Pricing & Sales in the Automotive Aftermarket

The automotive aftermarket continues to be one of the key revenue generators for companies in the automotive sector. Both automotive manufacturers (OEMs) and automotive suppliers (OESs) can generate high revenues through the sale of spare parts and services. The automotive aftermarket is a very complex market, characterized by different sales channels ranging from the OEMs’ tied aftermarket with trade partners and authorized workshops to the independent aftermarket (IAM) with major players in distribution and a large network of independent workshops.

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.

Internationalisierung als Herausforderung für den Automotive Aftermarket

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.

Werkstätten

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.