JAKARTA - Automotive aftermarket parts sector, which refers to the auto-parts replacement post vehicle purchase, has huge growth potential with over 11 million passenger vehicles in Indonesia due to be out of warranty by 2020.
Ipsos Business Consulting, a leader in fact-based business consulting, has forecast in its latest study that the out of warranty population will grow by 9.7 percent per annum from 2015 to 2020. The firm further highlights that although the aftermarket segment presents opportunities for both existing and new market players, it also presents a set of challenges. One of the notable challenges is to identify the most suitable distribution partners.
“Indonesia’s used car market is gradually becoming more sophisticated due to the greater availability of flexible financing terms, standardized and authorized dealership channels and better transparency of information. This assists market growth which in turn drives the demand for aftermarket parts”, said Douglas Cassidy, Head of Consulting Indonesia at Ipsos Business Consulting in Jakarta, recently.
He further highlights, consumers are attracted to second hand vehicles due to their lower prices and also the limited number of passenger vehicle dealerships available in their regions.
Meanwhile, Brenda Karnadi, Automotive Consultant from Ipsos Business Consulting noted, that parts players will continue to rely on parts retail shops to ensure wide distribution coverage to end users. Parts players face key challenges in identifying and controlling qualified distributors that have wide access to traditional channels such as parts retail shops and independent workshops.
Further, Brenda remarks that although uncertified independent workshops continue to dominate the market due to their cheaper service fees and generalized service offerings, branded workshops are gaining popularity due to their higher service and product quality.
"The rise of branded workshops enables parts players to sell directly to branded end channels rather than going through the fragmented traditional market channels," she said.
Furthermore, widespread availability of reliable and trusted genuine parts in the independent aftermarket channels intensifies the competition for non genuine parts players. ‘Non genuine parts’ typically refers to parts which are produced by various manufacturers supplying to the independent aftermarket channels as substitutes for the original (genuine) parts used by the vehicle manufacturers.
Meanwhile, consumers’ general lack of awareness regarding vehicle parts results in them placing great reliance on mechanics and vehicle manufacturer recommendations to ensure convenient and hassle-free maintenance.
"Non genuine parts players should consider how they can best compete in the evolving market through strategies based on more effective engagements with mechanics and consumers, particularly in relation to pricing, branding and communication," she concluded.