CHICAGO — The aftermarket in a nutshell? Strong, but with some potential hazards ahead.
“The [industry] fundamentals are still very strong, but for the next two to three quarters there will be some bumps along the road,” says Tony Cristello, managing director, BB&T Capital Markets, during his presentation “The Aftermarket on Wall Street” at the 2011 Global Automotive Aftermarket Symposium in Chicago.
Last year the economy greatly improved, showing growth from the recession. Gross domestic product expanded at a modest clip, but it was an even better year for aftermarket growth. The total aftermarket was up about 44 percent on an equity performance basis, compared to a 13 percent improvement for the overall economy on the S&P Index, Cristello says.
The global automotive aftermarket is also growing. Over time, consumers will continue to spend money and boost aftermarket sales and therefore company value, but those in the industry have to be patient. And there are other challenges to consider.
US new vehicle sales are still depressed — in levels last seen in the early 90s — with fewer new vehicles for dealers. Though bad for dealers, this is good news for the aftermarket.
The US vehicle PARC continues to age, and we are seeing a contraction in the US franchised dealer base. For each dealer that closes its doors, more money is being filtered to the independent aftermarket.