4 minute read
Preparing for
What you need to know now in preparation for 2030
2030 may seem like a long way off, but its important to start preparing your business now, in plenty of time for the future.
We’ve been revisiting McKinsey & Co’s Making every part count report and PwC’s presentation, ‘The Impact of Electrification & Automated Technology on the Automotive Aftermarket’ at the 2021 AASA Vision Conference to get every last drop of insight to help you prepare for the aforementioned future.
From new vehicles to different parts and new ways of owning and using cars, 2030 is shaping up to be a very different industry in comparison to today. Here’s what McKinsey & Co, and PwC say to expect in 2030.
What do the dollar figures look like?
In 2019 the global aftermarket industry was valued at USD $463 billion. In positive news, the aftermarket industry is projected to grow at 3.5% per annum as we reach 2030. And whilst it is mostly positive it’s driven from a complex mix of increases and decreases. This is due to what McKinsey & Co call ‘the increasing electrification of the global car parc,’ or for us, the increasing sales of electric vehicles (EVs).
What about the EV revolution?
Surprisingly, as per McKinsey & Co, by 2030 the global car parc is 15% larger than in 2020 and has a significantly higher age. The average age of a car on the road will be 12.9 years, which is positive for us in the aftermarket as it provides potential for greater quantity and length of services, driving an increase in revenue.
As Capricorn Automotive CEO, Brad Gannon mentioned, ‘as we know, as a car ages, replacement rates for different parts also increase. So, it is positive to see a higher average age of cars on the road, as this results in greater demand for parts and servicing.’
With all those new cars on the road, the make-up of the global car parc will change. By 2030, McKinsey & Co project EVs will make up between 18 – 26% of all the cars on the road. Some of this will be driven by PwC’s projections of EVs contributing to 13 – 20% of new car sales in the US.
For those in the know, this will come as no surprise, as OEMs have made numerous announcements over the last few years with their electrification plans. Over 70 EV models are expected to launch in the next 7 years. And with the total cost of ownership expected to become on par with ICE vehicles in 5 years, EVs are becoming an increasingly attractive option for customers.
Interestingly, the types of those EVs are expected to change as well. Between now and 2030, the total number of EVs is expected to move from a majority of hybrid vehicles to a majority of BEVs.
The rise of vehicle autonomy and connectedness
By 2030, the next level of vehicle autonomy will have firmly arrived. McKinsey & Co project 60% of passenger cars sold to be equipped with L3 systems, and 14% with L4. In the US, PwC project 70% of total vehicle sales will be sold with L1 – L3 systems.
Vehicles are going to be increasingly connected, with connected technologies available on all new vehicles by 2030 and most of the car parc connected. Shared mobility will also become significant, resulting in a reduction in car ownership, but an increase in mileage per vehicle.
What will my customers expect from me?
Covid-19 has exasperated a decline in customers looking for physical touchpoints at dealerships, especially amongst 35 – 54-year-olds. Customers are increasingly looking for online sales instead. McKinsey & Co report that the changes in customer expectations and value generation will become increasingly digital.
This means how your customers interact with you online are going to become increasingly important. Making it accessible and easy for your customers to reach you digitally is going to keep you relevant in your customers’ mind.
McKinsey & Co recommend seeing the aftermarket industry like a relationship, not just a service. They project that the initial purchase of the vehicle will become less important to the customer, and it will be the connection and offers made during the customer lifecycle which will become the true driver of value for customers.
The car parc may change in small increments over time but getting the basics right can help prepare you for the future. Check out our articles on customer relationships here to make sure you are getting the basics right.
As Brad mentions, ‘no matter where you are at in your business, making small incremental changes now will put you in a better place in 2030.’
For more information on the McKinsey & Co Making every part count report, check out mckinsey.com. PwC’s presentation at the AASA Vision Conference can be found on aftermarketsuppliers.org.
