September 2017 Editor’s Report
by John Lypen
With all the recent talk of electric cars, autonomous vehicles, ride-sharing, etc., it might be tempting to look at the independent aftermarket with pity. After all, if our society becomes dominated by shared, self-driving electric vehicles, there may be fewer cars and far fewer mechanical parts in those that remain—thus, not much need for traditional repair shops, right?
Before jumping to any such conclusions, we need to recognize that of all the light vehicles currently in operation in the United States, fewer than one in 500 is a plug-in electric and the number of miles driven has reached a record level. For context, there are currently more than 271 million vehicles in operation (VIO) with an internal combustion engine, and they’re not going away anytime soon, and a scant 1% of vehicle miles traveled last year came from ride-sharing.
The 2017 Aftermarket Size & Forecast Report, published by the Automotive Aftermarket Suppliers Association (AASA), assesses the size, growth rate and outlook for the automotive aftermarket and concludes a healthy future lies ahead.
In addition to the strong industry fundamentals shown in the accompanying chart, the report calls attention to two trends that are especially favorable for independent shops:
•After dipping to as low as 68% during the recession years of 2008-2009, the independent aftermarket share has rebounded to just over 70% today and is projected to increase steadily to 71% by 2020. While these percentage variations may not seem big, the dollars behind them are. An interesting fact helping to push this trend is that, while the number of vehicles with a foreign nameplate is rising, dealers selling these brands have experienced a decrease in their DIFM (do-it-for-me) or customer-pay business—a 4.5% decrease between 2012 and 2016.
•New cars sold in the post-recession years are moving into the aftermarket “sweet spot,” defined as vehicles between six and 11 years old. Last year, there were 72 million vehicles in this range, and that number is projected to rise to 79 million by 2020. During the same period, the number of cars aged 12 years and older will grow by 10%.
Also called out in the report is an interesting trend related to prices of replacement parts. Annual industry growth has become increasingly attributable to parts prices rather than the volume of sales. In 2013, for example, exactly half of the 3.2% increase in sales came from volume; however, it’s projected that in both 2019 and 2020, only .2% of the projected 3.2% increase in sales will be related to volume. AASA points out that new technology is driving up the price of parts and offers examples like a $45 fuel pump that now costs $225.
In summary, the AASA report predicts an annual growth rate above 3% through 2020, and in dollars, an increase from a $277 billion market to $316 billion. Not a bad way to end the decade.