Solving for Disruption: Digital Transformation in the Automotive Aftermarket

Digital Transformation is Disrupting the Automotive Aftermarket
The automotive and automotive aftermarket industries are some of the nation’s oldest and most established. Historically, they have faced less disruption than their equally-established counterparts (think health and telecom)…until this time of digital transformation. With the sudden light-speed evolution of driverless vehicle technology, vehicle AI, and smart public transportation like light rails and buses, players in the automotive and aftermarket industries are clamoring to keep up.
As if this sci-fi reality wasn’t already enough to adjust to, consumers are becoming more empowered than ever before. As more retail products become digitally available, third-party retailers (like Amazon) are dipping their fingers into new, unexplored markets…including automotive. Consumers have more access to industry knowledge, and the power to bypass brick and mortar stores by shopping online.
As the market continues to grow and shift towards digital transformation, these technological and digital advances are bringing some other surprising new players into the market, like Google, Tesla, and Uber.
With more diverse competition, more empowered and knowledgeable consumers, and advanced new vehicle technology threatening to dominate the market, what’s an automotive/aftermarket company to do?
In his recent address to the CAWA Summer Education Forum, AASA President and COO Bill Long said it best: “Vehicle owners’ freedom of choice is both an existential threat to the aftermarket and an opportunity.”
Here are a few ways to guarantee this new freedom of choice will be an opportunity, rather than a threat, to your business:

1. Learn to collaborate

As the market becomes bottlenecked for traditional automotive/aftermarket brands, companies that may have been competitors in the past will learn the hard lesson that “the enemy of my enemy is my friend.” Competitors must work together on understanding these new technologies, and adapt their practices to account for massive changes in the market. This could take the form of acquisitions, or automotive software engineers banding together to learn new technology and create software and data standards together. Like it or not, the future lies in collaboration. Technological and consumer trends leave room for nothing else.


2. Full digital integration

Retail giants all over the nation are realizing the pitfalls of not adapting to the new digitally-driven landscape. Classic stores like Macy’s and Sears are closing storefronts at a rapid pace as brick and mortar is threatened by the convenience of online shopping. While automotive will probably be one of the last industries to be hit by the digital commerce boom, it’s only a matter of time.


However, claims that the rise of digital hails the imminent “death of retail” are exaggerated. The reality is that companies that can understand and adapt to the new customer-centric digital landscape will survive and thrive, and those that don’t, won’t. The customer is king, and the way to ensure retail longevity is through enhanced customer experience and a driving emphasis on convenience.


Online sales of aftermarket parts have been solely driven by savvy early adopters, and minor maintenance. But once vehicle technology progresses to the point of cars being able to diagnose themselves and tell you what parts to order, retailers will be in trouble. The only choice is to make online buying as convenient and customer-friendly as possible. Once the distribution chain has extended all the way to the customer, only retailers with comprehensive, intuitive digital offerings can expect to thrive.


3. New data standards and regulation

As product value is defined more by software, OEMs (like Tesla) will have to adjust their training to account for software-enabled valued definition. Customers have more say in how they buy, which means they have more say in changes to the product. Not to mention that once this data is collected, it must be carefully protected and managed.


With great data comes great responsibility. With the constant shifting of the market and creation of new technology with new uses for this data, players in the automotive aftermarket must collaborate on new, standardized rules of engagement for automotive digital commerce and data management.


So what does it all mean? Digital transformation doesn’t have to be so scary. This exponentially increased amount of useful aftermarket data denotes a huge opportunity to learn more about how customers interact with these new products. Once we understand more about how these products are being received by the public, companies can decide how to improve the customer experience to stay afloat in a rapidly changing market.

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