Research Triangle Park, NC — Apr 13, 2009 — The North American automotive aftermarket industry is experiencing a lift in business now as consumers make necessary repairs to keep their cars on the road – but the Automotive Aftermarket Suppliers Association (AASA) warns of declining business down the road due to the current dramatic drop in new car sales.
An aging vehicle population is good for the automotive aftermarket since older cars generally need more repairs, according to Steve Handschuh, president and COO of AASA. “The range of vehicle age classes in which the population has not yet fallen significantly and maintenance costs have grown to favorable levels is known as the ‘aftermarket sweet spot,’” he explained. “The sweet spot changes over time, and there is a unique sweet spot for any specific product line. However, in 2008 the sweet spot contained the vehicles five to 10 years old, and these vehicles accounted for more than 40 percent of aftermarket demand. The total number of vehicles within the sweet spot was slightly more than 84 million in 2008.”
This is good news for the aftermarket in the short term, Handschuh noted. “The primary factor that drives demand for aftermarket parts and services is the accumulation of wear and tear on each vehicle in operation. Maintenance costs continue to increase as the vehicle ages,” he said.
“While this may appear to be good news for the aftermarket, our industry’s long-term health will be impacted by the unprecedented decline in new car sales now,” Handschuh said. “Dismal vehicle sales are setting the stage for stagnant aftermarket demand around the corner,” he added.
“Our research looks at the expected impact current conditions will have on the aftermarket sweet spot over the next decade. By rolling the short term sales outlook into the existing age profile of vehicles in use, a dramatic decline in the number of vehicles in the sweet spot becomes visible,” Handschuh said.
Much of the negative impact to the aftermarket that is described above can be avoided if new vehicle sales quickly return to more normal levels; consequently, a strong new vehicle sector now is necessary for the continued health of the aftermarket in the coming years.
A full examination of the impact of declining new car sales on the aftermarket sweet spot is available in the monthly e-newsletter, “Market Analysis.” The article, “Falling Vehicle Sales May Impact Aftermarket in the Years Ahead,” includes more details as well as charts and graphs which depict the trends. It is available by clicking here.
AASA (www.aftermarketsuppliers.org) exclusively serves suppliers of aftermarket components, tools and equipment, and related products. It is a recognized industry change agent – promoting a collaborative industry environment, providing a forum to address issues and serving as a valued resource for members. AASA is a market segment association of the Motor & Equipment Manufacturers Association (MEMA). “AASA, Leadership in the Global Automotive Aftermarket”