New report suggests strong growth in global auto market, 'mom and pop' shops in trouble

A report issued by a global market research firm suggests solid growth in the global auto industry over the next several years.More people than ever in developing economies are taking up the auto-based lifestyle so common in the developed Western world. According to this latest report, the number of vehicles in operation around the globe will increase sharply over the 2015–2020 period. This boom in vehicle production will drive new opportunities for light vehicle parts and service providers, with effects on the automotive aftermarket in regions from North America to Europe, China, India and Latin America.

According to the report, electronic parts retailing should do particularly well. But the demand for routine maintenance parts such as tires, filters, and brakes will grow sharply in Asia and Latin America where many have only recently come to own a car. In the developed regions of the world, demand for more complex parts like sensors, fuel injectors, steering gears and telematics/infotainment receivers will enjoy high growth.

The aftermarket industries in Asia and Latin America are highly fragmented, with networks of small retailers serving garages and workshops in these areas. In China there is a trend toward the growth of “auto part cities.” The historic economic boom in China over the past two decades has seen certain regions come to dominate the production and supply of certain products. There are entire towns dedicated to the production of, say, zippers. Something similar is occurring in terms of auto parts. Entire cities perform a role similar to what auto parts flea markets in the United States would play—small wholesale vendors cluster together in one spot to provide coverage of major aftermarket products.

High growth is anticipated for e-retailers as the Internet becomes a major distribution channel for tires, accessories and other products. When it comes to repair, the report suggests that independent repair facilities will continue to “face challenges keeping pace with changes in vehicle technologies and the tools, equipment and training to repair them. Many 'mom-and-pop' shops will be forced out of business.”