Parts and Parcels: Automotive Trends Highlight the Need for Perfect Protective Packaging
With the rise of ecommerce, it's now more common for automotive parts to be shipped directly to consumers. Damaged parts can cost both suppliers and manufacturers considerable time and money by slowing production and product loss, so using the right protective packaging design is paramount.
Today the typical new car seems more like a product of the United Nations than of any one country. The average new car includes more than 20,000 individual parts, with thousands of suppliers around the globe contributing to arguably the most intricate supply chain of any manufactured product. Indeed, if car buyers got an itemized receipt listing every part in their new vehicle, they just might trip over it.
Take the typical Toyota made in America, for example: Only 50 percent to 60 percent of the car was actually assembled stateside, with the rest coming pre-assembled or fabricated by suppliers around the world. With auto parts streaming in from six continents and expected to reach the assembly line just in time for production, the pressure is on suppliers to deliver perfect parts that won’t slow down the carefully orchestrated assembly line due to damage or nonconformity.
Advances in Automotive Technology
To complicate matters even further, advances in automotive electronics are coming especially fast. In just the past few years, carmakers have begun offering safe-driver enforcement systems, which keep drivers' cellphones quiet and restrict speed and stereo volume; backseat camera systems so drivers can check on their young children without turning around; vehicle-tracking software to prevent theft; and adaptive cruise-control systems, which match a car's speed with that of the car in front of it.
These technological advances are creating demand for new parts and forcing suppliers to think about the best way to ship them. Damaged parts can cost both suppliers and manufacturers considerable time and money by slowing production and product loss, so using the right protective packaging design is paramount.
Opportunity in the Automotive Aftermarket
Protective packaging design is playing a central role in a growing opportunity for carmakers, dealers and manufacturers. With the rise of ecommerce, it’s now more common for parts to be shipped directly to consumers, cutting out auto-parts retail chains that serve as middlemen. In fact, according to the Auto Care Association, the ecommerce sector of the automotive aftermarket is expected to grow to $28 billion by 2020.
This direct-to-consumer aftermarket sector generally has two kinds of customers, according to the Automotive Aftermarket Suppliers Association – those looking to upgrade their cars through accessories and those seeking replacement parts for older vehicles. The untapped potential in this sector is huge: Approximately 85 million vehicles in the United States are six to 12 years old, meaning they are at the age when things start to go wrong. And many owners are choosing to buy parts online because of lower prices and the convenience of home delivery.
A 2017 report by Zion Market Research valued the global car accessories market at $361 billion in 2016 and predicted that figure would surge to $519 billion by 2022. The growth in sales will include a wide range of products such as interior and exterior LED lights aimed at enhancing the car’s appearance and solar-powered HVAC systems to reduce fuel use, the report said.
“Damaged parts can cost both suppliers and manufacturers considerable time and money by slowing production and product loss, so using the right protective packaging design is paramount."
As cars become more complex, they are also becoming more expensive to repair following accidents, making aftermarket collision repair centers a key driver of the growing demand for parts. According to a 2018 report from the Auto Care Association, car accidents in America over the most recently recorded 12-month period resulted in $45.8 billion in collision repair-related sales and services, representing 16.5 percent of the total spent in the automotive aftermarket.
Younger consumers are fueling strong interest in car collecting, presenting another opportunity for parts suppliers. The car insurance and valuation-tracking company Hagerty said that in 2018, it received more requests for classic-car insurance quotes and more vehicle-valuation requests from Gen Xers and millennials than from baby boomers. Overall requests in 2018 were up 17 percent from the prior year, which Hagerty analyst John Wiley said indicates “a healthy market and continuing interest in cars and driving across generations.”
Focusing on Protective Packaging
For parts suppliers, carmakers and manufacturers, there are huge opportunities ahead, but with opportunity comes complexity and new ways of thinking. Within these new emerging markets and the inherent complexities of the auto supply chain, those who hone in on the main considerations of protective packaging design will realize the biggest dividends.
To learn about Pregis’ full line of automotive protective packaging solutions, visit www.pregis.com/automotive--transportation.