The independent automotive aftermarket deserves greater recognition for its vital contribution to European society and the EU economy. We present the evidence.
Consolidation in southern Europe's automotive aftermarket
Why consolidation presents clear opportunities for IAM participants to unlock value in southern Europe
The trend toward consolidation presents clear opportunities for IAM market participants to unlock significant value in Southern Europe. Relatively low entry valuations, combined with the ability to drive operational improvements and consolidate market share, make the IAM sector in Spain, Portugal and Italy a highly attractive target for PE investors. At the same time, consolidation is not only a long-term growth lever but also a defensive strategy for industry players to maintain competitiveness in an increasingly professionalized market.
"Consolidation in Portugal, Spain and Italy – particularly the latter two – lags behind the more mature northern European and US markets. This suggests there is significant room for consolidation."
The European automotive aftermarket
The automotive aftermarket is the secondary market for vehicle parts, accessories, equipment and services (maintenance, repairs, oil changes, etc.) purchased after the original vehicle is sold by the OEM.
The European aftermarket displays three main characteristics:
Resilience and stability
Europe’s large, aging vehicle parc requires regular maintenance and repairs, ensuring the market is stable despite economic fluctuations. For example, while European car sales fell by 25% during the COVID pandemic, the aftermarket declined by only 11% (CAGR 2019-2020). Europe’s diverse mix of private, commercial and fleet vehicles also spreads demand evenly.
Highly profitable
Aftermarket parts and services have higher margins than original equipment – on average, the aftermarket generates a quarter of sales but half of margins for suppliers. Opportunities for value-added services such as fast delivery, customization and technical support also enhance profitability. In addition, a broad product range allows suppliers to capture revenues from multiple vehicle segments and aging fleets.
Continuous growth
Europe’s aging vehicle parc fuels sustained demand for replacement parts and maintenance services. Furthermore, the growth of new mobility trends and technological advancements (such as autonomous driving) create new aftermarket segments requiring specialized parts and services.
The context of the automotive aftermarket in southern Europe
The automotive aftermarket in Spain, Portugal and Italy (SPI) has unique characteristics. Less developed than in northern Europe and the US, it is dominated by a highly fragmented backbone of independent distributors and small, local workshops. In fact, it has the highest density of workshops in Europe. Feeding these is a car parc with one of the oldest average vehicle ages on the continent.
"The value of the IAM is expected to reach EUR 6.3 billion in Spain, EUR 1.5 billion in Portugal and EUR 10 billion in Italy by 2030."
_person_144.png)
These and other factors make southern Europe a land of opportunity. In particular, the independent aftermarket (IAM) is ripe for consolidation. First movers have already acted to exploit the possibilities for returns and growth offered by consolidation in the distribution channel, and the trend is set to continue. So how can investors and large aftermarket players get in on the action?
In this report, we provide an overview of the automotive aftermarket, look at the specifics of the market in southern Europe, especially its fragmented structure, and assess the factors behind the consolidation trend, including examples.
We also offer a series of conclusions for investors and industrial players to make the most of the opportunities presented by consolidation, from value creation to long-term growth driver.
Request the full PDF here
Register now to access the full study. Furthermore, you get regular news and updates directly in your inbox.
Further readings
_person_320.png)
