January 13, 2017 Predictions for the Auto Sales Industry in the New Year

With nearly 18 million cars being purchased in just the U.S. alone 2016 was a banner year for auto manufacturers creating new opportunities.

By Gary Brooks, CMO, Syncron

Here are a few predictions for the year ahead that could revolutionize after-sales in the short-term, and change the way the space operates for years to come.

Growth in Automotive Aftermarket E-commerce

In 2016, the global automotive aftermarket grew 4.7 percent in 2016 – and that’s no surprise. E-commerce will play a key role in optimizing the aftermarket, not only because online shopping continues to grow, but because finding parts for an aging vehicle population becomes more challenging as time goes on. The average car on the road today is more than 11 years old, believe it or not.

E-commerce will be a significant trend in emerging automotive markets as well. Although more cars are hitting the road in China, the number of physical parts shops and auto-bodies where customers can go for replacement parts and repairs is lagging. This means that customers must turn to online vendors to keep their vehicles road-worthy.

After-Sales Service Optimized as Cars Become More Connected

A car is not just a car anymore. With options like in-cabin WiFi connectivity, electronic engines capable of taking you 200 miles on a single charge, and in-car media centers, the simple automobile is moving under the IoT umbrella. The number of cars with some sort of advanced connectivity will balloon to 152 million by 2020, so the automotive industry needs to adapt.

In less than five years, the IoT will account for more than 10 percent of the world’s data. The sheer amount of data that this connectivity brings will enable automotive manufacturers to tap into information to optimize vehicle performance in a whole new way. Instead of reactive maintenance, manufacturers can be more proactive about diagnostics, predicting when and where a specific vehicle may need a repair and ultimately improving the customer experience. To enhance inventory management, dealer success and customer satisfaction, manufacturers will also be able to leverage this data to make sure immediate areas have certain parts in stock.

Manufacturers shift from B2B to Direct B2C Sales

With e-commerce opening up direct avenues to consumers, manufacturers can now sell directly to end users through sites like Alibaba and Amazon. Buick, for example, saw $23.5 million in sales in a single day last year as a result of its online shop on Alibaba’s subsidiary, TMall.

This direct sales model not only has ramifications for profitability, but it will also cause retailers to rethink and reorganize their distribution and inventory operations. Now, more stock will be centralized for in-house shipping, and distribution will be redesigned to account for the shipping of more products to individual home addresses, as opposed to more central ‘hubs’.

Inventory and Pricing Management Enters The 21st Century

After-sales service is a huge profit lever for auto manufacturers today. Yet many have resorted to archaic methods of “cost plus” and Excel spreadsheets to price products and manage service parts inventory. Manufacturers are realizing that there are better solutions that can both help manage inventory and make the most out of pricing.

And while managing and dynamically pricing worldwide stock is no easy task, it’s still important. Forty-eight percent of companies with some sort of dynamic pricing approach or supply chain visibility tools outperformed those without them.

With competition increasing, and companies becoming aware that they are leaving money on the table, these next level pricing and inventory solutions will become more commonplace in after-sales service in 2017.

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The automotive aftersales business has huge revenue potential, and by continuing to innovate and meet the demands of modern auto users and the “on-demand” economy, the aftersales category could steal the show in 2017.

Gary Brooks
Brooks is Chief Marketing Officer at Syncron. With 20 years of marketing experience, Mr. Brooks is a revenue focused B2B marketing executive who believes in qualitative work with quantitative results to deliver breakthrough revenue performance.

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