NPD research finds aftermarket ‘sweet spot’ grows

‘Generational shift’ of retiring baby boomers and underemployed millennials challenges aftermarket

Tempering this positive trend is the fact that consumers still are in cost cutting mode, he noted. He said 22 percent plan to spend less on vehicles in 2014 while only 11 percent expect to spend more.

A major consideration that weighs favorably for the aftermarket is the fact that consumers are placing greater value on used cars in general. Portalatin said both new car sales and used car sales are expected to grow in 2014. About a quarter of consumers expect to buy a new or used in car in 2014, he said.
Noting that 2013 has seen an increase in new car sales, Portalatin said it is incorrect to infer that this means consumers are less inclined to spend money on older vehicles.

“The vast majority is driving the same care for the next 12 months,” He said.

More importantly, the “sweet spot” – the average age of vehicles that consumers are expected to invest in to maintain in good condition – continues to increase.

While the “sweet spot” represents an opportunity to do-it-yourself retailers as well as aftermarket service companies, Portalatin said the outlook is nonetheless good for both groups.

NPD surveys indicate that the average consumer expects to spend $645 on maintenance and repair in the next year. For cars 10 years old and older, that figure is $751.

“Consumers are spending on these cars,” he said.

Another important factor affecting the automotive aftermarket is the fact that consumers define value in terms other than price. “You have opportunities to create value in ways that other (industries) really don’t,” he said.

Consumers place more value on quality and performance than on price when it comes to cars, he said. “Quality carries a lot more importance than absolute price,” he said.

Portalatin conducted another text poll for his listeners about sales expectations for 2014. He found that most in the audience expect sales to increase between 2 percent and 4 percent, which he characterized as “optimistic but not exuberant.” This closely matched the expectations of  aftermarket companies in general, which according to his survey predict a 2.3 percent increase in dollar sales in 2013.

During the question and answer session, Portalatin noted that the “sweet spot” has increased from the four-to-seven-year range to the seven-to-15-year range.

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