Aftermarket Insider Issue 81 - (Page 18)

market research CHECKING IN WITH CHINA The OES Channel – A Strong Competitor to IAM By S te ven H. Ganster , M anaging Director , T echnomic A sia Contrasting the U.S. market situation where the OES channel has less than 30 percent revenue share of aftermarket sales, China’s car dealers still maintain the lion’s share of the aftermarket with close to 50 percent. The introduction of new models has been brisk over the last three to five years, and many vehicles in the parc are still under warranty. OEM parts, and as well as more sophisticated parts, are typically only available at 4S stores or authorized service stations. Further, independent aftermarket (IAM) repair shops are still not fully credible in the eyes of consumers, having inconsistent service quality and using varying grades of parts from international brands to local imitations to fakes. As a result, the OES channel still enjoys a strong position in aftermarket parts sales and service. Today, there are an estimated 23,700 retail car dealers in China with 73 percent of these (~19,900) being registered dealerships (i.e., those authorized by the vehicle maker). The balance ~3,800 are considered tier 2 or 3 dealers, often related to one of the registered dealerships (virtually all 2S with limited or no service capability). Of the registered dealers, about 46 percent (~11,000) are subsidiaries of dealer groups versus being independently owned. Most individual dealers and dealership groups are privately owned and stakeholders are often well-connected individuals with special relationships to leading vehicle makers like SAIC, FAW, SVW, SGM and Dongfeng. No. of Employees 45 No. of Bays 30 Vehicles Serviced per Month 1,000-2,000 All PC Service Breakdown (% Revenue) MLR (70-80%)* Collision (15-20%) General Repair (~1%) A typical profile of a 5 Star dealer is Beijing SGM Dashihang 4S shop. Repair Center at 4S Shop Their primary focus is still on new car sales, as well as the development of authorized repair shops. Parts and service is starting to be a very meaningful revenue and profit source for dealers who are looking for other ways to generate volume such as developing used car business (and trade-ins as sales incentives), financing and insurance, etc. Many 4S shops have been selling OEM parts to distributors and other garages to enhance sales and some have even branched into IAM themselves by offering services to “all makes/models.” Generally speaking, dealerships are motivated to find ways to manage their businesses more professionally by using IT systems (ERP, DMS, OA, etc.) in their quest to enhance profits. (82) and Shanghai Yongda (70). Shanghai Yongda group, as an example, represents various well-known brands such as Volvo, BMW, Porsche, JRL, Infiniti, Cadillac and VW. Its business and organization are well developed and luxury and JV brands are its focus to achieve higher profitability. These groups have emerged from various quarters including large state-owned enterprises, industrial conglomerates and private groups. Their heritage often defines their operating style and business approach as well as how suppliers need to address them for business. They will continue to strengthen as an aftermarket channel over the coming years. Despite the more aggressive efforts of With a trend of consolidation and 4S dealers, the IAM channel is expected deeper penetration into lower-level to slowly encroach on OES market cities, dealer groups are evolving and share as it becomes a more credible taking greater share of the dealership repair option for car owners (based on channel. Some of the larger groups (and more reliable service and parts) and as their number of dealerships) include: the car parc continues to age while new Pangda (661), China Grand Auto car sales growth slows. By the end of (244), Zhongsheng Group (140), Hubei the decade, IAM will lead the market Hengxin Delong (70), China Zhengtong with more than 50 percent share. * maintenance and light repair 18 | AFTERMARKET INSIDER | VOLUME 81 http://www.technomicasia.com/

Table of Contents for the Digital Edition of Aftermarket Insider Issue 81

Aftermarket Insider Issue 81
Contents
President’s Message
If It Matters… It’s at eForum
Campaign Update
Government Affairs
Member Profile
Toolbox: The Workplace Then and Now
Impact Award
Head of the Class
Market Intelligence: Globally and Locally

Aftermarket Insider Issue 81