It’s undeniable that the months of March and April meant a period of reduced activity and profit for the automotive after-sales market, which only in recent weeks has gone back to display positive trends. Given this new normality we are about to experience, made up of smart working and social distancing, a question arises, what impact will it have on the after-sales sector? Taking into account the persistence of a general situation of distress, true to practically the whole world, after-sales operators will have to take quick measures to be able to face the restart with the right approach.
Automotive after-sales: a ‘resilient’ business
It must be said that the automotive sector is usually less sensitive to the first impact of a crisis: typically, in a difficult economic period, you may not buy a new car, but you certainly repair the one you already have in order to keep using it.
A recent study released by McKinsey tried to take stock, studying previous periods of global crisis to quantify the changes in demand, earnings, and other performance indicators that are normally affected during difficult times. The resulting patterns were then projected onto the current situation to enable a forecast of the immediate future, to better understand what the so-called “new normal” will be like. That being said, and taking as example the 2007/09 financial crisis, even in a situation of general distress for the automotive industry, the after-sales sector was resilient to a greater extent and, at least in Europe and the US, remained relatively stable in revenues.
An unparalleled crisis
What’s the difference today? Five elements: fewer miles driven, fewer accidents, fewer car inspections and services (as governments often postponed deadlines), and increased ecommerce for spare-parts products, at the expense of purchases handled by workshops and spare-parts dealers. On a positive and potentially beneficial note, there’s a decreasing desire to use public transport (we have discussed this in relation to car-sharing), with a consequent push to purchasing vehicles. The impact of these 5 factors has led to a reasses the current year’s forecasts, which for Europe suggest a decline of 5 – 7% if the containment of the virus is successful, and even between 15 and 17% if infections resume in the autumn.
