Max Joachim
Partner Principal Consultant
B2B Digital Parts Trading Platform Strategy: Transforming Automotive After Sales
European passenger and commercial vehicle manufacturers (OEM) face an increasingly challenging market environment. Buyers’ reluctance, new competitors and massive investment needs for new models and technology are some of the key challenges the established OEMs need to tackle.
With decreasing margins from new vehicle sales, OEMs are looking to grow their highly profitable parts business and generate new revenue streams through (predominantly) digitalized aftersales services. The parts trading business in automotive industry refers to the process of buying, selling or exchanging vehicle parts. This can include both new and used parts, and involves transactions between manufacturers, retailers, and individual consumers. In this context, so-called Independent Service Partners (ISPs) are often also referred to as customers whereas Authorized Service Partners (ASPs) who are officially recognized and certified by the OEM to perform maintenance and repairs as well as offering original parts, act as retailers.
Goals for a Digital Parts Trading Platform
The reasons why OEMs currently invest heavily in such Digital Parts Trading Platforms stem from the significant business volume of parts sales but also go beyond direct sales contributions:
- A significant increase in revenue is expected, typically within 2 years, due to better linking of products and services and easier access for customers.
- Enhanced brand loyalty among both existing and new customers.
- Improved efficiency and widespread digitalization of existing aftersales processes.
- Monetization of additional workshop services, especially those related to diagnosis and telematics.
But it’s not as simple as that …
Often, it is observed that Automotive OEMs hastily select an eCommerce platform or opt for a technical solution they already have in-house for other purposes, under the misconception that Digital Parts Trading is simply another eCommerce use case. This perception is fundamentally flawed. The reality is far more nuanced and complex. Here’s why:
Matching the right vehicle-specific part is riddled with much more complexity than one might initially anticipate. These complexities arise from the intricate relationships between vehicles and their components. To ensure a seamless repair process, one must accurately determine which parts are required, depending on the scope of maintenance that needs to be done. This requires a high level of detail and care, to ensure all necessary repair components are on hand once the vehicle is in the workshop. This adds a significant layer of complexity.
The documentation process in itself is highly demanding, maintaining up-to-date and comprehensive parts catalogs poses a substantial challenge. Legal requirements mandate that repair information must be readily available to dealers, especially to independent service providers (ISPs).
Additionally, a multitude of business models exist for the various products: While parts are typically sold indirectly via ASPs, related products such as diagnostic software or repair manuals are sold directly by the OEM. This hybrid model creates a mix of direct and indirect sales, which can be further complicated by varying customer requirements. For instance, global key accounts might source all necessary components and services directly from the OEM, unlike smaller clients who might need to rely on alternative, more indirect, sourcing.
Logistics fulfillment strategies can pose additional complexities, including whether direct deliveries are made from OEM’s central warehouse or to ASPs with pickup locations. Furthermore, integration with back-office systems, particularly regarding payment flows and invoicing, remains a critical task.
The fundamental problem lies here: eCommerce platform vendors‘ promises often fall short. They tend to oversimplify everything into a product catalog—essentially, the available inventory. However, the real value lies in reliably identifying the required parts and understanding their constructive interdependencies. Similarly, traditional challenges related to fulfillment in aftersales logistics require comprehensive solutions.
A Call to Action for OEMs
Given these multifaceted challenges, OEMs must grapple with the question: “What steps should we take to approach this topic?” There are three core questions that every OEM should consider before even looking at eCommerce platforms:
- How can we empower users — particularly ISPs, who may lack deep knowledge and extensive training in vehicle repair and maintenance of our products — to successfully use the new platform?
- What will the business model look like in various scenarios? What contracts will be involved, and how are the payment flows handled?
- How will logistics be managed, who will bear the related costs, and what efficiencies can be explored or leveraged?
The Way Forward
The current landscape of Automotive aftersales is evolving rapidly, and OEMs must adapt swiftly to maintain a competitive edge. By adopting a thoughtful, effectively strategized Digital Parts Trading platform that prioritizes customer needs and streamlined operations, manufacturers cannot only tackle present challenges but also leverage the exciting opportunities presented by the digital revolution.
True success depends not just on technological advancements, but equally on fostering a culture of customer centricity that cultivates loyalty and strengthens customer relationships. OEMs that champion this integrated approach will be strategically positioned to navigate future market dynamics, ensuring sustained growth and resilience.
Ready for Transformation?
At Senacor Technologies, we specialize in guiding you through these complex digital transitions. Our expertise spans the entire value chain:
- Initial Mini Assessment: We identify untapped digitalization and optimization potentials within your current parts trading process and system landscape.
- Concept & Delivery: We design, shape and implement a complete bespoke Digital Parts Sales Platform tailored to your specific needs.
- Comprehensive Transformation: Our portfolio extends to guiding the entire transformation towards Digital Parts Trading, considering both technical and business facets.
Together, we can propel your business to the next level in the increasingly digitalized and competitive Automotive aftersales market.
About Us
Within Automotive, Senacor Technologies combines tech competence with in-depth business knowhow in the areas of Automotive marketing & sales, financial services and after sales. We help build and scale new innovative digital ecosystems around the vehicle and maximize value in retail integration. Our focus on business-oriented value-add solutions ensures that our clients can navigate challenges while unlocking new revenue streams in the evolving automotive aftersales landscape.
MAX JOACHIM
Partner Automotive