China's automotive aftermarket industry integration accelerates brand wars to replace price wars

The earliest classification of the automotive aftermarket was based on the order of sales of complete vehicles before and after sales. The automotive aftermarket industry is referred to as the automotive aftermarket.

The automotive aftermarket can be roughly divided into seven major industries: auto maintenance industry; auto finance industry; auto IT industry; auto boutique, supplies, beauty, quick repair and modification industry, also known as the auto maintenance industry; auto repair and accessories industry; auto culture and auto sports industry; used car and car rental industry; and aftermarket alliance platform integration.

The two major factors that affect the demand for the automotive aftermarket are: the number of cars in use and the profit structure of the automotive industry chain. In terms of the number of cars in use, my country's automobile production will reach or even exceed 200 million by 2018. In the automotive industry chain of mature countries, the automotive aftermarket accounts for 50-60%, while my country currently only accounts for about 10%, and there is still a lot of room for improvement.

Auto market profits shift to aftermarket

At present, China's auto industry is also in the best policy background. The country's measures to stimulate domestic demand have brought huge opportunities to brand companies, and auto peripherals and auto after-sales products will also benefit directly. The explosive sales growth in the auto industry has led to a rapid increase in the number of cars in use, so the market is also required to provide matching high-quality after-sales services.

According to the general law of the development of foreign automobile industry: With the continuous upgrading of consumer demand, the focus of competition in the automobile industry will gradually shift from the automobile itself to the related services after the purchase of the automobile, thus forming a huge "automotive aftermarket", which mainly includes the automobile insurance industry, automobile repair and accessories industry, automobile maintenance industry, used car and car rental industry. During the 12th Five-Year Plan period, with the support of national policies, the development prospects of the automotive aftermarket are bright. It will build a reasonable development system, improve the overall quality of practitioners, and gradually create products with its own brand as the core, in line with the mature foreign automotive aftermarket. And the profits of the entire automobile industry will be largely transferred to the aftermarket.

Channel multi-terminal service is not standardized

At present, there are five major channels in the automotive aftermarket: 1. 4S stations; 2. traditional large and medium-sized repair shops; 3. roadside auto repair shops; 4. special auto service shops; 5. branded quick repair beauty and decoration chain stores. These five channels have their own advantages and disadvantages in terms of area, equipment investment, personnel quality, location convenience, service quality, service time and charging standards. Different channels have different requirements for product profit, product quality, service requirements, etc. Therefore, the management difficulty is increased, and they are always facing conflicts and price chaos.

On the surface, China's auto aftermarket is diverse, flourishing and very active, but in reality, the quality of the market is mixed, and there are only a handful of established brands. Overall, it is still in a state of chaos.

Development Trend of Automotive Aftermarket

●Industry consolidation will continue, and enterprises with poor overall competitiveness will face elimination. The general trend of the development of the automotive aftermarket will be a decrease in the number of brands, while the trend of brand specialization and concentration is obvious, with a large number of well-known brands concentrated in the hands of a few enterprises. The development trend of the same industry is the same, tending towards monopoly and scale.

●The advent of the era of micro-profits With the increasingly fierce market competition and the continuous standardization of the marketing market, the era of huge profits in the automotive aftermarket industry has passed, and it has entered an era of micro-profits. In the past, the net profit was as high as 30%-40%, or even more, but now the general profit of enterprises is only 15-20%, and some individual products in some local markets have a profit of only 5%-10%.

● Brand war will replace price war and quality war. Price war has always been a means of selling low-end and medium-end products in the field of automobile aftermarket. It relies on its own productivity, advanced equipment and management, and relatively smooth marketing channels to reduce production costs and provide consumers with preferential prices. With the continuous improvement of people's material living conditions, brand products have a broader market than cheap products. The brand effect makes customers willing to accept its higher pricing and have a broader profit margin. Therefore, in the future automobile aftermarket, brand war will replace price war and quality war.

● Separation of brand building from production and operation In order to occupy the market more effectively, the existing manufacturing and marketing industries will develop in two directions. One part will become professional enterprises that build brands. They manage brands instead of products themselves, and some even do not have factories. The other part will become professional production enterprises, and they do not need to consider the market or distribute products themselves. They can completely rely on orders from brand operators. This separation of brand building from production and operation is conducive to concentrating energy and funds on production and brand building, and developing in the direction of refinement of professional division of labor. It makes production develop towards order-based development, which is conducive to realizing planned production. It allows marketing to concentrate on building strong brands, and it is possible to develop brands overseas.

●More auto aftermarket companies will acquire small and medium-sized enterprises that have successfully won the brand war by "copying" them. When orders increase, they sometimes feel that their production capacity is insufficient. In addition to expanding their production scale, these companies will also entrust other companies to produce. However, sometimes due to various reasons such as their technical capabilities and equipment problems, the quality is often not guaranteed, so there will be a practice of acquiring small and medium-sized enterprises by "copying" them.

The so-called "copying" means to require and regulate the acquired enterprise according to the model, style and management methods of one's own enterprise, so that the enterprise can meet one's own requirements in production management and quality management, and the product quality can reach the expected level. This "copying" acquisition method can save money for the enterprise and ensure quality and delivery time. It is much faster than expanding the production scale by oneself.

●The government will continue to increase support for the automotive aftermarket industry. The Chinese government has always provided strong support for the development of the active automotive aftermarket, and the vigorous automobile consumption also provides unlimited business opportunities for the automotive aftermarket. So far, the automotive aftermarket has entered a period of relatively high growth. However, due to the relatively traditional automobile consumption concept, the development of the automotive aftermarket industry has been relatively slow, and the stamina is slightly insufficient. In order to better expand and strengthen the automotive industry and create a new cluster advantage for the automotive aftermarket industry, the government also intends to support and actively guide through policies to extend the automotive industry chain. Subsidies and preferential policies are given to various domestic automotive aftermarket exhibitions.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.