The Automotive Aftermarket in China
2018-10-16 11:24 Tuesday
The number of private cars in China has soared in recent years, from 100 million in 2014 to 310 million in 2017, placing China second to the United States. The increase in the number of vehicles has been accompanied by a boom in the Chinese automotive maintenance sector, with growth in excess of 100% from 2015-2017, indicating the enormous promise of China's automotive aftermarket.
The automotive aftermarket refers to all automotive after-sales services.
Auto Aftermarket Overview
The automotive aftermarket refers to all automotive after-sales services. There are 18 major categories of business in the automotive aftermarket: automotive beauty, car refurbishing, automotive maintenance, automotive electronics, automotive entertainment, car modifications, automotive accessories, tire service, auto repair, automotive commerce, car rental, car owner clubs, second-hand cars, car culture, automotive financing, automotive advertising, automotive news, and automotive training.
History of the Automotive Aftermarket in China
The history of China's automotive aftermarket can be divided into four stages. 1990-1996: the initial stage dominated by official state vehicles; 1997-2006: a period of rapid development stage dominated by official state cars and increasingly supplemented by private cars; 2007-2010: ta restructuring period characterized by an almost equal split between official and private vehicles; post-2011:a period of stable development with private cars playing the predominant role.
There are five main distribution channels in China's automotive aftermarket: auto 4S stores, medium and large service depots, roadside auto repair stores, automotive service shops and automotive quick-service chain stores. Each channel has its own merits, but improved auto 4S stores and well-known automotive quick-service chain stores are best-positioned to succeed as the market continues to evolve.
Future of the Chinese Aftermarket
Revenue from China's automotive aftermarket accounts for 60%-70% of total auto industry revenue. In 2005, the value of China's automotive accessories market reached 42 billion RMB, the most lucrative sector in the automotive aftermarket, followed closely by 41 billion RMB in the automotive repair market. The total output value of China's automotive aftermarket exceeded 190 billion RMB in 2010 and 700 billion RMB in 2015, demonstrating remarkably rapid growth.
The number of registered auto beauty stores in China now exceeds 300,000, with auto sales continuing to expand at a 30% annual rate. All of the evidence indicates that China's automotive aftermarket faces a promising future.
However, poor service quality has hindered growth in China's automotive aftermarket. Likewise, there are lingering issues regarding information asymmetry and scattered and inconsistent access to service stores.
The proliferation of digital and internet-driven service models has led to speculation about the future direction and nature of development for the automotive aftermarket.
Notably, industry experts have noted that terminals will be an important feature of the future automotive aftermarket, with e-commerce-centric models that include integrated direct warehouse sales and distribution.