Business model innovation in Chinese auto aftersales market

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Type de publication:

Conference Paper

Auteurs:

Wang, Hua

Source:

Gerpisa colloquium, Paris (2014)

Mots-clés:

Auto aftersales market; China; business model innovation

Résumé:

This paper contains in-depth analysis of some business model innovations in the Chinese auto aftermarket.

The automobile sales in China reached another new historical high in 2013. The total sales volume was 21.98 million, with the year on year increase of 13.9%. The sales of passenger car amounted to 17.92 million, ten times more than in India in the same year. The double-digit growth of the Chinese auto industry in the last decade significantly increases the size of the car parc to around 90 million. The percentage of vehicle aged over 6 years (the critical age that triggers big volume of aftersales services) is estimated to reach 35% by 2015. It is in such context that we forecast the quick emergence of Chinese auto aftersales market.

Different to the matured aftersales market in the US, Europe, or Japanese, this market in China has its specific features. OEMs and dealer groups, previously focusing on the new car sales, are expanding their strategic focus to aftermarket in the last one or two years, and thus resulting strong competition. High volume of car model base but limited scale of sales makes costs of parts high. Curiously, counterfeits parts are widespread. Consumers are mostly price sensitive, and have low brand royalty. In terms of regulation, Chinese OEMS are not requested to release electronic data. This becomes the biggest technical hurdle for the development of independent service providers.

Based on the theoretical foundation of business model innovation, especially from the perspective of
customer’s value, it focuses on some in-depth case studies on the emergence of business model innovation in China’s auto aftermarket. Our analysis will illustrate the reactive attitude of most OEMs and authorized dealers from one side, and radical innovation by some leading component suppliers, independent service shops, parts distributers, and non-traditional players (insurers, leasing firms, or fleet operators). The paper will conclude with the importance of business model innovation in a commonly perceived low-technology, and high fragmented industry. In addition, we intend to discuss how business model innovation in such type of industry has its potential to re-shape the current industrial structure in China, especially in the era of quick evolving information and communication technology (ICT).

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