The post-market under capital withdrawal: Game Rules Rewritten, Hundreds Of Thousands Of Auto Repair And Parts Dealers Welcome Real Benefits?

In my previous article "The Pattern is Undetermined, Is the Best Era of the Automotive Aftermarket Approaching?" I expressed a viewpoint that, from the perspectives of competitive landscape, industry environment, and characteristics of the supply chain, the current automotive aftermarket industry should be the best era for any practitioner.

As of today, this trend has become increasingly apparent. The author will first continue to supplement the previous article, and then provide some thoughts for everyone.

01. Capital Outflow & Decrease in Fixed Costs, Two Major Benefits Emerge in the Aftermarket

Currently, there is a significant positive development, which is that capital is basically retreating.

Capital seeks profit, and once it enters an industry, the first step is to create a buzz, artificially generating industry heat to attract the attention of other capital.

Then, through various operations, it usually involves either going to the market independently or through mergers and acquisitions; after the asset appreciation, it looks for the next round of buyers, which is why we occasionally see significant financing, etc.

This entire process can cause most ordinary practitioners to feel unbalanced and anxious; it can also allow opportunists to enter and disrupt the situation, leading to the phenomenon of bad money driving out good.

However, the vast majority of emerging industries are like this, such as early online group buying, internet finance, real estate, sushi, etc. It was like this in the past, it is like this now, and it will still be like this in the future.

At this moment, the capital clamor regarding the automotive aftermarket has basically quieted down, which means a lot. At the very least, industry practitioners can return to a normal business environment and operate with peace of mind.

Currently, there is another positive factor: the general decrease in rent, which reduces fixed costs.

Nowadays, many shops and commercial properties are vacant, and the common explanation attributes this to the impact of e-commerce. The author is quite skeptical about whether such statements originate from real estate companies. However, the influence and impact of the real estate industry on other physical industries are undoubtedly undeniable. With the current widespread decline in rents, it is certainly a significant benefit for industry practitioners.

High fixed costs and stagnant profits can positively drive a company to strive harder, but negatively, they can reduce the decision-making space for business operations, forcing the company to pursue short-term interests.

At the same time, internet platforms directing traffic to physical stores did not lead to a high level of integration with the internet in our industry, as seen in the dining and entertainment sectors. Instead, there emerged statements about "working for internet platforms." Looking back now, it seems to be somewhat inevitable.

In summary, from the perspective of the external environment, all trends are positive. Of course, if industry professionals are contemplating a return to the era of excessive profits from over a decade ago or still hoping to get rich overnight from the automotive aftermarket industry, the possibility of this happening is indeed zero. However, compared to 7 or 8 years ago, things should be much better.

Every adjustment and optimization in operations will yield rewards and results, making operators more confident and assured. This is what constitutes a rational, healthy, and sustainable market.

02. The value of services urgently needs to be "materialized". How should practitioners carry out "customer education"?

Discuss another thought: How can services make customers perceive value?

Case 1: A long, long time ago, I discovered a review of a service on a certain e-commerce platform. This made me ponder. Whether it’s the platform or the merchants, what kind of service are they actually providing? Does pre-sale consultation count as a service? Or does shipping the goods after payment also count as a service?

Case 2: The author knows a former product engineer from a well-known automotive parts manufacturer specializing in wheel hub units. This senior engineer became very wealthy overnight after starting his own business, thanks to solving an original factory defect in the Chevrolet Lova's wheel hub unit years ago. Is this type of differentiated production and sales much more advanced compared to homogenized ones?

It is not hard for us practitioners to notice that those in the automotive service industry are using transparent glass in the construction areas, displaying screens in the work zones, and even spending money to develop software that allows car owners to scan a QR code to watch live construction on their phones. Those selling parts display different qualities of the same parts together and conduct on-site demonstrations of A/B testing at the slightest disagreement, among other practices.

Some auto service stores even package 36-item and 72-item inspection services, offering them as products to customers for free, hoping to make customers feel that their money is well spent. Now, by simply adding the customer's WeChat, they can easily create a customer group and provide 24-hour service, and so on.

In this process of value exchange, our peers have always been thinking and innovating, hoping to make customers feel our value and have never stopped.

Even the author has mentioned in past articles that we should learn from Hai Di Lao's perceptive interactive services, allowing customers to feel our value through their participation and confirmation.

However, in the context of increasingly fragmented and infrequent consumer scenarios, the aforementioned measures may not be sufficient for us to capture the minds of customers, so that when they have a need six months or even a year later, they think of us.

How can we enhance the value that customers perceive from our industry, especially under the mainstream societal belief that labor is generally undervalued?

The author believes that only thorough quantification of service value can allow consumers to concretize abstract services.

In today's society, the basic qualities (including upbringing, etiquette) and empathy required for interpersonal communication have evolved from "emotional intelligence" to "emotional value." So why can't abstract services be quantified to reflect their value, thereby achieving "service value"?

And there is another side to this coin, which is that our car owners actually still lack education.

Since 2010, the number of vehicles has surged, and considering the 6-7 year replacement cycle for vehicles, the most experienced drivers have at most around 15 years of driving experience and have only switched to their second or just replaced their third vehicle. The majority of demand still focuses on maintenance, with the primary consumption scenario being the 4S dealerships. Therefore, most drivers have yet to be influenced by the substandard services and parts in the aftermarket.

This requires practitioners in various sectors of the automotive aftermarket to continue thinking about how to transform abstract services into valuable ones that car owners can perceive.

In Conclusion

Despite the fact that there are still many external factors posing various challenges and difficulties to our industry, it is evident that the external environment has become more normal and rational, and is improving. Furthermore, it should not be overlooked that there are still many players who continue to sing and dance as usual, and some are even thriving more than ever.

Let's continue to regain our confidence and remain vigilant, ready to rise up in arms.