European Aftermarket to Suffer 1.2 Billion Euro Dip
New research from independent market analysts Datamonitor suggests that Europe’s 146 billion euro light vehicle aftermarket is in decline. The analysts say that revenues could drop by one per cent compared with those of today – a 1.2 billion euro shrinkage.
According to Datamonitor, the fast fit, autocentre and tyre specialist sectors will buck the trend and see an increase in value, with over 1.5 billion in revenues added in the period 2003-2008, as consumers perceive them to be a low hassle way to maintain a car. The major international competitors are likely to take advantage of this – KwikFit (including Speedy, PitStop and now Axto), Norauto of France (now incorporating Maxauto and Midas), ATU of Germany and Michelin’s Euromaster network (having acquired Viborg). Although competition is likely to remain intense, the report suggests that these companies are likely to be amongst the key winners in the evolving marketplace.
The research highlights vehicle manufacturer networks as holding the largest share of the aftermarket across Europe – approximately 40 per cent. The report predicts that this share will take a 2 billion euro hit, explaining that in large part the declines will be focused on the networks of the secondary dealers and agents rather than the core main dealer networks. Independent garages will likewise see a marginal reduction in their share of the market and a decline of 700 million in revenues by 2008.
Datamonitor estimates that the decline in total market value will result in a net reduction of 39,000 aftermarket outlets across the ten European countries by 2008. A reduction in the number of independent garages is also expected – and this will particularly be the case in countries such as Spain and Italy with very dense networks of small independent outlets. The density of the networks in these countries is reflected in the low average revenues per outlet.
“The negative factors are partially offset by a number of positives. For example, there is a steady increase in the number of cars on the road – generally rising between 1 per cent and 3 per cent per year – and this naturally creates more demand for replacement parts. Furthermore, the value of the aftermarket is boosted by a positive “mix” effect. Whilst fitting better components – such as stainless steel exhausts or precious-metal spark plugs – reduces volumes, they are significantly more expensive. Likewise, the closure of the smaller – and therefore less economic – retail networks, will eventually lead to average revenues per unit rising over the next few years,” said Simon Hodson, managing analyst of Datamonitor’s automotive research.
Datamonitor’s European Aftermarket Database 2005, tracks the components of this sector across the 10 major European countries of Germany, Italy, France, UK, Spain, Belgium, Netherlands, Switzerland and Portugal.