On the surface, the old farmer’s adage “Make hay while the sun shines” might be the perfect analogy for the automotive aftermarket today. Right now, the aftermarket sweet spot, defined as those vehicles between six and 12 years old, totals 101.5 million vehicles in the U.S. market. Next year, when 2008 model year vehicles enter the sweet spot, Experian Automotive projects the number of vehicles in the sweet spot to remain close to the same volume.
Clearly, there are ample opportunities for the automotive aftermarket today and well into next year.
But what happens down the line? Certainly, the drop in overall new vehicle sales in model year 2009 will eventually come back to haunt the automotive aftermarket. The industry was sailing along, selling more than 15 million vehicles per year, year after year. But then the bottom fell out and 2009 sales plummeted to 10.4 million.
Beginning in 2014, those 2009 model year vehicles will begin to cycle into the aftermarket sweet spot. The industry will see an immediate and steep drop in the number of vehicles in the sweet spot through 2015 and will continue to drop, although at a more moderate rate, through 2018. To see a larger version of the chart below, click here.
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It’s really not much different for aftermarket companies. They can utilize technology and information to help them figure out when the sun will shine, so to speak.
Here’s one simple example: Aftermarket companies will need to pay more attention to import vehicles over the next several years than they are today. Why? Because while the overall market for vehicles in the sweet spot will drop, the number of import vehicles within the sweet spot will rise dramatically.
Domestic vehicles currently encompass 58.6 percent of the total U.S. VIO market and have a similar sweet spot market share of 58.1 percent, or 59 million vehicles. But what will happen over the next few years? The sweet spot for domestic vehicles should expect a continuing drop in market share as high-volume model years in the early 2000s drop off and later 2000s and 2010s model years are added. To see a larger version of the chart below, click here.
Now let’s view the import vehicle market potential:
There is quite a different story for the import vehicles in the U.S. market. At a current sweet spot of 42.5 million vehicles, the import sweet spot is anticipated to increase every year, except in calendar year 2015, for the next five years as lower volumes of import vehicles drop off from the early 2000s and add the higher-volume vehicles in the later 2000s and early 2010s. In just the next year, the import sweet spot is due to increase by nearly 1 million vehicles (2.4 percent) to 43.5 million. To see a larger version of the chart below, click here.
Obviously, aftermarket companies that adjust their inventories to include more import parts will be ahead of the curve. However, this is just one simple example of how data can help in the planning process. There also will be regional and segment differences, shifts in consumer buying patterns and fluctuations in vehicle share from one manufacturer to another. Using the right tools and information to understand these market trends will help aftermarket auto companies to better understand where those “sunny” days will be between 2014 and 2018.
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