Malaysian automotive aftermarket sector set to grow further

by **Cals** Thu 10 Apr 2014, 01:15

Business & Markets 2014

Written by Sulhi Azman of theedgemalaysia.com

Wednesday, 09 April 2014 09:54

KUALA LUMPUR: The increasing market share of South Korean automotive brands, such as Hyundai and Kia, and Chinese brands in the commercial vehicle segment in Malaysia presents new opportunities in the local automotive aftermarket sector.
According to an analysis by Frost & Sullivan, the country’s capabilities to service the aftermarket need to be strengthened as more automakers set up production bases in Malaysia.
“Market liberalisation, leading to more vehicle availability, is likely to increase the number of products needed in the aftermarket, and drive industry growth,” said Silka Yosa, who is consulting analyst with Frost & Sullivan’s Asia-Pacific automotive practice, in her report titled “Strategic Analysis of Asean Automotive Aftermarket”.
She said accessories such as LED daytime running lights, high intensity discharge (HID) lamps, embedded navigation systems, reverse cameras, DVD entertainment systems and body kits are considered “must-have” items by vehicle owners in Malaysia. These items make up some of the most lucrative segments of the independent aftermarket.
Yosa also noted that the automotive aftermarket sector in Malaysia, Indonesia and Thailand is expected to grow at a compound annual growth rate (CAGR) of 12.9% from 2010 to 2018.
Wiper blades are found to be one of the fastest growing segments in the automotive aftermarket sector in these three countries due to the short lifespan of the product.
Yosa said wiper blade replacement in the three Asean countries could grow at a CAGR of 15.2% to US$243.5 million (RM791.4 million) by 2018.
“The growth rates for products such as wipers, clutches, compressors, filters and brakes are expected to be high, in the region of 13% annually for the next five to seven years, due to the boom in Asean vehicle sales.”
She added that internal components such as starters, alternators, radiators and fans are expected to have a lower growth rate as their sales only peak when a vehicle reaches 8 to 12 years old.
The analysis also found that most owners generally return to their respective authorised service centres for servicing and maintenance procedures due to warranty obligations in the first few years of ownership.
“However, when a vehicle has exceeded its factory warranty period, most people take it to an unauthorised service workshop for routine maintenance because of the workshop’s lower pricing and usually better proximity,” said Yosa. On the use of chemical products to restore engine performance and provide cleaner injectors, she said most vehicle owners in Asean countries are sceptical of using such products unless recommended by the original equipment manufacturers or their service centres.
“Vehicles under manufacturer warranty are bound by replacement of only original, approved parts. Consumers not bound by warranties generally opt for aftermarket parts due to pricing, but still consider factors such as brand, quality and warranty when making a choice,” she said.

This article first appeared in The Edge Financial Daily, on April 9, 2014.