What long-term effects will COVID-19 have on the aftermarket?

Hereby we would like to share the vision and strategy of DENSO by the artcle on “Covid long term effect”.

Before we even heard the term ‘COVID-19’, the automotive aftermarket was already in a state of change. Evolving car ownership habits and the rise of Mobility-as-a-Service (MaaS) were recognized as trends that could permanently alter the way we use, service and repair vehicles. As countries across Europe emerge from lockdowns, there is no doubt that change is still coming.

The future of the aftermarket, however, may not look the same as it did before the pandemic. The long-lasting effects on the economy, as well as a renewed public focus on safety and hygiene, will see customer preferences change, and not just in the short term.

For example, MaaS is still coming – but it will look different. Some of its aspects will be emphasized while others will be delayed as we enter a ‘new normal’ in which drivers have a new set of priorities. Understanding these preferences is going to be key for repairers looking to update their business model and maximize opportunities in the post-COVID economy.

Less sharing, more data

In general, MaaS refers to an integrated network of different modes of transport, working together as a single service accessible on demand via an app. It has been described as the future of mobility, and it’s even been said that it will lead to the end of private car ownership, since individuals can pay for transport on a single-use basis.

That aspect may not become a reality now: for many end-users, sharing a vehicle that has been used by hundreds of other customers represents an unwanted virus transmission risk. So they may prefer to hang on to their own vehicles for longer.

But MaaS is a broader term, incorporating other aspects such as inter-vehicle communications and use of data. For example, collating huge amounts of vehicle diagnostics data may allow workshops to plan their stock levels and workloads more intelligently. ‘Big data’ could offer insights on what car parts will need repair or replacement, and when they will need it – so garages can stock up on the right parts just before they need them.

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Big data will also be used in predictive congestion avoidance: analyzing driving habits at a large scale to prevent congestion even occurring. For example, during heavy rainfall, traffic congestion increases due to deceleration. If the vehicles in the affected area are interconnected, a central MaaS system could automatically send an update to each vehicle to control its speed and travel route to optimize traffic flow. DENSO is contributing to this with cloud-based technology, called DENSO MaaS, which replicates real-life urban environments and traffic conditions in a virtual space, then analyzes data from this space to anticipate traffic issues and create a safer and convenient mobility experience.

Growing business from fleets

Even if individuals take longer to buy in to the MaaS ownership model, corporate customers will be keen to take advantage of its benefits now. These customers could form a growing source of revenue for independent workshops, since keeping fleets moving is critical for operators and they will value the instant services an independent repairer can offer.

Fleet customers may pay on a retained basis, rather than on a per-job basis, in return for around-the-clock services. These services may not be limited to standard repairs either: garages who can find way to offer customized road rescues, doorstep services and even car washing and valet services may be at an advantage. Availability and high standards of service will be key to winning repeat business.

Opportunities in an ageing car parc

Not only are drivers more likely to stick with privately owned cars, they are sticking with the same cars rather than buying new ones. According to ACEA data, the average age of a car in the EU is now 10.8 years. This could be for a number of reasons: perhaps economic; perhaps uncertainty over the future of petrol, diesel and electric drivetrains; perhaps owing to the increased quality of car manufacture allowing them to stay operational for longer; perhaps all three.

For repairers, the good news is that older cars require more regular care and maintenance than newer vehicles. Older vehicles typically undergo more wear and tear on critical components, making demand for part replacements strong. Batteries, exterior lights, windshields, wipers, tire pressure monitoring systems, spark plugs and fuses among the most likely vehicle parts to develop issues.

Stocking up on the right parts could enable workshops to fulfil increased demand from an ageing car parc. DENSO’s parts are specified to match or exceed OE quality, and backed by a rigorous testing program conducted at DENSO’s facilities across Europe. By choosing DENSO, you can always be confident of OE quality.

More cars on the road

Use of public transport came under scrutiny during the coronavirus outbreak, with governments urging travelers to use caution, wear PPE, or even avoid buses and trains altogether. Now, as schools and workplaces reopen and people have a greater need to travel, they may still prefer to drive instead of taking public transport.

This will mean more car miles and more demand for servicing and repairs. Workshops will already be expecting this in the first few weeks after lockdown, with vehicles having developed issues during a long period of inactivity, or requiring annual tests and check-ups. But the trend could be longer-term than first thought, meaning an increase in revenue for workshops that have the capacity to fulfil a sustained level of demand.

Customers value contactless solutions…

Nearly every company had to change how it worked during the pandemic, and taxi-hailing apps were no exception. Ride-sharing was no longer permitted, all transportation was on an individual basis, and drivers and passengers had to wear PPE. This is likely to be a lasting trend: customers will favor options that reduce contact with others.

This extends to workshops as well as cars themselves. Customers will appreciate the safety and convenience offered by services that allow them to hand over vehicles remotely – such as by using a dedicated app coupled with contactless key drop-off. Some forward-thinking garages have already adapted by offering car pick-up and return to the customer’s house during lockdown.

…and even driverless ones

The desire for contactless mobility could accelerate the development of autonomous vehicles (AVs) within a MaaS framework, since these would eliminate driver-passenger contact. A report from McKinsey estimates that 50 per cent of all passenger vehicles sold in 2030 could be highly autonomous and a further 15 per cent fully autonomous.

 AV rollout will reduce collisions, instead generating regular maintenance work for dealers. Driverless cars will be equipped with sensitive components such as sensors, which will need more frequent diagnostics checks. Plus, big data will enable a predictive maintenance model on AVs: they could simply drive themselves to the garage for maintenance before passengers even observe a fault. Now that’s the future!

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