Holden’s last manufacturing plant closure in October 2017 capped a period of snowballing decline for the Australian automotive industry – or for most sub-sectors. Motor vehicle parts wholesaling and retailing has actually grown steadily by 2.5 per cent each year since 2013, according to IBISWorld. This means it’s now a $5 billion industry and it’s ready for a change.
Why has automotive parts retailing grown?
It seems bizarre that in a national industry on the out that the motor vehicle parts and accessories should continue to grow year-on-year. There are several reasons for this:
- Rising car taxes and increased foreign vehicle imports have seen the market for second-hand vehicles grow. This has naturally led to a higher demand for replacement parts and customisation options.
- The aftermarket is split evenly between local producers and imports from Asia and the US. according to the US Federal Government’s International Trade Administration. This parity shows there is still an appetite for Australian products when compared with cheaper or readily available foreign competition.
- Parts and accessory sales have been protected, for the most part, from the drive of e-Commerce seen in other retail sectors, both globally and in Australia.
These factors have led to the sector employing thousands of people across over 2,200 businesses nationwide(IBISWorld).Additionally, increased customisation options – thanks to the influence of technology – means more people than ever are willing to use third party accessories.
Streamlining the consumer supply chain
The retail sector is being increasingly defined by three key trends:
Trend 1: Embracing future-ready technology
Bringing consumers closer to retail businesses is being led by a shift towards using technology that streamlines the supply chain. Repco and Supercheap Auto are the two largest groups in the automotive parts sector and dominate the market, despite minimal investment in future-ready technology.
Businesses that harness automated solutions can allow consumers access products quicker and more readily than ever before.
Trend 2: Microsoft support end-of-life
Another change set to vastly alter the makeup of retail operations is Microsoft discontinuing its support for facility operating systems. This will affect most Australian businesses, and means owners will have to look towards alternative providers, such as Android, to continue operations.
Automotive parts businesses should take this opportunity to rethink how they connect customers to their products. Enterprises brave enough to embrace automated solutions and modern supply chain design will lead the industry.
Trend 3: Increasing the speed along the supply chain
Retailers need to do more than ever to ensure consumers have access to the products they want when they want it. Asian markets are more closely linked to Australian retail than ever, which offers businesses the chance to learn from the effectiveness of supply chains in key markets on the continent.
Click-and-collect has been around for a while, and customers expect these waiting times to gradually come down all the time. Businesses that can’t meet these demands may as well not offer an e-Commerce platform at all.
The Australian Automotive Dealer Association, meanwhile, states the lack of competition in the motor vehicle parts retail sector specifically is driven by two factors:
Factor 1: Urban/rural divide
The first is regional demand fluctuations between well-connected urban areas and remote or rural centres. Urban locations have the appropriate population and infrastructure for steady sales, but rural locations lack the e-Commerce or distribution network to truly connect in the same way with a business. Addressing this a refined supply chain is vital to changing the city/rural divide.
Factor 2: Low e-Commerce competition
The second factor is down to a prevailing trend in wider retail towards online purchasing that hasn’t been reflected in the automotive parts and accessories sector. While global giants such as Amazon have shaken the Australian retail sector from online inertia, a lack of competition in the motor vehicle accessories sector means operators lag behind.
Each of the issues above can be solved by embracing automated solutions and supply chain redesign with one partner – Cohesio.
What solutions can Cohesio offer?
Too many organisations consider technology to be an afterthought of their operations, a means for making current processes work. Flipping this thinking to make technology a tool for developing systematic improvement is key. Cohesio offers enterprises cutting-edge technology that redefines the supply chain and drives improved business through process optimisation. The latest additions to their evolving tech stack are robotics for logistics, drone stocktaking and voice tech with android which are being deployed in some of the largest warehouse facilities and retail stores across Australia, New Zealand and Asia. Additionally, their signature managed service solution can be wrapped around any combination of tech implementations, offering customers various levels of support and high-value touch points throughout the lifespan of the partnership.
These solutions are just the beginning – businesses brave enough to rethink what their operations can be will undoubtedly lead the automotive parts industry in the coming years. And we want to be with you on that journey, offering expert supply chain design guidance and leading-edge logistics technology each step of the way.