In the constantly evolving global economy, China continues to grow and compete across the board with North American companies, including the tire and automotive aftermarket.
Steve Ganster, managing director of Technomic Asia, a market entry and strategy consulting firm, told Tire Business China’s economy is No. 2 in the world right now and growing at about 7 percent, with the vehicle parc expanding at a rate of about 15 percent annually.
In about five years, he said, the car parc will exceed 200 million vehicles, whereas the U.S. market is growing at only a percent or two.
"It’s only a matter of time when the China market will exceed the U.S. market. Same is true in the (automotive) aftermarket in China," Mr. Ganster said.
By Technomic Asia’s calculations, the car parc—which includes all light passenger vehicles—has hit 100 million units.
Mr. Ganster said that taking a look at the composition of that aftermarket, most cars are no longer new. The middle-aged bracket of four- to nine-year-old cars is "becoming much more sizable and that’s bringing into it then many, many more opportunities for car repair and service."
As China’s vehicles reach the 30,000-40,000 mile mark, he said, they begin to clock some replacement incidence rates.
Because of that, the Chinese automotive aftermarket is becoming more important, Mr. Ganster said. While it is yet to hit the level of the U.S. aftermarket, that segment’s growth in China is a combination of its absolute size and the fact that it is beginning to mature.
"By our estimates, it’s probably 40 percent the size of the U.S. car parc," he said, "so it’s still a big gap between the size of China’s and the size of U.S. (aftermarket)."
However, just like new vehicle sales continue to increase each year in China, that country can catch up and surpass the size of the U.S. aftermarket quickly, Mr. Ganster said.
"New vehicle sales in China surpassed the United States," he said, "and now China is the No. 1 new vehicle sales market."
He said it’s only a matter of time before "that gap in the aftermarket closes as well."
Mr. Ganster told Tire Business there are two phenomena occurring in China, and both are represented in the aftermarket. First, its pace of development will be more rapid than how the U.S. grew. "We use the phrase that 'China years are like dog years,'" Mr. Ganster said, explaining that one year in China is like seven years in the U.S.
The second phenomenon is that the phases China goes through could be very different from what the U.S. experienced. While, for instance, the U.S. went sequentially through Phases 1-4 and so on, China might leap from Phase 1 to 3 to Phase 6, skipping steps along the way.
Mr. Ganster noted that as eCommerce is getting a lot of attention in the U.S. now in the aftermarket, it also is getting that kind of interest and focus in the Chinese aftermarket as well.
"So things like different technologies, like eCommerce and the Internet, will have an impact on the market and accelerate in terms of how that market may develop," he added.
Source: tirebusiness.com
