SYDNEY, July 18, 2013 /PRNewswire/ -- Frost & Sullivan said that the automotive aftermarket sector in Australia is expected to see consolidation of its aftermarket distributors as well as servicing and maintenance providers as scale becomes essential for profitability.
Mr. Vijay Rao, Research Director, Asia Pacific at Frost & Sullivan said that there will be increased competition from original equipment services (OES) channels through introduction of capped price servicing and longer warranty periods on new vehicles sold.
He added that the demand for SUV parts and accessories is likely to drive the growth of the automotive aftermarket industry in Australia. "Other factors include an increasing average car parc age. Currently, the average age of passenger vehicles in Australia is 9.8 years and this is expected to increase to 10.2 years within the next decade," he said.
Mr. Rao is predicting the Australian automotive aftermarket sector to grow at a compound annual growth rate (CAGR) of 1.7 per cent (2012-2020) to reach revenues of US$ 12.93 million in 2020, driven by demand for accessories as well as SUV and performance parts.
"There will also be increased opportunities for new participants in the Australian aftermarket sector due to future growth of hybrid and electric vehicles," he added.
Mr. Rao said that the rebound from the global financial crisis, clearly evidenced by the record number of cars sold in 2012 will be an important driver for the Australian automotive aftermarket sector, particularly for the parts and accessories segment.
He noted that Australian consumers are also increasingly turning to the internet to buy their aftermarket parts. "E-retailing is especially high in the case of parts and accessories," Mr. Rao said, adding that the newly-launched Webtyre.net allows customers to buy their tires online and then have them fitted at the nearest Ultra Tune center, a franchised workshop chain.
He noted that currently, there are over 85 registered vehicle brands that run on Australian roads compared to approximately 50 brands in the United States. Mr. Rao said that a diverse car parc in Australia requires aftermarket parts distributors to hold varied inventory, putting pressure on the margins of small independent distributors.
He also said that in order to retain customers for a longer period, OEMs have also recently introduced capped priced servicing to ensure customers continue to return to their dealerships.
"Capped price servicing puts a ceiling on the cost of routine servicing of new vehicles for a predetermined period, reducing ambiguity for customers," he said, adding that OEMs have also increased the warranty period on new cars to up to five years, which is likely keep the customers from taking the vehicles to independent workshops.
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