China Auto Parts Market Ripe For Right Strategy

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Twenty percent growth in Chinas auto aftermarket in the recent past has slowed to under 10%, but the numbers disguise the opportunities that exist for auto parts companies. There are 350 different models of cars and light vehicles on Chinas roads. New car sales since 2006 have doubled from under 7.5 million annual sales to 15 million units in 2010.

Technomic Asia produced its sixth annual China Auto Aftermarket report. This is a comprehensive report of Chinas growing auto aftermarket. It covers the trends in auto part sales, regions of growth, and also details distribution channels.

Steve Ganster, managing director of Technomic Asia, shares some of the highlights of the report and describes the possible ways this market will change. The chart below shows how the category of other repair has spiked. These are repairs of middle-aged vehicles parts like, batteries, brakes, transmissions, and many others. This market is just at a transition point according to Steve Ganster. He believes the number of layers in the auto aftermarket supply chain can number up to five and is simply not efficient to service the tens of millions of vehicles and hundreds of millions of parts. Simply put, its a mess, with more than 800 parts cities serving more than 350,000 service operators this current model is not sustainable as new car sales grow and the aftermarket that follows.