Laissez Les Bon Temps Roulez! Let the good times roll, the Cajun French cheer heard in New Orleans during Mardi Gras, also might be heard in the global automotive aftermarket when describing business in 2013 – but will the good times continue rolling into 2014?
The most recent quarterly “How’s Business” global aftermarket business survey by the AASA Overseas Automotive Council (OAC) polled its regional directors and board of governors about their experiences in Q3 2013, business comparisons with 2012, and members’ expectations for 2014.
Survey responses generally indicated that business was up through the third quarter of 2013. “Business in our U.S. and international regions in the first seven months of 2013 has been excellent,” was a typical response from the OAC board of international aftermarket business executives.
Latin America was cited as a growth market, “Our Latin America Region is right on track with projections,” a respondent said. While noting that Venezuelan business has declined, a survey participant added, “Other (Latin American) regions have picked up … Business in Mexico is going strong!” Another stated, “Business is steady in Mexico, the Middle East and South America.”
Although 2013 isn’t over, it has been better for business compared to 2012, according to OAC’s survey. “We are ahead of last year’s sales at this point. Some has come from price increases and some from pure business gains,” one member said. Another stated, “We’ve seen significant increases in sales in all our U.S. and international regions.”
But year-end 2013 projections are less rosy. One response to the OAC survey said, “We are starting to see some slowing and expect sales for the remainder of year to be only marginally higher.” Another noted simply, “We expect slowdown in Q4 2013.”
The 2014 outlook is less sure, but projections by OAC survey respondents show cautious optimism. Markets in Colombia and Australia were mentioned by survey participants as ones to watch in this regard.
Colombian markets fared poorly in 2013, as an OAC survey participant explained, “(Colombia’s) negative balance in auto parts is due mainly to a fall in domestic demand carrying over from 2012. The sector's performance has been deteriorating since May.” However, the Colombian government is reactivating its economy through the free trade programs with the U.S. and the European Union, and is contemplating additional programs with other countries continuing through the next two years.
Australian markets are struggling with the country’s unique economic issues. Although the country has low national debt and low unemployment, its manufacturing is losing ground due to high, uncompetitive costs. An OAC survey respondent noted, “This is forcing the government to restructure, with greater emphasis on service industries and tourism.” Australia also is coping with the rapid decline of its Dollar, which increased the cost of imported parts approximately 18 percent.
The country’s aftermarket experienced unprecedented consolidation in 2013. Four companies now control about 44 percent of auto parts jobbers in Australia: Genuine Parts Co. U.S.A., 100 percent owner of Exego; Metcash, owner of Automotive Brands and Australian Truck & Auto Parts; Quadrant, owner of Bursons; and AHG with its Covparts distribution. “This consolidation is accelerating the trend towards a two-step distribution structure, particularly for imported parts. This, in turn, is leading to the introduction of “House Brands,” an OAC survey participant noted.
What does all of this mean for the global automotive aftermarket? These comments by an OAC international member sum it up best: “There is reason for confidence that, just as in the past, the automotive aftermarket will adapt to new economic environments and continue to make its contribution to the (global) economy.”
The quarterly OAC “How’s Business” reports are available to council members only. For more information about the OAC and its programs, visit www.oac-intl.org.
Dan Pike is the vice president of membership and member services at the Automotive Aftermarket Suppliers Association (AASA) and group executive of AASA’s international aftermarket council, the Overseas Automotive Council (OAC). OAC promotes the sale in foreign markets of automotive and heavy-duty products manufactured in North America. Those products include components, accessories, chemicals, hand and power tools, service maintenance and repair equipment, and paint and body supplies for both cars and trucks. OAC has more than 350 members in more than 40 countries. More information is available through its Web site, www.oac-intl.org.
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