One of the biggest trends impacting the automotive industry and auto service centers is the increasing trend of leasing vehicles. Leasing a car is becoming more popular with consumers, and it is expected to continue and grow, as it is more cost-effective than owning a car. Leasing agreements have a variety of advantages, from flexibility to reduced upfront costs.
Increasing age of vehicles
The aging of vehicles in the automotive service industry is an increasing concern. While record-breaking new vehicle sales should have dampened the trend, a shortage of new cars and parts has caused the average vehicle age to rise. Additionally, the lack of new vehicles has caused a shortage of automotive parts, forcing automakers to cut production. This trend influenced consumers to hold onto their old vehicles for longer as inventories became depleted.
Combined with underlying weakness in several market segments, the increasing age of vehicles puts upward pressure on the average age of vehicles. As consumers weigh the cyclical nature of goods expenditure, they often opt for longer-term financing options and hold onto their vehicles for longer periods. Consequently, IHS Markit predicts a substantial upward pressure on average vehicle age in 2020 and subsequent years. This new normal is expected to persist throughout the foreseeable future, with a vehicle population of nearly 280 million in the U.S. alone.
The aging population of vehicles is changing the face of the automotive service industry. As more cars turn to independent garages for repairs, the demand for new parts and aftermarket components will rise. This will ultimately lead to a greater demand for auto mechanic jobs and mechanic certification program graduates.
Increase in share of mobility
As the automotive industry adapts to changing consumer demands, new business models are expected to emerge. OEMs and mobility service providers will team up to create new and unique vehicles that serve specific consumer needs. The new business models will consider consumer preferences, regulations, and technological advancements. For example, the growing demand for ride-sharing services will drive the growth of purpose-built vehicles. These vehicles will cost up to 25% less than conventional vehicles.
More companies are focusing on this market as the need for affordable transportation increases in peri-urban and urban areas. This is especially true in countries where public transportation is expensive or non-existent. People in these regions are always looking for ways to save money, and mobility as a service can provide a cost-effective alternative to traditional car ownership. Additionally, this service can help reduce the amount of pollution and traffic congestion that occurs in cities.
Mobility as a service is also becoming increasingly attractive as fuel prices rise. The rising cost of fuel, combined with changing consumer preferences, has encouraged consumers to consider alternatives to conventional car ownership. More people are ditching private cars in favor of ride-sharing services such as Uber and Lyft. Ride-hailing services are flexible and tailored to meet the needs of each user, making them a more attractive alternative to traditional car ownership.
Increase in mobile van services
The automotive industry is rapidly becoming more mobile, and mobile van services are well-positioned to capitalize on the trend. In the coming years, major overhauls to the business model are likely, as power shifts from OEMs to the customer. In such a scenario, customer convenience will be of the utmost importance.
Increase in demand for aftermarket telematics solutions
Automotive service companies like Welch Careers and dealers are increasingly adopting telematics in their after-sales programs to provide better customer care and relevant offers. Using data collected from vehicles, aftermarket telematics providers integrate CRM solutions, establish agile marketing strategies, and improve customer service and support. These solutions also help service providers upsell additional services to their customers.
Consumers and insurers are benefiting from telematics products. Telematics data allows consumers and insurers to understand risk better and provide over-the-top incentives. Telematics products enable underwriters to monitor numerous factors, such as the number of miles driven and the speed at which a vehicle travels. Moreover, they can measure drivers’ driving behavior and identify factors that could increase their insurance premiums.
Other automotive telematics applications include stolen vehicle recovery, security-related telematics, and direct-to-consumer solutions. In countries with high vehicle crime, the demand for stolen vehicle tracking is highest. Several leading companies provide SVT, such as CalAmp (LoJack), Ituran, Pointer Telocation, and Netstar. The number of dedicated active SVT units is expected to reach 51.2 million by 2023.
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