By: Dion De Graaff - CEO of AutoZone

After a new car purchase, often the last thing on our mind is the day the warranty and/or service plan expires. When that day arrives, however, car owners do have a few choices: extend the warranty/service plan at the dealership, buy a warranty extension or maintenance plan with a third-party insurer, or cover one’s own expenses.

Warranty extension products mostly require large up-front payments, which may not be affordable to many people, and only a small proportion of owners take their cars back to dealerships when the original warranty expires.  What, then, do the remaining people do?

The answer:  there is a whole and growing industry geared for exactly that eventuality, called “aftermarket parts and services.”  In recent years the aftermarket parts business has evolved into a sophisticated, well-run industry, with several companies possessing the skills and partnerships to offer OEE (Original Equipment Equivalent) and quality aftermarket parts at an affordable price.

New cars require regular services, where demand is limited to high-wearing service parts. Older cars require repairs, in addition to the high-wearing service parts, which increases the range of parts needed. The wise choice for those whose car’s warranty/service plan has expired, is to buy from the aftermarket industry’s reputable companies and/or take their car to an accredited RMI workshop — which source their products from accredited suppliers such as BOSCH, GUD, NGK, DENSO and VALEO among others — and offer 12+ month guarantees.

The average age of vehicles in South Africa is increasing, partly due to the pause in new car sales during the Covid-19 pandemic, but also in response to stagnant economic growth and the increasing cost of living. According to research conducted by Lightstone, the average age of vehicles in South Africa rose from around 9.2 years in 2015 to over 10.5 years by 2022. Research by TopAuto shows that more than 42% of cars on South African roads are between 11 and 20 years old, followed by vehicles between the ages of 6 to 10 years, accounting for roughly 30%. New cars — defined as those between 0 and 5 years — account for only 23%.

Besides the ageing car population, which is favourable for the growing aftermarket parts and services industry, the landscape for new cars is also changing in South Africa. There has been a significant influx of brands from China and India, such as CHERY, GWM, BYD, GAC, JAC and Mahindra. It is well reported that these brands are some of the fastest growing in the South African vehicle market — they are rapidly growing market share and their models now regularly feature in the top-10 best-selling lists.

These brands are relatively new in South Africa, with many of the cars still in their warranty/service periods. And their warranties are impressive. Whereas the typical European car companies offer warranties of between 3-5 years and/or 100 000-120 000 km, the Chinese and Indian vehicle companies often offer 5–7-year warranties and/or 150 000-200 000km. Sometimes a new car purchase is sweetened with a 10-year or 1-million km engine warranty (there is always a caveat to this though, so make sure you read the fine print).

Given their popularity, we have noticed an uptick in these car brands entering the aftermarket space and their numbers are growing steadily. This signals a huge opportunity for auto parts companies to capitalise on the growth of these new brands. There have been several anecdotal reports about a scarcity of OEM (Original Equipment Manufacturer) parts for these new brands needing repairs. This is most likely due to logistical bottlenecks and/or inadequate inventory at local dealerships — issues which should resolve in time as the new vehicle brands’ networks and dealerships become more established. However, it does indicate that there will always be opportunities for non-OEM parts companies to leverage.

We are confident the aftermarket parts and services market is set to continue its robust growth trajectory as the car population continues to age and warranties and service plans inevitably expire. As long as consumers stick to purchasing quality parts from accredited suppliers, older cars will continue to demonstrate their worth in South Africa’s still-constrained economy.