Pickups, CUVs dominate aftermarket future, Experian says

Oct. 29, 2015
For example, we’ve heard about the promise of electric vehicles (EVs) and hybrids taking over for the past couple of decades. In reality, in Q2 2015, EVs and hybrids accounted for just 1.5 percent market share of vehicles on the road.

About 15 years ago, I attended an automotive industry technology conference. I remember hearing the chief executive officer of a global automotive supplier company ask an interesting, albeit tongue-in-cheek, question.

“Where are all the flying cars?”

After all, it was the 20th century, and those of us who grew up with the late 1960s cartoon The Jetsons couldn’t help but be a little disappointed that flying cars had not yet made their debut. As kids, we saw George Jetson fly to work and hoped – maybe even assumed – that’s how we’d get to work at the turn of the century.

Even now, in the 21st century, there still are no flying cars.

While far-fetched, the flying car is a reminder of just how slowly – almost glacially – changes to the types of vehicles on the road take place. For example, we’ve heard about the promise of electric vehicles (EVs) and hybrids taking over for the past couple of decades. In reality, in Q2 2015, EVs and hybrids accounted for just 1.5 percent market share of vehicles on the road.

What’s leading the pack? Good old-fashioned full-size pickup trucks, with 15 percent share.

This begs a question, however. What keeps full-size pickups at the top of the heap when technological advancements such as EVs and hybrids languish? Perhaps Japanese fashion design icon Tadashi Yanai summed it up best: “More than trends, consumers need functionality. Everything needs an element of fashion, but that’s more like a spice.”

Major shifts in consumer demand for highly fuel-efficient vehicles just haven’t materialized. Consumers seem to opt for functionality over trendy fashion most of the time.

The fastest-growing vehicle segment in Q2 2015 seems to back up this assertion. Consumers are looking for lower fuel costs but still need to take the family to dance lessons, hockey practice or trips to the lake. They also still want something that looks good (that extra spice Yanai talked about).

The necessity of meeting this combination of needs has given rise to the crossover utility vehicle (CUV) segment. In the past year, market share for all types of CUVs was up. Entry-level CUVs went from 5.6 percent to 6.2 percent, midsize CUVs went from 3.3 percent to 3.6 percent, and premium CUVs went from 1.9 percent to 2.1 percent.

Overall, CUVs have gone from 5.6 percent in Q2 2009 to 12 percent in Q2 2015. It is one of the few seismic shifts in an otherwise stable vehicles in operation environment.

Domestic manufacturers still lead, but share is eroding

While more than one in four vehicles on the road today come from General Motors, the company’s current market share (25.2 percent) is down 5.9 million vehicles since Q2 2009. Likewise, Ford Motor Company has a strong hold on the number two spot, with 18.2 percent share of vehicles on the road. However, the company also is losing share, with a loss of 4.4 million vehicles since Q2 2009. Fiat Chrysler Automobiles is currently number four and holding steady with 12.4 percent share and losing only 75,000 vehicles since Q2 2009.

Toyota, Honda and Nissan round out the top six manufacturers and continue to gain ground. Toyota is third in market share at 13 percent, while Honda (8.9 percent) and Nissan (6.1 percent) hold the fifth and sixth positions, respectively.

Aftermarket sweet spot to shrink two more years

Currently, the aftermarket sweet spot – those vehicles between six and 12 years old – consists of 89.2 million vehicles, approximately 200,000 units lower than this time last quarter. We expect that number will continue to drop for two more years as the 2004 and 2005 model years fall out and are replaced by the 2011 and 2012 model years.

As of now, there still are approximately 13.8 million 2004 model year and 14 million 2005 model year vehicles in operation. Unfortunately, there are only 11.9 million 2011 model year and 12.5 million 2012 model year vehicles in operation. During those years, the automotive sales market still was suffering the lingering effects of the recession.

What it all means

In the short term, from a vehicles-on-the-road perspective, full-size pickup trucks will continue to command significant attention, as truck owners often use their vehicles as work tools. Similarly, truck owners have to keep their work tools running, so they likely will come in for repairs, which is a direct benefit to the aftermarket.

Looking long term, the CUV market will start to add more to the aftermarket bottom line each year for the next five years. In fact, five years from now, CUVs and pickups will account for more than one in every four vehicles on the road.

The next two years could be challenging for automotive aftermarket companies, as the sweet spot dictates much of what happens in the marketplace. A smaller sweet spot provides less opportunity, making it imperative for aftermarket retailers to analyze the trends to find the pockets of opportunity. As for hybrids and EVs, they are about as likely as flying cars to add to aftermarket profitability, at least in the foreseeable future.

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