Forecasting Demand for Automotive Spare Parts

00:34 What is so special about the automotive aftermarket?
02:37 How can you forecast the demand for such a wide range of options?
03:57 Can we really forecast for when someone breaks down?
06:40 Talking about challenges, does having so many parts that are compatible not make a practitioner’s life easier?
08:28 Has nobody created databases that make use of the practitioner’s expertise and tells you which compatibility exists?
10:35 What’s the best way to keep track of this? How can we keep track of which components were used in the manufacturing of a certain vehicle?
13:30 What about pricing? How important is pricing when it comes to the demand for these components?
16:40 If you’re not analysing what competitors are doing, is there any way of analysing how aggressively you can price?
18:47 How has the industry changed with the introduction of e-commerce players who are starting to compete with the more traditional garages?
20:50 What are the key lessons to learn from today’s episode? Is it that data can give structure to what is a seemingly random activity?


Accurate demand forecasts for automotive spare parts is important to ensure high service levels that minimize disruptions for customers when their vehicles are in need of mechanical repair. However, the number of distinct parts and the number of distinct vehicles are high, which both complicate the forecasting process.

In this episode of LokadTV, we look into the wide range of challenges that have been introduced into this highly complex industry. Nowadays, consumers have become that much more aware of the importance of preventative maintenance and regular services in order to maximize the lifetime value of their vehicles. With around 80 million cars sold worldwide each year, the automotive aftermarket industry is expected to reach a global value of over $700 billion by 2020.

We discuss the introduction of various e-commerce players into an industry that has up until now largely been dominated by garages and why the growing trend for DIY maintenance has resulted in a rising demand for aftermarket parts. We also expand upon just what exactly makes the automotive parts aftermarket so particular when compared to other industries, namely the questions of such vast catalogs of products and the highly important concept of compatibility between parts.

In addition to this, we talk more about techniques for forecasting demand, taking into account that it’s extremely difficult to predict when a customer will require a specific spare part. Considering that the spare parts market is very cause-driven - often people will purchase a spare part due to a specific incident and not in anticipation - pricing has a key role to play in relation to demand. So what is the best way to approach competitive pricing strategies?

To conclude, we underline where exactly you should be looking for that statistical stability to be able to better forecast for a market that is filled with sporadic demand that is difficult to map.