Understanding the structure of its market is vital not only for a finished product, but also for all its spare parts, mechanical or electronic. The spare parts business model will then condition the repair and after-sales service of these products. Continuing our series of articles on spare parts issues, we analyse the structure of the parts market by sector. The aim is to deliver a complete picture to new players of the service because of the repair capital and the reparability index.

The spare part, a relative value

Whatever the market, the value of the spare part is above all linked to that of the finished product. It answers a simple consumer question: considering the purchase price and the delivery time, is it worth having my damaged product repaired? To this basic equation, another dimension can be added: is there an emotional connection with the brand? In the case of household appliances, the sector has long suffered from an image deficit, even though it has proved its usefulness and is popular with the general public. The trivialisation of the market and the constant fall in the price of the finished product has had repercussions on repairs. Today, the trend is reversing with manufacturers becoming increasingly consumer-oriented. With value-added services, the sale of consumables, maintenance advice and the management of approved repairers, manufacturers are trying to get closer to the automotive model.

When spare parts become a luxury product

Once the consumer’s interest in the spare part has been estimated, the level of competition in this market should be studied. Automotive industry is a perfect example. For visible parts and in particular the bodywork, the manufacturer retains the exclusive right to supply under the intellectual property right. The same laws that protect the dresses of French designers from counterfeiting apply to the fenders and bumpers of our cars. This keeps the price level high. In 2017, the marketing of spare parts generated a turnover of €13.2 billion in France, i.e. 59% of the €22.5 billion generated by the entire automotive after-sales sector. The ASR (Automotive Safety and Repair) has been reporting price increases of 5% to 6% per year for over 10 years. The legislator is trying to change this model without succeeding for the moment. The ever-increasing presence of software in our devices has the same effect. And beyond the respect of intellectual property rights, only manufacturers can ensure compatibility between parts, software and cards, as can be seen on telephones, consoles, and even tractors. This is also the case in household appliances, where cards remain the most expensive component.

What about the generic part

On the other hand, for spare or wear parts, supplied by equipment manufacturers to the mass market (oil change filters, windscreen wipers, etc.) price wars are the norm. With the arrival of pure players in the automotive industry, the notion of generic spare parts accessible to the general public at the click of a button has made its appearance. There is no need for technical knowledge to enter this market of multi-brand interchangeable parts, but for consumer confidence to reassure them about their purchase. In household appliances, the revolution has not yet taken place, but more and more manufacturers are offering their spare parts to consumers via e-shops, a solution that guarantees quality parts at affordable prices and encourages self-repair. Pumps, resistors and other standard branded parts are thus freely available to DIYers.

Does structuring the spare parts market encourage repair?

While the automotive and household appliance sectors have long managed this complexity, other sectors suffer from a difficult or almost non-existent repair offer for reasons of price, availability or logistics. If the repair is not common, the consumer will often consider the cost of a repair higher than the price of a new good. DIY or consumer electronics, for example, suffer from this perception. By further structuring the repair process and communicating its possibility, these barriers are removed. As the reparability index is extended to other sectors, it will be interesting to analyse the evolution of these perceptions. For the time being, we can see that the more easily accessible the repairers are, the more repairs are made. Changing mobile phone screens is one of those virtuous circles where the presence of repairers encourages repair and vice versa.

Is the future of after-sales service a question of volume or quality?

The repair of household appliances has been digitalised and optimised for many years. We have a very large volume management capacity with about 15 to 20 million devices per year. The majority of repairers are independent players throughout the country, which helps to maintain local employment. Despite the lowest prices for finished products in Europe, France has largely succeeded in maintaining a strong household appliance repair business. Based on this observation, the establishment of an effective repair chain is possible for all actors. Within Agoragoup, we are ready to accompany the new market players who will have to face up to the challenges of spare parts in order to meet the specifications of the repair capital. Another challenge from our neighbours on the other side of the Atlantic is also likely to shake up mentalities, the right to repair or the right of consumers to repair. In short, repair is becoming an environmental, economic and societal issue – a fine agenda!