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What changed in the strategic management of the aftermarket business model?

Trends

January 25, 2023

10 MIN of Reading

TIPS Talks with Dário Afonso | Managing Director of AutoCoach Management

Dário Afonso is our guest for a very timely chat about managing the automotive after-sales business: What challenges are transforming this market? What trends will mark the future? What are the best practices to succeed in this future?

But first, let us meet Dário

He is passionate about automobiles, which influenced his professional path in the automotive market, having developed his career in the strategic and commercial area, as a coach, trainer, and business strategy consultant, possessing a very comprehensive and consistent vision of the dynamics of this market and its framework in the global automotive industry.

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1. What are the main transformative challenges for the future of the aftermarket?

Fundamentally there are three major challenges:

Technology

The technology, in particular the electrification of mobility and the digitalization of processes and business models;

Legislation

The legislation, focusing on the new MVBER and the impositions of the Green Deal with ambitious targets until 2050;

People

People, as human resources in organizations and also as consumers, who nowadays adopt a more demanding stance in consumption experiences, which should deserve future attention for the quality delivered in the provision of service by any operator in this market.

These challenges are shaping various aspects of the market, breaking trends that emerged before the pandemic, such as carsharing which is no longer significant in Lisbon, making room for other concepts.

Currently, we are witnessing the migration from car-as-a-service to mobility-as-a-service with integrated solutions, initially targeting a younger and urban audience that does not want to deal with "barriers" in cities, such as excessive traffic and lack of parking.

There are also alternatives to purchasing the vehicle, such as renting, leasing, or new subscription solutions comparable to the Netflix model (“Netflix of mobility”): For the value of a fee, there are service packages that can range from public transport to the use of scooters or having a vehicle just for the weekend.

2. And how are companies preparing to face these challenges?

The highest priority must be the focus on People. It will not be possible to face any kind of challenge if the right people, motivated and properly trained, do not exist.

Business owners and managers need to evolve in a perspective aligned with the changes occurring in business models, avoiding the illusion that they can continue on the same path to success with the same practices – It is not possible to replicate success in markets that no longer operate according to the standards that led to that same success.

3. What can help change mindsets and behaviors?

There is an important message for the more experienced and all those who were in the creation of companies: Give an opportunity to a whole new generation of more qualified managers who are entering the sector, and who can make a difference with their diversity of ideas and vision about the market.

Despite the merit in the first generation of entrepreneurs, there is an enormous benefit in this intergenerational symbiosis – currently, 4 distinct generations coexist in the business market – through the sharing of knowledge and new experiences.

This should be the response to one of the main drivers of change in the sector: The entry of new players in the distribution of parts and workshops, which will force new ways of thinking, doing, and deciding the business at a speed that will counteract the resistance to change.

4. Practical advice for companies and professionals to adopt in 2023?

Acquire training and knowledge gaining a rigorous perception of the context around us about the dynamics and changes in business models, the impact of the circular economy, and the power of digitalization.

This practice will allow improving the Management Culture in all its aspects, but especially in the management of employees, listening to them according to their generational diversity.

5. What trends are emerging that may affect the aftermarket in the short term?

There are 4 major trends:

The consolidation of the parts distribution sector in the Iberian market after having been a reality for the past 10 years in other European countries;
The transition from Car Dealers to agents, which will change the current scenario in the next 2 to 3 years, creating enormous expectations around the large retail groups and what the agents will do in the aftermarket, where there are several opportunities such ascustomer loyalty source, that completely bypass the moment of vehicle purchase (one shot selling). This loyalty can boost a range of new businesses and services that do not exist yet;
A digital distribution, exemplified by Autodoc's online parts sales, is very prominent: it is expected to reach 2 billion euros in 2023, equivalent to the entire aftermarket sector. The future of retail will be phygital (integration of physical and digital means), making it essential to consider this reality for those still in traditional retail;
Technical qualification in all aspects, including sales, through greater capacity in the use of information and management support tools.

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