The outlook for automotive aftermarket companies appears strong when looking long term. There are more than 250 million vehicles in operation (VIO) today, up 5.8 million from a year ago. Much of the increase can be tied directly to lower scrappage rates and an influx of new vehicle sales, which is at 16 million through the last 12 months. Over time, those new vehicles will fall out of warranty and turn to the aftermarket for parts and services.
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However, as it currently stands, the aftermarket “sweet spot,” those vehicles that are now between six and 12 years old, is down 5.6 percent from the previous year, creating short-term challenges for the automotive aftermarket industry.
The constricting sweet spot means that automotive aftermarket companies will need to work a little harder to identify unique trends by attributes such as geography, vehicle type and engine type to help with overall business planning. The companies that take the data and insights and turn it into action will likely maintain market share in the short run and be well positioned for success when the sweet spot starts to grow again in a few years. When the sweet spot begins to grow again, expect to see a different vehicle mix, as imports have outsold domestic vehicles during the last six years.
Among some of the trends from Q3 2014 to watch:
· Chrysler exhibited staggering growth, both nationally and regionally
· Four-cylinder engines continue to grow in popularity, despite the drop in gas prices over the past few months
· Pickup trucks are still the most prevalent vehicle on the road, while alternative-fuel vehicles still have a small slice of the market
Chrysler sales boom
Chrysler had explosive growth year-to-date through Q3 2014 compared to a year ago, with total market share jumping 9.4 percent. Additionally, Chrysler had the highest unit sales gain at 216,000.
Regionally, Toyota still remains the market-share leader in the West and Northeast, while General Motors is the market-share leader in the Midwest and South. Chrysler made a strong showing in each region, growing its share by 25 percent in the Northeast, 19.3 percent in the Midwest, 20.5 percent in the West and 9 percent in the South.