Consumers driving less? Research isn’t conclusive and aftermarket prospects remain strong
Americans may be driving less, as noted by a recent report in today’s PTEN newsletter, but that doesn’t mean the demand for aftermarket services won’t continue its upward trend. The U.S. Public Interest Research Group (PIRG) released a report yesterday that has garnered a lot of attention in the automotive industry since it highlights several trends contributing to a decline in driving. (Read the report.) The most important trend being that the millennial generation drives less than older consumers.
The purpose of this PIRG report is to encourage the government to stop spending aggressively on new construction while the existing infrastructure crumbles. PIRG, an organization that claims to support the interest of the consumer, raises an excellent point in urging the government to change its course of action. The report notes the decline in driving is a trend that has existed for years (even preceding the recession) while the nation’s roads and bridges deteriorate.
Anyone living in an area that has roads older than 10 years knows that PIRG is correct in its assessment of the nation’s infrastructure. And anyone who drives a motor vehicle knows vehicles take more and more abuse every day because of the sad state of the infrastructure.
The nation’s automakers are understandably concerned about changing demographics and other factors that threaten new car sales. But the automotive aftermarket has a positive outlook.
In November 2012, the Automotive Aftermarket Suppliers Association (AASA) released a white paper that specifically examined the role of miles driven in aftermarket spending. The white paper noted that while miles driven historically mirrors aftermarket spending, the trend has not held for the recent five-year period. While miles driven remained stagnant during this period, aftermarket spending continued to increase.
The AASA white paper noted that the aftermarket industry has been able to find new sources of growth, such as aging vehicles and more complex vehicle technology, which drives spending.
The AASA white paper further notes that the decline in miles driven is not expected to continue. Citing a study from the U.S. Energy Information Administration (EIA), the white paper deviates from the new PIRG forecast. The EIA projects that from 2013 through 2035, miles driven will increase at a compound annual growth rate of 1.2 percent.
The AASA white paper notes the future growth in miles driven will be lower than the growth that occurred from 1995 to 2007. It cites many of the same factors contributing to the slower rate that PIRG report cites: an aging population, high unemployment, higher ownership costs, higher fuel costs, increasing urbanization, less interest in cars among younger drivers and more telecommuting.
“However, this is still substantial future growth for miles driven, which means a positive growth driver for the aftermarket,” the white paper notes.
New vehicle registrations, both new and used vehicles, have been on a steady growth curve since 2009 and it is expected to continue at least through 2015, according to Polk research presented during the recent Equipment Tool Institute’s ToolTech conference.
Aftermarket service providers can feel confident in both the short-term and long-term consumer demand.
