April 2020

BY Andrew Marsh, Engineering Director, Auto Industry Consulting Ltd W e can see or read about momentous historic events, and rarely realise that we are living through such times. Right now, the rate of change from government, to how we see ourselves has never been so intense. In the aftermarket the usual order was for people to buy vehicles, for the newly registered vehicles to return to the franchised dealer and eventually find their way to the independent sector for repair and maintenance. Let’s look at what has subsequently happened within the automotive industry over the past two decades. Firstly, the capital required to create a facelift for an existing model has increased from around € 300 million (new bumpers, headlights, interior fabrics) to around € 800 million (as before plus revised powertrains to meet ever tightening emission regulations). At the same time, the capital to create a new vehicle with carry-over powertrains has risen from around € 1,000 million to close to € 2,500 million. This is driven by the anticipation of mandatory forward-facing advanced driver assistance systems (ADAS) as well as more demanding safety requirements combined with weight reduction. In the last two decades most vehicles have had a net weight gain of 100kg, after reaching a peak increase of 300kg. Emission regulations and the associated tax penalties for non-compliance are a major factor in weight reduction. The price increases have been in part due to inflation, but product sophistication has been the primary reason. Engineering in the late 1990s was already heavily reliant on the power of computers, but simulation has reached levels today that were unimaginable back then. However, the amount of work required to achieve the required product sophistication to meet demands for connectivity, comfort, safety, performance and emissions has far outstripped the advances in labour saving simulation, even though computing and data storage costs have fallen dramatically over the past two decades. So, vehicle manufacturers who traditionally designed, developed and made parts for their products were stuck: How does one raise huge amounts of cash to invest for a minimum of 18 months before any return can be made, at a profit margin below 4%? A way of reducing investment costs ahead of the point 32 AFTERMARKET APRIL 2020 TECHNICAL www.aftermarketonline.net REVOLUTION IN THE AIR What does the march of technology mean for the automotive aftermarket, and how to take advantage of the situation