This year’s AAPEX is a “sold out” event with 2,300 exhibitors, and when combined with SEMA will boast 166,000 attendees this year, compared to 145,000 in 2014, according to Bill Long, AASA president and chief operating officer. Long conducted an AASA media briefing Tuesday morning in the Sands Expo Center before the AAPEX show opened.
Some key points Long made about the aftermarket industry include:
• The industry is huge representing more than a $250 billion opportunity in 2015, and is projected to grow close to 3 percent over the next three years.
• Conventional wisdom has held that increased new car sales are bad for the aftermarket industry, yet despite the ramp-up of annual vehicle sales from 10 million in 2009 to 16 million in 2014, the aftermarket has continued to grow by more than $50 billion during that same period.
Long said that foundational industry trends also are positive:
• The vehicle parc is growing and is expected to add some 10 million net new vehicles to the U.S. car population in the next three years.
• The average vehicle age continues to grow and is now at 11.5 years.
• Low unemployment and affordable gas prices have led to the return of miles driven to pre-recession levels
Long said that in AASA’s most recent Quarterly Supplier Barometer survey members reported growth in the range of 3 percent to 5 percent.
“Among all this good news however, there are some important hidden dynamics that our industry must make note of and cannot ignore,” he said. “Much of the growth we are seeing (and will see) is being driven by the higher prices of today’s newer technology, be it fuel pump technology or wiper blades.
“Although the foundational pillars are strong, technology and innovation are causing parts to last longer, reducing replacement cycles and failure rates.”
A key battleground for growth in the aftermarket will be the do-it-for-me (DIFM) market. This year, AASA released a thought leadership report, “DIFM Outlook 2025: on DIFM, alerting aftermarket suppliers and channel partners to this major industry shift.
“Today DIFM represents a dramatic 74 percent of all aftermarket product volume. By 2025, DIFM will grow by some $14 billion and represent 78 percent of all aftermarket product volume. The traditional do-it-yourself (DIY) market will lose share – its dollar volume is flat,” Long said.
The DIFM battleground also will see changes. Currently, OE dealers represent 17 percent of aftermarket product volume but will gain 3 points of market share and capture $5 billion of the $14 billion growth, he said
“The market share of non-dealers, or independents, represents the largest sector or 57 percent and will continue to grow – gaining 1 point market share, which represents $9 billion in growth over the next 10 years,” he said. “There will be some shifting within the type of independent service providers with a significant reduction over time in individual outlets. The independent shop’s prime concerns are and will continue to be finding qualified technicians to do the work and gaining access to data for repairs.
Independent shops have some clear advantages over dealer shops.
“First is the trust factor. Consumers still perceive independents more favorably than dealerships,” Long said. “The aging U.S. light vehicle fleet also favors independents, as consumers are very loyal to their local shop. OE dealerships are limited by bay capacity – representing less than 30 percent of all bay capacity.”
Telematics and connectivity
Telematics in existing vehicles have not had a dramatic impact on repair behavior and independents are not threatened yet, Long said.
“But we, along with other industry stakeholders are working together to address industry needs and have created a stated principles documents defining industry needs that support freedom of choice for the motorist. This is not simply who owns the data. This is about creating a level playing field that will enable independent service providers to perform the same maintenance and repair as offered by the car manufacturer and their dealer network, providing motorists the freedom of choice.“
Suppliers and channel partners can be a valuable asset to independent shops as they respond to the transformation in new and connected technology.
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