Connected, autonomous, shared, electric, transforming regional auto aftermarket

June 15, 2019 - 8:19 PM

Global auto aftermarket professionals believe they are more ready now than they were 12 months ago for imminent market changes, as new technologies, economic climate, and government policy play key roles in how the Middle East auto services industry will look in the next five years, according to a new survey. The May 2019 survey was conducted ahead of Automechanika Dubai 2019, the Middle East and Africa’s largest international trade fair for the auto services industry. It compares respondents’ answers to the same questions 12 months ago, indicating whether market perceptions have changed with time.

Answered by distributors, manufacturers, importers, exporters, wholesalers, retailers, consultants and service providers, the survey showed that while technology is still the chief reason for change in the next five years, political and economic scenarios will have a bigger role to play.

When asked what would be the reasons for future change in the Middle East auto aftermarket, 64% of respondents in 2019 cited change in automotive technology, versus 74% in 2018. Meanwhile, 48% of respondents in 2019 believed that regular political and economic improvements or slowdowns will be the chief factors driving change in the next five years. This is 6% higher than in 2018, indicating external factors beyond the industry’s control might have a bigger say in how the aftermarket looks in the future.

The perception that electric vehicle technology will challenge petrol and diesel the most has increased year-on-year, with 51% of respondents believing electric cars will be the chief challenger to the internal combustion engine, compared to 47% in 2018. Confidence in hybrid and hydrogen cell vehicles as the big challengers appears to have waned slightly year-on-year.

51% respondents believe electric cars will be chief challenger to internal combustion engine, compared to 47% in 2018.

Arrival of CASE

Tellingly, more than two thirds of the survey 68% agree that CASE – Connected, Autonomous, Shared, Electric mobility is already happening in a big way or will dominate the market in the Middle East within the next five years, which is 12 points higher than in 2018 56%.

More than half 55% also say they would expect to see Return On Investment in alternative fuel vehicles repair equipment in five years if they were to invest in it, while a further 35% say ROI would be seen within two years.

But while 55% of respondents in 2019, no change from 2018, indicated that customers had started approaching them for products and services for non-petrol or diesel engines, 61% of garage or workshop respondents had not yet invested in new equipment for electric vehicles. A further 35% said that, while they know what equipment would be needed, it was still too early to make this investment.

Disruption to after market

Respondents were also asked for their thoughts on which key aftermarket product groups would face the most disruption in the Middle East in the coming years, these comprising Parts and Components; Electronics and Systems; Accessories and Customising; Repair and Maintenance; Car Wash, Care and Reconditioning; and Tyres and Batteries.

There was very little movement year-on-year in what product groups respondents perceived would face the most disruption. Parts and Components – the heart of the internal combustion engine – would face the most disruption in the next five years according to 56% of the survey sample in 2019, a slight drop from 59% in 2018.

This was followed by Electronics and Systems 37% in 2019, 35% in 2018, Repair and Maintenance 36% in 2019 and 2018, Accessories and Customising 27% 2019; 26% 2018, Tyres and Batteries 23% 2019; 25% 2018, and Car Wash, Care and Reconditioning 12% in 2019; 14% 2018.

“The Automechanika Dubai Market Outlook is an annual survey we conduct every year to ascertain the current situation in the regional aftermarket, where it’s headed, and where the potential opportunities are in the Middle East,” said Mahmut Gazi Bilikozen, Show Director for Automechanika Dubai.

“It is clear that the automotive industry, and the aftermarket as a result, is undergoing a rapid transformation, but it is a positive indicator that industry professionals appear more confident their businesses can still survive and ultimately be more successful in a market that will no doubt look very different in years to come.”

Automechanika Dubai 2019 featured 1,880 exhibitors from 63 countries. Its global influence is highlighted by the presence of 23 country pavilions and 34 international trade associations, while 90% of exhibitors, and 52% of the 32,000-plus visitors are expected to come from outside of the UAE.

Parts and components would face most disruption in the next five years according to 56% of the survey in 2019.

Key takeaways

  • 67% respondents feel companies are ready to face the changes that will inevitably arrive in the future.
  • 64% of respondents in 2019 cited change in automotive technology, versus 74% in 2018.
  • 48% respondents in 2019 believe political and economic changes will drive change in the next five years.
  • External factors beyond industry control might have a bigger say in aftermarket in future.
  • 51% respondents believe electric cars will be chief challenger to internal combustion engine, compared to 47% in 2018.
  • Parts and components would face most disruption in the next five years according to 56% of the survey in 2019.

 

Tags: