Between 2020 and 2021, the automotive aftermarket is expected to have grown 11.2 percent, according to IHS Markit. There are many trends impacting this growth, and these were presented on Nov. 3 at a session at AAPEX in Las Vegas, Nevada.
1. Supply chain challenges
The chip shortage, potential magnesium shortage, and ships being stuck in the port of Los Angeles are just some of the supply chain issues that have resulted in a shortage of new vehicle availability. IHS Markit is predicting the chip shortage will continue through 2023-24. This will drive up the average vehicle age.
“For the aftermarket, this is not bad news because people are having to keep their vehicles on the road a little bit longer, they have to maintain them a little longer and they are realizing they can do that, which is all positive for the aftermarket,” said Todd Campau, associate director of aftermarket solutions at IHS Markit, during his presentation at AAPEX.
2. Used vehicles
Demand for used vehicles is “through the roof,” Campau said, adding that by August of this year, more used vehicles had been sold per date than ever before. Increased residual values are changing the decisions to repair or replace existing vehicles. Consumers may get used to higher mileage vehicles over time, he said. A lot of vehicles that had been parked in garages during COVID are now coming back into the fleet.
“These are vehicles that we already have parts for on the shelf, we already know how to repair, we already have plenty in the supply chain to be able to take care of them,” he said.
3. Shifting vehicle preferences
The make up of fleets is ever changing. The current trend is towards CUVs and many manufacturers are pushing those since that’s what they have available to sell. There has also been a migration from domestic brands to import brands for cars.
“It is important to be aware of those changes because it impacts the vehicles you are going to see in your bays,” Campau said.
4. Aging fleet (sweet spot growth)
For the most part, average age is relatively stable at 11.5 years for cars, but some body styles are changing more rapidly. For example, those vehicles that are classified as light trucks have an average age of around 13 years, and trucks with model years from 2016-18 have increased in the vehicle fleet. Vehicles that are six to 11 years old are expected to grow by 26 percent by 2025 to almost 90 million vehicles. Conversely, vehicles aged one to five is expected to decrease by six percent.
“We believe this shift in age is already going to lead to as much as $3 to $4 billion new dollars coming in, just as the fleet moves through the age spectrum,” Campau said.
The longer vehicles stay on the road, the more repair and maintenance they need, he added.
5. Impact of electric vehicles
Eventually, EVs will transform the fleet and aftermarket repair and maintenance significantly, Campau said. The registration of EVs continues to grow, with 300,000 EVs sold by August of this year. The truck body style is boosting EV registrations, and 50 percent of all EVs sold are light trucks (mostly CUVs).
The time is now to be educated and stay ahead of the EV market, Campau said, even though he noted the large volume of repairs are still far off on the horizon.
“We are just beginning to understand the maintenance needs for EVs,” he said. “As they start living in the fleet a little longer, I think we are going to see more repair opportunities.”
