Growing Vehicle Parc and High Miles Driven per Vehicle are Driving Growth
Australia has seen steady growth in its vehicle parc over the past few years. According to industry estimates, the total vehicles on road in Australia crossed over 23 million units in 2020. This growing vehicle population is resulting in higher demand for regular service and maintenance of existing vehicles. On average, Australian vehicles clock over 20,000 km per year which is one of the highest annual distance driven globally. This high usage puts additional wear and tear on vehicle parts leading to frequent replacements and repairs. Additionally, Australia's harsh road and climatic conditions also accelerate the deterioration of components further fueling higher aftermarket demand.
Rising Complexity of Modern Vehicles to Sustain Demand for Professional Garages & Technicians
Modern vehicles have become highly complex with integration of advanced driver assistance, safety, infotainment and emission control systems. Repairs and maintenance of such sophisticated components requires special tools, diagnostic equipment and technical know-how. This growing complexity has made it difficult for general vehicle owners to carry out repairs on their own. As a result, there is a rising trend of vehicle owners relying on professional automotive garages and workshops for even minor issues. The workshops are well equipped with latest tools and employ trained technicians certified by vehicle manufacturers. This reliance on professional servicing is driving steady growth of organized automotive aftermarket sector in Australia.
Opportunities in Expansion of Independent Aftermarket with Emphasis on Generic Components
While OEM spare parts certainly have an advantage in terms of fit and reliability due to vehicle-specific design, independent aftermarket component suppliers have been gaining ground with their focus on cost competitiveness. Independent players now offer comprehensive range of generic parts that can replace a variety of OEM components at significantly lower prices without compromising on quality and performance. Taking note of this growing demand for cost-effective generic parts, independent players have been expanding their distribution networks across Australia. They are making significant inroads especially for commodity components like filters, belts, hoses, gaskets etc. used for regular maintenance and servicing. This has opened up new business and revenue opportunities for independent component suppliers as well as multi-brand automotive workshops.
Rise of E-Commerce Platforms and Online Part Sales Benefiting both Retailers & Customers
Digital disruption has reshaped various industries worldwide including automotive. In Australia as well online retailing of automotive parts and accessories is revolutionizing the aftermarket. Specialized automotive e-commerce platforms are emerging as a convenient one-stop-shop for vehicle owners and workshops to search and purchase products online. Benefits like extensive product catalog, competitive prices, transparency in costs, fast delivery and 24x7 order tracking are fueling rapid adoption of virtual retail channels. Sensing the immense potential, major component suppliers, retailers as well as new entrant startups have established their online stores. This is allowing increased outreach beyond geographic boundaries while saving costs compared to physical stores. Online platforms are playing a pivotal role in boosting the overall size and scope of Australian automotive aftermarket industry.
Stringent Emission Regulations Driving Shift to Greener Technologies
Australia has implemented progressive emission standards over the years in line with global protocols under Paris Agreement and United Nations Framework Convention on Climate Change (UNFCCC). The nation aims to halve its greenhouse gas emissions from 2005 levels by 2030 and achieve carbon neutrality by 2050. Accordingly, emission norms for both new as well as in-use vehicles are being tightened periodically with a clear focus on shifting towards electric and other greener technologies. This transition towards low-carbon mobility is stimulating demand for novel components supporting newer engine architectures, hybrid powertrains, battery packs and related technologies. Aftermarket players are developing expertise and product ranges aligned to emerging categories like 48V mild-hybrids and supporting infrastructure for EVs. Original equipment manufacturers are partnering with suppliers for technology transfers and local manufacturing of critical green components. These industry developments point towards exponential opportunities in Australia's evolving Green Automotive Aftermarket landscape.
Rising Trend of Multi-brand Workshops and Franchise Models for Smaller Players
While branded workshops belonging to OEMs and large component groups hold a strong position, there is an upswing of independents as well adopting multi-brand service approach. Smaller automotive repair shops are realizing benefits of dealing with a diverse customer base instead of limiting themselves to select vehicle brands. This diversification helps reduce over-dependence and stabilize revenue streams. Further, to achieve economies of scale, several local workshops are associating with prominent aftermarket retail chains as franchise partners. Franchising enables small players to leverage the support infrastructure of bigger networks including centralized procurement, training academies, joint marketing programs and technological tools. In a highly fragmented Australian aftermarket industry, franchise and multi-brand business models are emerging as a viable strategy for long-term growth and sustainability of individual workshops.
Focus on Specialized Vocational Training to Address Shortage of Skilled Technicians
While automotive repair and maintenance sector offers ample career opportunities, shortage of qualified technicians has been a long-standing concern in Australia. Rapid vehicular growth and advanced new technologies have further widened this skills gap. According to industry estimates, over next 5 years, the nation would require additional 15,000 skilled automotive service professionals. Addressing this acute talent crunch necessitates dedicated efforts from both public and private entities. Automotive vocational colleges, technical schools, brands and buying groups have stepped up training infrastructure as well as customized course modules focusing on specialized domains like electrification, connectivity and alternate fuels. Apprenticeship programs are being encouraged to nurture fresh talent from grassroots. Government funded schemes as well provide monetary assistance to automotive technicians for continuing education. These measures aim to develop a robust workforce essential for future growth of Australian automotive industry.
So in summary, factors like growing vehicle population, high yearly distance driven, rising vehicle complexity, expansion of online retailing and emphasis on green mobility are presenting abundant opportunities for Australia's dynamic automotive aftermarket industry. While independent suppliers are leveraging generic components, workshops are exploring franchise models for stability and scale. Overall, focus on specialized skills development would be crucial to sustain this positive business outlook over the coming years.
Published Date: Oct 2024
