New car dealers are putting greater effort into attracting owners of older cars, notably those that make up the primary base of automotive aftermarket business, according to a recent report.
With new car sales down and, in turn, creating fewer opportunities to bring new buyers back to the dealership for service, “dealers are turning to the aftermarket and used vehicle sales (which have aftermarket implications) as primary profit sources,” said a recent Aftermarket iReport from Lang Marketing.
And don’t expect dealers to back off once new vehicle supply returns to normal, the report Car Dealers Home In on the ICE Aftermarket warned.
“Dealers realize that as electric vehicle (all-electric BEV) sales increase, a significant amount of business will evaporate from their service bays,” it said. “This marks a strategic turning point for dealers as they home in on the internal combustion engine (ICE) aftermarket as the primary means to continue generating significant profits through their bays, in the face of rising all-electric EV sales (whatever the sales growth pace).”
During the financial crisis of 2008, dealers similarly went after aftermarket business. They marketed their bays to a wider range of vehicle age groups, expanding beyond those under five years of age and their own nameplates. So in came oil change lanes and quick service options.
So the aftermarket should prepare for increased competition, Lang observed.
“Dealers will need to further increase the range of vehicles that they attract to their bays both in terms of vehicle ages and nameplates,” the report said. “This will ratchet-up competition in the repair and maintenance of ICE vehicles, with the independent (non-dealer) segment of the aftermarket increasingly hard-pressed to compete with more aggressive dealer ICE repair activities.”
This content was originally published here.