There is no doubt that the economic situation has affected vehicle use and consumers’ DIY behavior. According to Mark Seng, global aftermarket practice leader at R.L. Polk, the changing mix of vehicles on the road and increased competition from OEM dealerships are two of the top trends impacting the aftermarket over the next few years.
In a recent article, Aftermarket Business World covered Seng’s research on the trends currently impacting the automotive aftermarket. In addition to the economic climate, increases in gas prices, fewer miles driven and high unemployment are impacting vehicle owner behavior.
For instance, many vehicle owners are transitioning to DIY automotive repairs and diagnostics in order to save money. This will ultimately affect the aftermarket industry.
With this said, the top five trends important to the aftermarket include:
New light vehicle sales are recovering. The automotive industry, as well as new registration counts, is on the rise. At the same time, the number of vehicles per household has remained steady and the type of vehicles being purchased is shifting. What’s considered the “lower medium” category of cars is growing and will represent almost 40 percent of the market by 2015.
More light vehicles are in the aftermarket sweet spot. With fewer new vehicles on the road and owners keeping their vehicles around longer, the aftermarket will continue to gain more share of the service market. In 2011, dealerships were only serving 28.1 percent of the non-warranty service sector. This is a great sign for the aftermarket, Seng says.
The vehicle mix is changing rapidly. The average age of vehicles on the road is increasing – the average length of ownership has increased more than 20 months in the past 10 years. Secondly, domestic models are aging at a faster rate than imports. And lastly, the hype of hybrid vehicles misrepresents their market share, holding less than one percent.
There’s no end in sight for parts proliferation. OEMs are currently on pace to hit 250 model changes for the 2012/2013 period, as they continue to announce new models. According to MOTOR Information Systems, there are 80,000 unique OEM part numbers a year – in 2010, 24 percent of those were new parts. That is a big increase in SKUs and companies that can maintain that inventory management challenge will ultimately succeed.
OEMs are an awakening giant. OEM dealerships are becoming more aggressive for post-warranty service work. The leaner dealer population has been quite successful over the past few years and is focusing on growing its aftermarket business. Seng attributes OEM success to various factors – prepaid service plans, more aggressive service programs and more electronic engagement with customers – all creating a more resourceful business.
In order to manage this rising demand, many aftermarket providers and dealerships are turning to more advanced diagnostic technology tools. With vehicles becoming more complex with numerous computers and wires, it’s becoming more necessary to have a PC for diagnostics. Rugged mobile computers can be used to check-in customers and create service documentation, and to run parts management software programs. In addition, they can be leveraged for repair diagnostics.
It’s also important that dealers and non-dealer providers have security and surveillance systems in place to protect property and customer vehicles overnight.
How is your shop using technology to meet the rising demands of the auto aftermarket?