China: Do-over opportunity

If you had the chance to do it all over again, what would you do differently? Quite an esoteric question for the aftermarket, isn’t it? Life offers us very few opportunities for a “do over,” but the Chinese aftermarket offers suppliers and distributors alike such a chance.

China has a population of more than 1.3 billion people with nearly 100 million registered passenger vehicles, about 150 million less cars than the U.S., which has almost 1 billion less people. That is all about to change.

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The Chinese autoparc is expected grow to nearly 225 million vehicles within the next 10 years, according to Ernst & Young. With this growth in mind, the Automotive Aftermarket Summit held during Automechanika Shanghai 2012 addressed “Innovation and Adjustment of the Service Mode” to prepare the audience for the automotive aftermarket growth that is expected to result from the vehicle parc gains.

Organized by the Automotive Aftermarket Suppliers Association (AASA), China National Automotive Industry International Corporation (CNAICO), OAUTO and Messe Frankfurt, the event was attended by more than 300 distributors and suppliers to the Chinese aftermarket.

The growth in the Chinese aftermarket offers full-service suppliers and distributors the opportunity to gain market share and prevent brand erosion by providing those services valued by the Chinese supply chain. Topics were covered in detail by a wide array of Chinese aftermarket professionals and included training, customized distribution to service workshops, the advent of e-commerce in the supply chain and new technology.

The event – sponsored by Ernst & Young along with Polk-CATARC and TecDoc – emphasized that the supplier that provides quality parts and training at all levels of distribution has the advantage in the supply chain.

Shang Bao Guo is the general manager of CARZONE Auto Parts, which has 66 franchises and services 30,000 repair shops in China. He comments, “Distributors sell connections and make arrangements to have the right part at the right place at the right time, and the shops sell services to the consumers.”

He also spoke of the challenge of servicing Chinese repair shops, which have diversified into “quick repair shops that focus on easier types of repairs, such as brakes and oil changes, and others that focus on more specialized repair such as transmissions.” CARZONE faces many of the challenges the U.S. distributors face in that it needs to have the part in close proximity to the shop in order to secure the sale.

Other trends that were highlighted included the projected growth of turbo-charged gasoline engines to nearly 20 percent of the vehicle parc by the year 2020. Mike Yu, aftermarket director, China BorgWarner, notes, “15 million cars will be turbo equipped by the end of 2017, which presents its own set of training and cataloging difficulties.”

Shui Cong Fang, general manager of Shanghai Che1an.com, concluded the program with a discussion of the innovation service mode of e-commerce platform for auto parts. Her message focused on the aftermarket’s opportunity to learn from past distribution mistakes and to make the Internet a viable, vibrant partner in vehicle repair.

Lionel Vautrin, general manager for Hella (Shanghai) Trading Co. Ltd. and chairman of the AASA China Aftermarket Forum (CAF), and Felix Koo, director of the Aftermarket for The Schaeffler Group (Shanghai) Trading Co. Ltd. and CAF vice chairman, chaired the event and introduced the speakers.

The AASA CAF is a consortium of full-service suppliers that meet on a quarterly basis to discuss opportunities within the Chinese aftermarket and identify ways to address challenges in the growing segment. For more details about CAF programs and initiatives, visit http://www.aftermarketsuppliers.org/Councils/CAF.

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