Navigating the Aftermarket: Examining the routes to aftersales value creation

As the automotive industry continues to undergo a new era of transformation, the aftersales domain grapples with the monumental consequences.

In a world where sustainability reigns supreme, the automotive landscape is experiencing a dynamic overhaul. Electric vehicles (EVs) are taking center stage in an emission-reducing revolution. Meanwhile, cutting-edge technologies, such as autonomous driving and vehicle connectivity, are reshaping how we define mobility. Compounded by shifting consumer preferences towards shared transportation, rapid innovation in vehicle development is more pronounced than ever.

As we bear witness to these sizable shifts in operations, it becomes clear they don't just affect vehicle manufacturing. Evidently, they are significantly reshaping our perception of the aftersales market.

Profound transformations have left an indelible mark on the aftersales landscape. The aftersales market and its associated profit pools have responded to these developments in intriguing ways. This has left many OEMs unsure how to react. To explore the impact and evolution of the aftersales market, we conducted in-depth analysis that encompassed a customer survey involving over 2,500 premium customers in key markets: Germany, the US, UK, China, and Sweden. Alongside expert interviews and extensive research, our findings reveal five core dynamics that are shaping the future of automotive aftersales:

1. The Threat – New Market Players: Emerging market entrants, including EV-startups from China and Europe, are exerting a significant impact on the automotive sector, and thereby introducing competition. Collaborations with energy service providers, tech giants (e.g., Google), and technology service providers (e.g., Otonomo) are further propelling the industry's transformation.

2. The Big Hope – Rising Customer Expectations: Elevated customer expectations offer significant potential. Customers now demand a digital, personalized, and connected aftersales experience. Prioritizing interactions and reducing waiting times is vital for enhancing loyalty and satisfaction. While over 70% of customers express dissatisfaction with the current service and would not recommend it, a striking 91% of customers are eager to invest more in exchange for an enhanced service experience.

3. The Game Changer – Electrification: Ongoing electrification reduces demand for traditional maintenance services, due to the simplicity of electric vehicles. However, it paves the way for new services, such as mobile solutions and tire wear management. It is essential that OEMs adapt to these challenges.

4. The Innovator – Software-Defined Vehicle: Technological advancements in software-defined vehicles, driven by AI, IoT, and telematics, offer opportunities for improved efficiency and transparency. Transitioning to predictive technologies can help OEMs optimize the customer experience, albeit with some implementation time (88% of customers are willing to pay for mobile services anywhere and anytime).

5. The Rational – Sustainability: Sustainability takes center stage in a climate-conscious era. OEMs must address sustainability and resource constraints. Remanufacturing, especially in spare parts, plays a vital role in environmental preservation, with 85% of customers expressing their openness to using refurbished parts in the name of sustainability. Regulatory influences need to be integrated into aftersales strategies to align with these changes.

These trends will significantly affect the six main aftersales’ profit pools by 2035, which can be categorized into three groups, depending on their expected revenue potential by the same year:

The Winners:

Connected services and new business models (such as subscription-based services, refurbished spare parts, and other novel profit streams) show significant potential to quadruple revenues. This is largely due to customers' willingness to pay for them, coupled with ongoing softwarization. Even though new market players might pressure traditional OEMs in this field, they also bring opportunities for valuable collaboration. This territory is primed for substantial growth and prosperity.

The Keepers:

In the context of wheels and tires, the revenue potential remains stable, mainly thanks to the increased wear generated by the prevalence of heavier EVs. This effectively offsets potential negative influences stemming from sustainability-related price increases and heightened competition from specialized wheel providers. Consequently, we anticipate that the profit pool in this sector will maintain its stability.

The Losers:

Service and maintenance, spare parts, and repair revenues face a downturn with fewer breakdowns and repair workshop visits being expected. This is because EVs contain fewer components and improved Advanced Driver Assistance Systems (ADAS).

Based on our findings, we anticipate a period of profit stagnation from 2030 onwards, driven by market saturation, predictive technologies, and electrification effects. In response to this, OEMs must adapt by investing in promising sectors and innovating in challenging areas.  

Navigating the twists and turns

So, what is the specific roadmap for OEMs to tackle these changes? To survive and thrive in the future, OEMs will need to start investing in new, prosperous profit pools. But there are several concrete steps they can take in the here and now to ensure their aftersales offerings are built to be adaptable and primed for success. For example, they can launch a profitability program to exploit today’s profit pools in core business. Next, they can maintain the competitive edge by building up their digital aftersales. Once this is in place, OEMs can begin overcoming product shortcomings by upgrading their whole aftersales experience. Of course, this upgrade should include specific measures designed to strengthen OEMs’ B2B strategy, which must first be defined to tackle the increasing size of the segment. Finally, OEMs cannot overlook the importance of effective warranty management and cost savings.

Final thoughts

To gain a thorough understanding of these strategies and specific OEM recommendations to enhance the aftersales approach, we invite you to explore our extensive Capgemini Invent Aftersales Study, which was developed by our industry-specific experts. This valuable resource offers in-depth insights into specific action fields for each profit pool, providing the guidance and clarity necessary for navigating the changing automotive aftersales market.

Authors:

Sebastian Tschödrich, Global Head of Automotive, Capgemini Invent

Anne Junge, Head of Customer Transformation, Capgemini Invent

Nadine Kirchhoff, Head of Sales & Commerce Transformation, Capgemini Invent

Isabelle Orlea, Senior Manager, Automotive, Capgemini Invent

Katharina Schuback-Ruther, Manager, Automotive, Capgemini Invent