By just about every measure, the auto industry has climbed back to health in recent years. After hitting below 10 million units sold in 2009, sales rose to reach 16.3 million in 2014. Looking long-term, that bodes well for the automotive aftermarket. More vehicles today equal more aftermarket work in the future.
But, aftermarket executives might sound a bit like delegates at a sitting president’s electoral convention chanting “Four more years. Four more years.”
Why four more years? Because that’s about how long it will take for the aftermarket sweet spot to get back into growth mode. The aftermarket sweet spot – the six- to 12-year-old vehicles that currently cover model years 2003 to 2009 – now stands at 92.2 million vehicles. Model years 2003 to 2005 will drop out of the aftermarket sweet spot in the next three years. But, they will be replaced by model years 2010 to 2012, which combined had fewer new vehicle sales than the 2003 to 2005 models. That means the sweet spot will contract for another three years and will not grow again until model year 2006 falls out and 2013 is added.
Not only is the aftermarket sweet spot shrinking, it’s morphing from a dominant-domestic vehicle mix to an import-controlled vehicle market. Five years ago, domestic vehicles covered nearly two-thirds of the aftermarket sweet spot, but today, domestic share is down to a 55/45 percent mix. Five years from now, import vehicles will take over with an anticipated market share of 55 percent of all vehicles in the aftermarket sweet spot.
An altering sweet spot creates a challenge for the industry, but certainly doesn’t mean disaster is looming. It will be important for aftermarket professionals to use data and analytics for the good of their business. The insights that these businesses will gain, enable them to take action and better prepare for the future. Here are some of the trends driving the industry today:
Pickup trucks still rule
Pickup trucks are to the auto industry what blue jeans are to apparel. No matter what trends come and go, blue jeans are a comfortable and functional staple of just about any wardrobe. Pickup truck functionality, year in and year out, is a staple of the auto world.
Currently, 15 percent of all vehicles in operation are pickup trucks. The two most prevalent vehicles on the road today are both pickup trucks – there are nearly 9 million Ford F-150s and nearly 8 million Chevrolet Silverado 1500 pickup trucks in operation today. Many pickup trucks are critical to their owners’ livelihood. Therefore, keeping them running smoothly is mandatory.
Four-cylinder engines continue sharp growth within new vehicle sales
One trend that has held steady since the recession started in 2008 is the growth of four-cylinder engines. Overall share for four-cylinder engines first topped six-cylinder engines in the 2008 model year. At that time, share for both was near 40 percent. In 2014, however, four-cylinder share jumped all the way to 54.82 percent, while six-cylinder share fell to 30.39 percent. The V8 engine had approximately 20 percent share in 2008 and dropped to 14.28 percent in 2014.
Ford, GM lose ground while FCA sales boom
Overall, the Detroit 3 share of vehicles on the road dropped from 57.5 percent to 56.3 percent from 2013 to 2014. GM still has the second largest share at 25.6 percent, followed by Ford at 18.3 percent. Both GM (0.15 percentage points) and Ford (1.02 percentage points) lost market share in 2014.
The big winner in 2014 was Fiat Chrysler Automobiles, which saw its share of new vehicle registrations jump by 1.2 percentage points. The company has the fourth highest share of vehicles on the road at 12.4 percent.
Sharpest growth in Northeast, slowest growth in South
Regionally, the Northeast has the highest share of registrations (21.81 million new and used vehicle registrations) and also has the fastest growing share (4.1 percent). Registrations in the Midwest, West and South were up 3.4 percent, 3.2 percent and 2.5 percent, respectively.
Entry-level CUVs were the fastest growing segment in the Northeast and Midwest. Pickup trucks had the fastest growth in the South and small economy cars were the fastest growing segment in the West.
Don’t wait four years
Despite the automotive market running smoothly now, the aftermarket industry may have to wait a few years for the sweet spot to grow. Gaining insight into the current trends in the market will enable aftermarket professionals to find the pockets of opportunity while the inventory of vehicles continues to increase. Understanding the data and using it for the good of their business will also help aftermarket companies wait out the next four years by taking appropriate actions that will keep their business cruising down the highway of success.
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