Challenges in the automotive aftermarket
Internationalization
Globalization is an increasing challenge in the automotive aftermarket as well. Global platforms of automotive manufacturers are forcing parts manufacturers to standardize extensively and to expand their international presence. Increasing price pressure in the international environment on Tier 1 and Tier 2 suppliers leads to an increasing importance of the IAM channel for the suppliers concerned. At the same time, increasingly larger and more international parts manufacturers expect adequate distributors as channel partners.
Consolidations
The channel partners, in turn, are becoming larger and larger due to international consolidations and are exerting strong pressure on the suppliers. In addition to the original parts manufacturers, there are now many manufacturers of replica articles or own brands of wholesalers and purchasing associations. This leads to additional pressure on prices and margins of the original parts manufacturers. Similarly, workshops increasingly have opportunities to buy parts within Europe across national borders, increasing the price pressure on wholesalers and parts manufacturers alike.
E-commerce and web selling
The sale of spare parts is increasingly taking place via electronic ordering platforms such as web stores on the Internet. Parts are searched for and ordered online. It is not uncommon for workshops to have access to several wholesalers’ web stores and order flexibly according to need. It is essential for dealers to have appropriate platforms ready to meet customer requirements. It must be possible to identify parts quickly and conveniently. A clear product range structure and well-maintained master data and product information are essential for this. Due to the high transparency and comparability between distributors, prices must be marketable. Open web stores for end customers and workshops additionally increase the price pressure on workshops and thus, as a direct consequence, on distributors as well.
Solutions for the automotive aftermarket
In order to hold one’s own and be successful in the automotive aftermarket, it is crucial to adapt to the challenges, especially strategically and digitally.
Achieving the goal with a clear pricing strategy
Parts manufacturers need clear strategies for their products. For example, for highly comparable parts with high competitive pressure, good processes and strategies are needed to prepare for tenders and negotiations and to shape them in the best possible way. In addition to tenders, basic condition systems and elements are also crucial for differentiated pricing and target setting.
Due to increasing international price transparency, parts manufacturers are also dependent on well-coordinated international strategies and processes. Price levels can, for example, be controlled by international price corridors in order to skim off willingness to pay and at the same time minimize gray market risks due to undesirable trade between countries.
Perform customer segmentation
It is also crucial for wholesalers to systematically differentiate prices and conditions according to different customer segments and competitive situations. While the logistics requirements are clear prerequisites for a successful market position, there are opportunities to position themselves accordingly with relevant customers, particularly in the area of services (service and workshop concepts).
Implement digital solutions
In addition, digital solutions are highly important to be able to process and strategically use the large volumes of technical data and price data from the many suppliers. Complex software solutions are often used here, which have a wide range of design options in the context of price management.
Looking to the future
The question of how the multichannel landscape will develop over time is a fascinating one. It can be assumed that the newer sales channels will become more established over time and that transparency regarding prices and conditions will continue to increase via platforms and marketplaces. This will further drive the (international) consolidation of price levels and market participants.
Experiences and project examples
Prof. Roll & Pastuch – Management Consultants has extensive experience in the automotive aftermarket sector. In various projects R&P was able to support companies in solving the complex challenges. The focus of our projects in the automotive aftermarket includes the following topics:
- Multichannel strategy (pricing and distribution)
- International Pricing
- Development of new and differentiated condition systems
- Negotiation training and pricing tools
- Service concepts
- Selection and implementation of pricing software
Learn more about your potentials of pricing and sales in the automotive aftermarket
We will be happy to answer your questions and provide you with further information.
Prof. Dr. Oliver Roll
Prof. Dr. Oliver Roll is Chair of “International marketing and price management” at Osnabrück University of Applied Sciences. He is a member of the European Pricing Platform’s Academic Advisory Board. Prof Roll gained extensive management experience at Simon-Kucher & Partners, before moving to Roland Berger Strategy Consultants to establish their Pricing Excellence Unit. He has managed marketing and pricing projects for numerous international companies. Prof. Roll also speaks at various management conferences on the topic of price management, and has published numerous articles concerning different aspects of the pricing process.
