Special Report

July 28, 2015

The Coexistence of Opportunity & Challenge in China’s Automobile Aftermarket

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Written by: Suhail Nasir
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A discussion of ideas regarding China’s automobile aftermarket was held during the 6th Global Automotive Forum on the afternoon of June 9, 2015. This session was hosted by the Director of Automobile Strategic Development Research Institute of Tianjin University, Miss Guo Yan. Distinguished guests — Chairman and General Manager of Pang Da Automobile Trade Co., Ltd, Pang Qinghua, General Manager, Auto Business Development Department, PICC Property and Casualty Company Limited, Shuang Lei, CEO of , Ma Xiaowei, CRC Leader, APAC, Managing Partner, Western Region, ERS, Deloitte China, Total Chow, CEO Asia Pacific, UTIL (Guangzhou) Auto Parts Co. Ltd, John Mack all attended this session.

As is known to all, China became the largest auto market in the world in 2009. From 2001 to 2014, China’s auto market maintained impressive industry growth with an annual growth rate of 24.97%. Nevertheless, the performance in China’s auto market has been negative since 2014. With the advent of Internet Plus and Industry 4.0, all parties from car manufacturers to dealerships have been forced into an era of revolution. So how can China’s automobile aftermarket capture this?


We are now confronted with unprecedented challenges in this revolutionary era. Automobile 4S stores are in a tough time. Automobile markets are facing a shift from old to new systems, a coexistence of convention and innovation, and the transformation from a single automobile 4S store pattern to diversification. Through this transformation process, the profit of automobile 4S stores has decreased sharply and the rate of defects has risen rapidly. Pang Qinghua emphasized, “If enterprises want to remain invincible, they must stay up to date and continue to innovate.”

Shuang Lei believed that as car ownership in China increases, the insurance industry could gain more and more attention through Auto after-sell services, ultimately providing new development opportunities. He stated that Auto insurance industry and Auto after-sales service should cooperate and establish a win-win relationship.

“The second-hand or used car selling is full of great business opportunities. In future, the size of second-hand car sales market will double and even reach 20 million units.” Ma Xiaowei said. The second-hand car is part of the aftermarket and has a very long life. Both traditional dealers and new online dealers will have to keep quality controls and provide good consumer services to survive in this market.

Looking at the five-year data, Total Chow explained “The prospects of the automotive post market have been clearer.” The proportion of car owners’ consumption in the post market has increased with every passing day. Auto aftermarket expenditures in 2013 and 2014 have registered 70% of consumer expenses.

John Mack, however, has cast confidence in China’s car accessories market. He expressed, “The potential of China’s automotive after market has been great. China is very qualified for investments compared to the rest of the world. Success can be achieved as long as there is adequate knowledge and appealing products.”

There is no doubt that the margins of suppliers mainly come from the OEMs in China, and the sale of new cars is the profit source for auto distributors. But new car demand has slowed down with declining price and profits due to fierce competition. However, China’s car ownership has increased continuously and created huge opportunity for the aftermarket, the next growing field of suppliers and distributors.

-Published on page#21 July-2015 edition MOBILE WORLD Magazine

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