Chrysler growth, four-cylinder surge highlight Q3 trends, Experian says

The outlook for automotive aftermarket companies appears strong when looking long term. There are more than 250 million vehicles in operation (VIO) today, up 5.8 million from a year ago. Much of the increase can be tied directly to lower scrappage rates and an influx of new vehicle sales, which is at 16 million through the last 12 months. Over time, those new vehicles will fall out of warranty and turn to the aftermarket for parts and services.

However, as it currently stands, the aftermarket “sweet spot,” those vehicles that are now between six and 12 years old, is down 5.6 percent from the previous year, creating short-term challenges for the automotive aftermarket industry.

The constricting sweet spot means that automotive aftermarket companies will need to work a little harder to identify unique trends by attributes such as geography, vehicle type and engine type to help with overall business planning. The companies that take the data and insights and turn it into action will likely maintain market share in the short run and be well positioned for success when the sweet spot starts to grow again in a few years. When the sweet spot begins to grow again, expect to see a different vehicle mix, as imports have outsold domestic vehicles during the last six years.

Among some of the trends from Q3 2014 to watch:

· Chrysler exhibited staggering growth, both nationally and regionally

· Four-cylinder engines continue to grow in popularity, despite the drop in gas prices over the past few months

· Pickup trucks are still the most prevalent vehicle on the road, while alternative-fuel vehicles still have a small slice of the market

Chrysler sales boom

Chrysler had explosive growth year-to-date through Q3 2014 compared to a year ago, with total market share jumping 9.4 percent. Additionally, Chrysler had the highest unit sales gain at 216,000.

Regionally, Toyota still remains the market-share leader in the West and Northeast, while General Motors is the market-share leader in the Midwest and South. Chrysler made a strong showing in each region, growing its share by 25 percent in the Northeast, 19.3 percent in the Midwest, 20.5 percent in the West and 9 percent in the South.

Four cylinders surge

Despite the drop in gas prices over the last several months, four-cylinder vehicles continued to pick up market share through the third quarter, as they made up more than 55 percent of all new-vehicle sales.

For further evidence of the surge, look back at Q3 2009 when four-cylinder engines accounted for 29.9 percent of all vehicles on the road. This jumped to 35 percent in Q3 2014.

The big loser in the engine share was the V6, which dropped from 41.4 percent in Q3 2009 to 39.2 percent in Q3 2014. What is the lesson here? While there is a core of driving enthusiasts who want or need raw power, more and more consumers are leaning toward fuel-efficiency as a major contributor to the decision-making process.

Pickup trucks rule the road

In Q3 2014, pickup trucks had the highest share of VIO with 15 percent. Standard midrange cars had the second highest share of VIO at 11.6 percent, followed by small economy cars at 9.2 percent. At the bottom of the spectrum were alt-powered hybrid cars at just 1.2 percent. However, despite pickup trucks making up the majority of vehicles on the road, entry-level crossover utility vehicles still remain the top registered new vehicle in the quarter.

Beware conventional wisdom

As gas prices dropped, it would be easy to assume that consumers might look once again to larger, more powerful engines. The market, however, is always more nuanced than the latest media report or the gut feel of even the most seasoned executive. Knowing how to plan and drive profits efficiently takes one important tool: unbiased industry data, analytics and insight. As the four-cylinder example shows, common sense doesn’t always make sense. It pays to take a deep dive into what’s really going on. That way the data, analytics and insights can be turned into real actions that make sense.

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