New analysis of the growing Chinese automotive aftermarket

New conditions provide fuel for rapid growth.

In our 2016 publication – The Boom of China's Automotive Aftermarket – we highlighted the coming rise in growth of the Chinese Automotive Aftermarket and how players should prepare for this opportunity, as well as the associated challenges. In this new report, entitled "China's Automotive Aftermarket - New Conditions Provide Fuel for Rapid Growth", our team of growth strategy consultants in Shanghai analyse the effect of recent improvements in online platform technology, which allow for an increased diversity of business models within the Chinese automotive aftermarket. This publication reviews key opportunities for each strategy, while also highlighting potential weaknesses. It is aimed at domestic and foreign investors and other players within the automotive aftermarket and related fields who are seeking to build, compete and grow their presence in China's automotive aftermarket.


Rising car age brings steadily growing aftermarket value in China

As a consequence of new car sales continuing to slow, the average age of passenger vehicles in China is projected to hit 5.5 years by 2023, compared with 4.6 years in 2018.

China automotive aftermarket is expected to grow steadily at ~8% p.a. in next 5 years, reaching 1.93 trillion CNY in 2023.

The proportion of repair & accident parts in the aftermarket is expected to grow gradually, owing to rising average car age.

Diversified, digitalised, standardised market structure

A diversified, digitalised and standardised aftermarket is being formed, owing to top-down government intervention and growing needs from end consumers.

From an end-channel perspective, IAM (independent aftermarket) will overtake 4S stores within the next 5 years, with branded workshops / O2O service being a significant growth driver (~35% CAGR from 2018-2023).

High-level digitalisation and standardisation in aftermarket are on the way, with potential to further optimise distribution efficiency and enhance service quality.

O2O platforms are being widely adopted by consumers, especially for consumable/ wearable parts.

B2B2C is an emerging business model, with the involvement of internet giants.

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