ADAS Is Here and Growing … But There Are Headwinds

Monday, May 23, 2022

ADAS Is HERE and GROWING … But There Are Headwinds

By Chris Gardner, senior vice president, Operations, Automotive Aftermarket Suppliers Association (AASA)

Chris Gardner

I attend many industry events every year, and the most-discussed topics and issues facing the aftermarket over the past two years are:

  • Supply Chain Disruptions
  • Labor/Talent Recruitment & Retention
  • EVs & the Electrification of Tomorrow’s Vehicles
  • Advanced Driver Assist Systems (ADAS)

Each of these issues come with major headwinds, but they all represent opportunities to differentiate, exceed customer expectations and grow business. This blog focuses on ADAS opportunities.

AASA recently conducted a comprehensive and extensive research project on ADAS to answer industry questions on how quickly the market will grow. We also identified the obstacles the independent aftermarket, especially the mechanical repair community, faces in capturing a sizeable portion of this business. However, there are several industry organizations in the early stages of developing training and new process technologies, which should make a material impact soon. Like any technology disruptor, there are as many opportunities as there are challenges.

Thought #1: ADAS represents a significant growth opportunity.

A careful analysis of the individual safety systems embedded as standard or as optional on late and new models provides the basis for the future market for ADAS parts and calibration services. The chart below projects rapid growth in replacement components: sensors, cameras, ultrasonics, Lidar, Radar and V2X components. The market should reach $1 billion by 2030.

Historical and estimated failure rates, announced ADAS functionality on new models and average costs of ADAS components were used to calculate the addressable replacement parts market size. This is encouraging to suppliers, and when combined with calibration service fees should be an incentive to repair facilities to evaluate adding ADAS capabilities.

Thought #2: Much of the collision and most of the mechanical ADAS calibration service work are outsourced or directed to OE dealers.

  • Only 30% of collision shops have full ADAS calibration capabilities.
  • $177 million in calibration work was outsourced in 2021.
  • 90% of ADAS calibration work is outsourced by mechanical shops.
  • 75% of ADAS calibration work is outsourced by collision shops.

These data points represent a major problem. Not only is the independent aftermarket losing revenue on the ADAS jobs themselves, outsourcing calibrations creates opportunities for losing customers to other shops that are performing the outsourced work.

It is understandable that shop owners find it difficult to invest significant dollars in calibration capabilities when they are not currently seeing large volumes of vehicles requiring calibration.

Thought #3: Consumer acceptance of new vehicle safety systems is tenuous.

Vehicle owners spend substantial money on new vehicles with standard and optional safety systems. However, many choose to deactivate ADAS systems or decline to have needed calibration services performed. Reasons include cost, lack of confidence the systems work, drivers’ perceptions that they are not needed, being distracted from warning indicators and inconvenience. This is a major problem. Safety systems will not operate properly if not calibrated properly or if they are deactivated. This could lead to unnecessary accidents.

Thought #4: The business case for adding calibration capabilities must be made.

The researchers for the AASA study on ADAS interviewed hundreds of shop owners. Verbatims and anecdotal comments varied, but many of the comments were similar to the ones listed below:

Justifying the investment in dedicated space, training and equipment is not a simple task, but the industry must take the initiative to support the independent shops in this endeavor. The items listed below are some of the various aspects of servicing and calibrating ADAS, which must be considered before investing in the business.

  • Required Dedicated Space
  • Regional VIO
  • Regional VIO with ADAS Functionality
  • Investment Required
  • Regional Calibration Capacity
  • Potential Loss of Business over Time without Calibration Service
  • Potential ROI

Thought #5: There are lots of opportunities to grow and expand one’s ADAS knowledge base at AAPEX.

It can be daunting for shop owners and technicians to gather accurate and useful information to set themselves up for a successful ADAS growth/expansion plan. The 2022 AAPEX event will make this task much simpler. 

AAPEX will provide opportunities to explore new technologies, new ways to calibrate systems and new providers of ADAS components. Much of this will be located in the Repair Shop HQ and in Joe’s Garage. All shop owners, service advisors and professional technicians should visit Joe’s Garage to experience the full-size lifts, running vehicles, ADAS calibration demonstrations, tool suppliers, diagnostic technologies, shop management systems and much more.

AAPEX also will provide education sessions that cover the technical side of ADAS, shop business planning, the future of vehicle technology, electrification of the car fleet and overall industry trends that will directly impact repair facilities. It is the most cost-effective “vehicle” for accessing the latest information needed to grow and ADAS calibration service.

Thought #6: The aftermarket’s history indicates it will figure this out.

Hello! There is no new revelation here. The independent aftermarket has consistently innovated throughout the automotive industry’s history to engineer and reverse engineer components, parts, systems, tools and chemicals. These developments and ensuring the industry’s technicians are trained on the latest vehicle technologies/architectures have kept the U.S. motoring public operating safely on our roads.

We could list dozens of technology challenges and automotive industry changes in direction, but we all know the independent aftermarket will adapt. It is an exciting industry, and there is little doubt that we will address the ADAS headwinds, grow business and keep the U.S. fleet of passenger vehicles operating correctly and safely.

May 23, 2022