normal in developed economies, according to a report by Global Industry Analysts, a market researcher. Developed economies are now saddled with financial and economic conditions, which are likely to persist into the foreseeable future, such as, depressed GDP growth, federal austerity measures, capital raising constraints, consistently high unemployment rates, and increased taxes.
The scenario is aggravating the trend towards buying used cars and the tendency to retain vehicles for longer time in good working condition therefore requiring continued maintenance, which in turn translates into greater demand for aftermarket service and mechanical parts. The penchant of car owners to turn their cars from a simple transportation machine to an ultimate status symbol by installing a range of electronic gadgets and accessories is also driving growth in the aftermarket.
Growing percentage of electronic content in automobiles coupled with modern consumers’ proclivity to in-car infotainment technologies provides ample opportunities for growth in the area of automobile entertainment in the aftermarket. The rapid pace of depreciation in the value of factory-fitted systems will result in skewing consumer preferences towards aftermarket products.
For instance, in-car navigation and information systems have a higher appeal in the aftermarket as factory fitted satellite navigation systems have product cycles that lag behind technology development in the aftermarket. In the upcoming years, energy efficient and environmentally safe aftermarket products will find special demand, impelled by stricter emission norms and rising fuel prices. Investments in R&D and production processes are therefore seen as critical for sustained success in the marketplace.
Growth in the global automotive aftermarket is also forecast to be driven by increasing demand for cosmetic parts or crash parts such as panels, bumpers and bonnets and other sheet metal parts such as doors, fenders and hoods, as a result of the increasing number of automotive accidents and crashes. These parts typically take the highest impact in the event of collisions and therefore demand immediate replacements in case of damage. Given the growing demand for crash parts in the aftermarket and consumers emphasis on safety, aftermarket manufacturers are focusing on providing crumple zones in bumpers, hoods etc for crash safety at quality levels comparable with those provided by auto OEMs. Independent aftermarket component manufacturers are poised to gain the highest score over for standard stock OEM replacement parts offered by the automaker. This is primarily because of the lower and highly competitive prices offered by independent component manufacturers. The Certified Automotive Parts Association (CAPA) certification, which ensures quality levels on par with OEM manufactured parts, is also is expected help spur demand for parts supplied by independent aftermarket component manufacturers.
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