Our Vision & Strategy
EUROPEAN AFTERMARKET IN TRANSITION
We intend to investigate the direction the market is moving in, as these are the changes that will drive our future growth.
Experts expect moderate but stable market growth of 1.5% over the next 15 years. And these years will be important: We are facing the biggest transformation in the history of the aftermarket. Players who adjust rapidly and pro-actively to the changes will have a unique opportunity to leave the competition behind. Let us take a look at what the future holds for us on the basis of 10 trends.
Trend No. 1
Market Consolidation
Merging regional wholesalers into a large international company allows boosting profits for example by negotiating improved conditions on purchases or by cutting administrative costs. LKQ has implemented this strategy with particular success: We are now three times bigger than the number two in the European aftermarket.
Trend No. 2
Greater Pressure From Car Manufacturers (OEM)
Nowadays, an increasing number of brand-authorised workshops are servicing older vehicles and thus competing with the independent workshops, our most important group of customers. The aim is to achieve greater customer satisfaction. There’s a need of investment in workshop infrastructure and marketing campaigns for prepared parts and economy repair services to secure new groups of customers. The car manufacturers, such as Peugeot for example, are joining the battle to set up their own brand-independent workshop chains offering economy repair services.
Trend No. 3
Increasing Complexity
Today, vehicles are computer-controlled, always connected and fitted with a lot of sensors. The impact of manufacturer-specific software is increasing. Workshops must invest in training and find specialists to ensure the correct servicing and complex repairs, and to fulfil the requirements of the diagnostics.
Trend No. 4
Our Market Is Increasingly Digital
Customers are seeking information on digital platforms or in online communities to improve their purchasing decisions. Through direct selling the manufacturer cuts out all wholesalers and middlemen. Their margins are distributed between the manufacturers and the online shops, being expressed in increased profits and in the form of price discounts to the customers.
Trend No. 5
The Gold Of The Future: Vehicle-Generated Data
Today, vehicles gather data on the car and its driver with each kilometer driven. If the sensor detects the need for an oil change, not only does the warning light start to blink, but at the same time the navigation device points the driver to the location of a nearby authorised workshop. The authorised workshop can order the suitable spare parts beforehand and thus offer the customer optimal service.
Independent workshops lose out.
There is a heated political debate about the way the abovementioned data is accessed. Whatever the outcome of the debate, the technical solutions to be developed by us for gathering customer information will demand considerable investment financially and in personnel.
Intermediaries – insurance companies, leasing companies, automobile clubs and online platforms – are pushing in as service providers between drivers and the workshop. Insurance companies offer rebates if vehicles are repaired in workshops that they have concluded a framework agreement with. Fleet operators stipulate which parts must be installed and where they should be bought.
The direct relationship between intermediary and car owner not only influences the choice of workshop and repair terms, but reduces the power of the workshop. This means that the parts wholesaler must adapt to new negotiating partners.
Trend No. 6
Growing Influence Of Intermediaries
Trend No. 7
Driver Assistance Systems Become More Common
Technologies that back up the driver, such as cruise control, lane change assistant and automatic distance control with emergency braking, for example, will become standard in every car. Their use will cut instances of damage and the wear of parts that currently arise as a result of emotional and uneconomic driving behaviour.
Trend No. 8
Electric Vehicles Enter The Mass Market
Growing popularity and increasing environmental consciousness will lead to electrically powered cars having a significant market share. Lacking ignition and combustion technology, and with a radically simplified braking system, they have considerably fewer components than a car with a traditional internal combustion engine and lower servicing costs. Novel components installed in electric cars also increase demands on workshops with respect to servicing and repairs.
Trend No. 9
Level Of Autonomous Driving Is Constantly On The Rise
Even if factors like traffic routing, weather and road surface make autonomous driving technology appear utopian at first glance, vehicles will in the medium term take over most of the functions of the driver. Traffic regulations will be respected and critical situations recognised at an early stage. Cars do not get tired, they react in a fraction of a second, and they communicate with other vehicles so as to merge with the flow of traffic in the best way possible. Each of these points will reduce wear and the need for accident-related repairs considerably.
Trend No. 10
Sharing Is The New Owning
Market predictions indicate that around 10% of vehicles will be shared by several owners by 2030. Instead of buying their own car, people will make use of digital intermediary services to arrive cheaply and rapidly at their individual destinations. This trend will benefit vehicle fleets, for example mobility providers such as Uber and car2go, which will be able to carry out repairs more cheaply and cope with breakdowns more easily. Minimising downtime will in turn lead to new challenges for workshops and parts suppliers.
Our Vision & Strategy
EUROPEAN AFTERMARKET IN TRANSITION
We intend to investigate the direction the market is moving in, as these are the changes that will drive our future growth.
Experts expect moderate but stable market growth of 1.5% over the next 15 years. And these years will be important: We are facing the biggest transformation in the history of the aftermarket. Players who adjust rapidly and pro-actively to the changes will have a unique opportunity to leave the competition behind. Let us take a look at what the future holds for us on the basis of 10 trends.
Trend No. 1
Market Consolidation
Merging regional wholesalers into a large international company allows boosting profits for example by negotiating improved conditions on purchases or by cutting administrative costs. LKQ has implemented this strategy with particular success: We are now three times bigger than the number two in the European aftermarket.
Trend No. 2
Greater Pressure From Car Manufacturers (OEM)
Nowadays, an increasing number of brand-authorised workshops are servicing older vehicles and thus competing with the independent workshops, our most important group of customers. The aim is to achieve greater customer satisfaction. There’s a need of investment in workshop infrastructure and marketing campaigns for prepared parts and economy repair services to secure new groups of customers. The car manufacturers, such as Peugeot for example, are joining the battle to set up their own brand-independent workshop chains offering economy repair services.
Trend No. 3
Increasing Complexity
Today, vehicles are computer-controlled, always connected and fitted with a lot of sensors. The impact of manufacturer-specific software is increasing. Workshops must invest in training and find specialists to ensure the correct servicing and complex repairs, and to fulfil the requirements of the diagnostics.
Trend No. 5
The Gold Of The Future: Vehicle-Generated Data
Today, vehicles gather data on the car and its driver with each kilometer driven. If the sensor detects the need for an oil change, not only does the warning light start to blink, but at the same time the navigation device points the driver to the location of a nearby authorised workshop. The authorised workshop can order the suitable spare parts beforehand and thus offer the customer optimal service.
Independent workshops lose out.
There is a heated political debate about the way the abovementioned data is accessed. Whatever the outcome of the debate, the technical solutions to be developed by us for gathering customer information will demand considerable investment financially and in personnel.
Trend No. 4
Our Market Is Increasingly Digital
Customers are seeking information on digital platforms or in online communities to improve their purchasing decisions. Through direct selling the manufacturer cuts out all wholesalers and middlemen. Their margins are distributed between the manufacturers and the online shops, being expressed in increased profits and in the form of price discounts to the customers.
Trend No. 6
Growing Influence Of Intermediaries
Intermediaries – insurance companies, leasing companies, automobile clubs and online platforms – are pushing in as service providers between drivers and the workshop. Insurance companies offer rebates if vehicles are repaired in workshops that they have concluded a framework agreement with. Fleet operators stipulate which parts must be installed and where they should be bought.
The direct relationship between intermediary and car owner not only influences the choice of workshop and repair terms, but reduces the power of the workshop. This means that the parts wholesaler must adapt to new negotiating partners.
Trend No. 7
Driver Assistance Systems Become More Common
Technologies that back up the driver, such as cruise control, lane change assistant and automatic distance control with emergency braking, for example, will become standard in every car. Their use will cut instances of damage and the wear of parts that currently arise as a result of emotional and uneconomic driving behaviour.
Trend No. 8
Electric Vehicles Enter The Mass Market
Growing popularity and increasing environmental consciousness will lead to electrically powered cars having a significant market share. Lacking ignition and combustion technology, and with a radically simplified braking system, they have considerably fewer components than a car with a traditional internal combustion engine and lower servicing costs. Novel components installed in electric cars also increase demands on workshops with respect to servicing and repairs.
Trend No. 9
Level Of Autonomous Driving Is Constantly On The Rise
Even if factors like traffic routing, weather and road surface make autonomous driving technology appear utopian at first glance, vehicles will in the medium term take over most of the functions of the driver. Traffic regulations will be respected and critical situations recognised at an early stage. Cars do not get tired, they react in a fraction of a second, and they communicate with other vehicles so as to merge with the flow of traffic in the best way possible. Each of these points will reduce wear and the need for accident-related repairs considerably.
Trend No. 10
Sharing Is The New Owning
Market predictions indicate that around 10% of vehicles will be shared by several owners by 2030. Instead of buying their own car, people will make use of digital intermediary services to arrive cheaply and rapidly at their individual destinations. This trend will benefit vehicle fleets, for example mobility providers such as Uber and car2go, which will be able to carry out repairs more cheaply and cope with breakdowns more easily. Minimising downtime will in turn lead to new challenges for workshops and parts suppliers.
