Winning the aftermarket shift

Eight strategic actions automotive aftermarket suppliers must take now

The automotive industry is transforming faster than at any point since Henry Ford industrialised the assembly line. Electrification, software-defined vehicles, artificial intelligence (AI), geopolitical fragmentation, shifting customer expectations: Each force alone would be significant. Together, they are reshaping competitive advantage in ways few organisations are prepared for.

Aftermarket suppliers, distributors, parts manufacturers, and service organisations face an even deeper challenge. Original equipment manufacturers (OEMs) can focus on what vehicles they'll sell tomorrow. Aftermarket players don't have that luxury—they must support the vehicles already on the road while simultaneously preparing for the technologies arriving next. This is the uncomfortable truth: The aftermarket must operate in two worlds at once. The winners won't be the ones waiting for market clarity. They'll be the ones building agility, resilience and intelligence ahead of it.

Electric vehicles are transforming aftermarket value creation

For decades, aftermarket demand was predictable. Internal combustion engines require routine maintenance: filters, exhaust systems, engine components, lubricants, mechanical repairs. Suppliers built entire business models around that rhythm. That rhythm is changing. Electric vehicles (EVs) have far fewer moving parts. Software increasingly determines vehicle behaviour. Connected vehicles generate continuous operational data. AI-driven diagnostics can identify failures before they occur. Vehicle architectures are becoming centralised and software-controlled rather than mechanically driven.

Electrification: Embrace a multipolar service market

The global vehicle parc continues to age. Hybrid platforms are expanding, and millions of internal combustion engine (ICE) vehicles will remain in service well into the next decade. Meanwhile, new revenue pools emerge around software services, predictive diagnostics, battery support, connected vehicle data and advanced maintenance.

Eight strategic actions for aftermarket leaders

Industry surveys show strong growth expectations across the sector, but uncertainty, supply chain volatility, labour shortages and the EV transition remain pressing concerns. The question is not whether opportunity exists, but whether your organisation is positioned to capture it.

1. The ICE-to-EV transition brings additional complexity

The transition is far more complex than a simple shift from combustion engines to battery electric vehicles (BEVs). Most suppliers must support ICE, hybrid and electric platforms simultaneously while managing significant uncertainty regarding the pace of adoption, regional regulation and customer demand. The challenge is not choosing one technology path. It is maintaining the agility to support multiple paths at the same time. For aftermarket suppliers, this means running multiple portfolios simultaneously:

• Traditional ICE components
• Hybrid-specific parts
• EV service parts
• Battery-related products, such as cooling technology and EV braking systems
• Electronic and software-enabled components

Organisations that prematurely exit profitable ICE business risk losing cash flow before EV revenue matures. Those that ignore electrification risk irrelevance in the market's fastest-growing segment. The winners strike the right balance and build the operational flexibility to adjust that balance as markets evolve.

2. AI: Turning hype into meaningful process optimisation

The AI conversation has moved past experimentation. Leading aftermarket organisations are already applying AI to real business problems, including:

• Demand forecasting
• Inventory optimisation
• Supplier risk monitoring
• Price management
• Customer service automation
• Warehouse operations optimisation
• Predictive maintenance and diagnostics support

The most important lesson from early adopters: start with the business problem, not the technology. Organisations chasing AI use cases often fail. Organisations solving operational bottlenecks with AI consistently succeed. AI's immediate value is not in replacing people—it is in improving the quality and speed of decisions. Forecasting accuracy, inventory efficiency and faster issue resolution are delivering measurable returns today. The gap between leaders and laggards is already widening.

3. Refocus supply chain priorities from cost to resilience

For decades, supply chains were engineered around a single priority: cost efficiency. That model is no longer adequate. Regulatory requirements, cybersecurity concerns and hard-learned lessons from recent disruptions are pushing both OEMs and aftermarket suppliers towards resilience, diversification and visibility. Strategic priorities now include:

• Multi-sourcing critical components
• Regional supplier diversification
• Nearshoring where economically viable
• Real-time supplier monitoring
• Supply chain control towers
• Inventory risk simulation

The organisations that navigate future disruptions successfully won't be those with the lowest inventory. They'll be those with the highest visibility.

4. Turn ERP into a system of strategic decision-making

Enterprise resource planning (ERP) platforms were built to record what happened. That's no longer enough. The rise of AI, Internet of Things (IoT) data, connected operations and real-time customer expectations demands something more: systems that don't just report history but actively support decisions as they're being made. The next generation of aftermarket operations depends on connecting:

• ERP
• Warehouse management
• Transportation management
• Supplier collaboration
• Manufacturing execution
• Customer service
• AI-driven analytics

The future ERP platform doesn't tell you what happened yesterday. It identifies risks before they occur, surfaces opportunities before they close and recommends action before you think to ask.

5. Connected vehicle data helps solve problems early

Software-defined vehicles disrupt the traditional aftermarket model. They also create significant new opportunities. Connected vehicles can deliver:

• Remote diagnostics
• Predictive maintenance alerts
• Usage-based service recommendations
• Fleet optimization insights
• Data-enabled customer services

BCG research projects substantial shifts in the aftermarket profit pools as data-driven services and software-enabled business models gain ground over the coming decade.

The aftermarket has always been about solving customer problems. Connected vehicle data simply allows those problems to be solved earlier—before the breakdown, before the failure, before the customer even knows there is an issue.

6. Answer to OEM margin pressure with operational excellence

OEM pressure on suppliers continues to intensify. Price-down clauses, volume volatility, compliance costs and increasing complexity place constant pressure on profitability. Margin protection increasingly depends on operational discipline:

• Intelligent automation
• Process standardisation
• Digital workflows
• Inventory accuracy
• Faster response cycles

Organisations deploying AI agents to optimise these areas are not just cutting costs—they are creating learning loops that compound over time. The longer you wait, the harder it becomes to catch up. Operational excellence has become a significant source of competitive advantage and survival.

7. Success depends on people as well as technology

Technology transformations rarely fail because of technology. They fail because people do not buy into it or lack the ability to use it to its full potential.

The aftermarket faces a difficult talent environment on two fronts. Younger professionals entering the industry expect modern, intuitive tools, and they turn elsewhere if they don't find them. At the same time, the highly experienced workforce that holds institutional knowledge must be equipped and motivated to generate value with AI. Leadership teams need to focus on replacing fear with enablement by creating:

• AI and data literacy at every level
• Continuous learning cultures
• Cross-functional collaboration
• User-centric technology adoption

The most successful AI deployments are not seeking to replace employees. They are rendering the workforce more capable, informed and effective.

8. Leaders of tomorrow move now while others wait for certainty

Nearly every automotive executive today has uncertainty on their radar. The concept comes in many different flavours, including uncertainty about markets, trade conditions, regulation, technology adaptation and customer behaviour.

Yet history teaches a consistent lesson. Organizations rarely fail because markets change. They fail because they assume the future will resemble the past. The strongest aftermarket leaders have reframed uncertainty as a strategic asset. While competitors wait for clarity, they're investing in operational infrastructure that increases their agility. They're simplifying their systems to respond faster. They're building the capacity to pivot while competitors hesitate, delay and wait for clarity.

The aftermarket's next chapter starts now

The automotive aftermarket remains one of the most resilient sectors in the global economy. Consumers still need vehicle repairs. Fleets continue to age. Parts continue to wear. That demand isn't going away.

But the next generation of market leaders won't be defined by their parts catalogue alone. They'll combine traditional aftermarket expertise with AI, connected vehicle intelligence, software-enabled services and resilient digital operations. The future won't belong to the largest supplier or the cheapest. It will belong to those who learn, adapt and execute faster than everyone else.

In practice, that means connecting ERP, manufacturing, warehouse operations, supply chain planning, and supplier collaboration into a single, unified operating model where industry-specific AI and automation can be put to work. The organisations that unify their data, automate intelligently and standardise globally will be best positioned to protect margins and capture the opportunities of the decade ahead.

The race has started. You set your own pace. But with the accelerating speed of development, the leading pack will be much harder to catch up with if you let them slip away.

Don’t wait for certainty to shape your next move. Start building a more agile, resilient and intelligent automotive aftermarket business now. Discover how Infor’s automotive capability and Infor Velocity Suite can help you turn today’s aftermarket complexity into measurable value at speed.