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Attention to detail: Finding opportunity in the aftermarket sweet spot

Friday, September 25, 2015 - 07:00
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Former college football coach Lou Holtz once said, “In the successful organization, no detail is too small to escape close attention.” It’s a quote I believe should be considered by many aftermarket executives.

When you think about the business opportunity that exists for aftermarket organizations, it’s fairly finite. The sweet spot for these companies consists of vehicles that are six to 12 years old and have recently come off of warranty. In the grand scheme of the industry, this limits the number of prime target customers these companies can attract.

Due to the natural limitations of the aftermarket industry, it’s important for these organizations to analyze the data and understand as much detail as possible to get a better sense of where their customers are and what inventory they need to stock. By digging into the data, aftermarket companies will better position themselves for success.

Breaking down the sweet spot by region and state

Today there are approximately 89 million vehicles within the aftermarket sweet spot. To offset the limited number of vehicles that fall within their prime target, aftermarket companies need to understand where these vehicles are located so they can better manage their inventory.

At a regional level, the Northeast has the highest concentration of those sweet-spot vehicles on the road at nearly 37.5 percent. It is followed by the South (35.7 percent), the Midwest (35.2 percent) and the West (33.5 percent).

 

Census region

Market share of sweet spot within region

 

Northeast

37.5%

 

South

35.7%

 

Midwest

35.2%

 

West

33.5%

 

Diving a bit deeper, we also found that Maine and Massachusetts are the only states with more than 40 percent of sweet-spot vehicles in operation, at 41 percent and 40.1 percent, respectively.

Interestingly, although the West has the lowest percentage of vehicles that fall within the sweet spot, Hawaii has the fifth-highest share, at 37.9 percent.

On the opposite end of the spectrum, three states have sweet-spot shares below 30 percent. Oregon and Idaho are at 29.7 percent and 29.5 percent, respectively, while Oklahoma comes in at 29.4 percent.

Parts-level breakout at lower geography levels is crucial to product planning

Understanding where certain vehicles are located can only help these organizations so much. It’s critical for aftermarket companies to gain insight into which vehicle parts are most prevalent among certain models. This level of detail can help these companies properly manage their inventory and market to potential customers.

For example, when we consider battery group sizes, the detail is especially important. For 2014 model year vehicles, the battery group size with the highest market share was 94R, with more than 1.9 million light-duty vehicles on the road today. However, when we look at the first model year of the current sweet spot, 2004, group size 94R has fewer than 177,000 vehicles. Compare that with the group size 78, which has more than 2.4 million vehicles in the 2004 model year still on the road.

Currently, the top five battery sizes make up 47.2 percent of total vehicles on the road:

Group size    U.S. share

24F

11.1%

65

10.4%

78

9.9%

35

9.5%

48

6.2%

However, when viewed regionally and only for battery group sizes within the sweet spot, the breakdown of part numbers and volumes varies due to the different vehicle mix within each geography area:

Top five sweet-spot batteries

Group size

Midwest

Group size

Northeast

Group size

South

Group size

West

24F

2.2M

24F

2.5M

24F

5.5M

24F

3.5M

34

2.2M

35

1.5M

65

3.5M

35

1.9M

78

2.0M

65

1.2M

78

2.9M

65

1.6M

65

1.7M

51R

1.1M

35

2.8M

78

1.4M

48

1.4M

34

1.0M

48

2.5M

51R

1.3M

Breaking this down further to metropolitan area or even ZIP Code would yield even different results.

A database of automotive detail

Experian Automotive is redefining the automotive information category by providing a richer breadth of automotive aftermarket data than anything the industry has seen to date. Experian’s North American Vehicle DatabaseSM has more than 9.5 billion records with information on nearly 745 million vehicles in the United States and Canada. That information includes title, registration, mileage readings and key vehicle events to help identify the type of vehicles and where they are still being driven.

Having access to this level of information is crucial for automotive aftermarket companies. There are a number of factors that these organizations need to track, including models, tires, batteries, oil viscosity, etc. By leveraging a rich set of data, aftermarket companies will have enough details to position themselves for success.


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