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South Africa Automotive Aftermarket Industry, Forecast to 2023

  • Report

  • 59 Pages
  • February 2019
  • Region: South Africa
  • Frost & Sullivan
  • ID: 4758230

Growth of 5.5% Expected as Right to Repair Policy and Online Retail Will Force OEMs, Dealers, and Suppliers to Re-imagine Business Models and Forge New Partnerships

This report is a synopsis of the trends and factors impacting the South African automotive aftermarket sector. It provides an economic analysis to assist the reader in understanding the economic backdrop against which the aftermarket is performing and being challenged. It is clear that the previous government’s maladministration of the economy led to its weakening and the rand’s depreciation, which has had serious knock-on effects for the aftermarket sector.

Another important element is the performance of the new vehicles sector and how vehicles in operation are being impacted. These variables have a direct effect on the performance of the aftermarket. Although the weakened economic climate has caused a decline in new vehicle sales, the vehicle parc has continued to show consistent growth. The parc has, however, aged with the average age of the South African passenger and light commercial vehicles rising to 12.2 years since manufacture. An aging parc generally incurs higher maintenance costs and therefore drives growth in the aftermarket.

The South African automotive aftermarket sector has exhibited strong growth since the early 2000s and is forecast to grown annually at 5.5% until 2023. Heightened levels of investment into the sector combined with new entrants, most notably small-sized businesses, have seen total revenue reach $6.6 billion in 2017. As a consequence of new entrants, concentration levels in the industry have dropped, thereby reducing any one company’s ability to control prices and effectively raising levels of competition in the industry.

Tires remain the largest generator of revenue in the industry while service parts and then parts and accessories follow closely. South Africa’s laggard status as an adopter of electric vehicles will mean that it remains oriented toward servicing and replacement parts while the advanced markets of the United States and Europe gradually move to toward electric components for the drivetrain. Authorised dealers constitute approximately 20 to 30% of the aftermarket sale of parts while the independent aftermarket distributors and retailers account for the lions share.

The introduction of the right-to-repair policy in South Africa is expected to have a significant impact on both the aftermarket retailers and the repairer industry. The policy aims to raise competition among industry players by reducing barriers to entry and ultimately, the price of servicing/repairing vehicles that remain under warranty from the factory. The local industry is faced with significant change; the rise of online retail and the right-to-repair policy will challenge businesses in the short to medium term. The adoption of new business models and establishment of new partnerships will be essential to achieving strong growth up to 2023.

Key Issues Addressed

  • What are the main factors that will influence the size and direction of the South African automotive aftermarket in 2018?
  • What are the changes in sales and VIO that have occurred since 2006?
  • What were the developments in the South African automotive aftermarket in 2017 and what is their impact?
  • What the outlook for eRetailing between 2018 and 2023?
  • What will be the emerging trends in the South African automotive aftermarket space between 2018 and 2023?

Table of Contents

1. Executive Summary
  • Key Findings

2. Research Scope and Segmentation
  • Research Scope
  • Research Aim and Objectives
  • Key Questions This Study Will Answer

3. Key Trends
  • South African Automotive Aftermarket - Key Trends
  • Market Outlook

4. Economic Climate
  • Economic Growth and Stability
  • Key Variables

5. Vehicle Sales and Parc
  • New Vehicle Sales
  • Vehicles in Operation
  • Vehicle Market

6. Aftermarket Sector Analysis
  • Market Size
  • Market Breakdown and Performance

7. Parts Analysis
  • Parts Breakdown
  • Income Breakdown by Parts Category
  • Top Aftermarket Suppliers

8. Distribution Analysis
  • South African Automotive Aftermarket Structure
  • Key Distributor/Service Groups Compared
  • Automotive Aftermarket: Revenue Distribution

9. Distributor Profiles
  • Distributor Profile: Africa Automotive Aftermarket Solutions
  • Distributor Profile: Autozone
  • Distributor Profile: World-Wide Automotive Group

10. Online Aftermarket
  • Online Sector Overview

11. Right to Repair
  • Right to Repair Overview

12. Growth Opportunities and Companies to Action
  • Growth Opportunity 1: Right to Repair
  • Growth Opportunity 2: Digitization of Capabilities
  • Strategic Imperatives for Success and Growth

13. Key Conclusions
  • Key Conclusions and Future Outlook
  • Legal Disclaimer

14. Appendix
  • List of Exhibits
  • Acronyms Used

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Africa Automotive Aftermarket Solutions
  • Autozone
  • World-Wide Automotive Group