Why OEMs Can’t Ignore the Aftermarket Any Longer

For years, original equipment manufacturers (OEMs) have focused primarily on selling new machinery and equipment. But as market dynamics shift and competition intensifies, the aftermarket—the sale of maintenance, spare parts, and value-added services—is emerging as a critical revenue stream. Yet many OEMs still fail to recognize its full potential.

If you’re an OEM struggling to understand why aftermarket services matter, here’s what you need to know.

The OEM Business Model is Changing

Historically, OEMs have relied on new product sales to drive revenue. However, this approach is becoming increasingly unsustainable. Margins on new equipment are shrinking, customers are delaying capital expenditures, and economic fluctuations—such as the COVID-19 crisis—have disrupted traditional sales cycles.

In contrast, aftermarket services offer a more stable and profitable revenue stream. The global average operating margin from aftermarket services is estimated to be 2.5 times higher than that of new equipment sales. In some cases, the entire profit generated by a company comes from aftermarket services, with new equipment acting merely as a way to expand the installed base.

Why Aftermarket Services are a Must

OEMs that invest in aftermarket services benefit in several key ways:

1. Recurring Revenue & Higher Margins
   Manufacturers that offer service contracts secure steady income, often covering over 80% of their installed base. Spare parts and maintenance services also deliver higher profit margins than new equipment.
2. Stronger Customer Relationships
   Aftermarket services provide an opportunity to engage customers beyond the point of sale. By offering proactive maintenance, predictive analytics, and remote support, OEMs can build long-term relationships, ensuring customer loyalty.
3. Competitive Differentiation
   With competition rising and cheaper alternatives available, customers are prioritizing reliability over price. An OEM that offers a seamless service experience—including fast parts delivery, remote diagnostics, and predictive maintenance—can stand out from the competition.
4. Digital Transformation & New Business Models
   Smart, connected equipment allows OEMs to offer new service models such as pay-per-use contracts, outcome-based pricing, and subscription models. For example, industrial printer manufacturer Heidelberg is shifting toward pay-per-use models, ensuring ongoing customer engagement while generating steady revenue.

Overcoming Challenges in the Aftermarket

Despite the benefits, many OEMs struggle to transition to an aftermarket-focused model. Common challenges include:

• Lack of Service-Oriented Culture – Many manufacturers still prioritize product sales over long-term service opportunities.
• Limited Digital Capabilities – Without connected equipment and predictive maintenance tools, OEMs miss out on valuable service opportunities.
• Talent Gaps – Skilled service technicians are in high demand, and companies must invest in training and digital tools to support them.
• Fragmented Service Networks – Ensuring a seamless global service experience requires investment in digital platforms, spare parts logistics, and remote support capabilities.

The Road Ahead: A Strategic Approach

Winning in the aftermarket requires more than just selling spare parts. OEMs must take a strategic, multi-pronged approach:

1. Invest in Digital Technologies – IoT-enabled equipment, AI-driven predictive maintenance, and cloud-based service platforms can transform aftermarket operations.
2. Build a Service-Centric Culture – Shift from a product-based mindset to a solution-oriented approach, prioritizing customer needs over one-time sales.
3. Develop Subscription & Outcome-Based Models – Pay-per-use and service-based contracts create long-term revenue stability while aligning OEMs with customer success.
4. Expand Remote & Predictive Service Capabilities – By reducing downtime through proactive monitoring, OEMs can increase customer satisfaction and reduce operational costs.

Conclusion: Now is the Time to Act

The shift toward aftermarket services isn’t just an opportunity—it’s a necessity. The manufacturers that embrace this change will build stronger customer relationships, secure higher profit margins, and future-proof their business. Those that ignore it risk losing ground to competitors who recognize that selling equipment is just the beginning of the customer journey.