With new vehicle sales struggling on both sides of the border, a recent analysis looked at how this is affecting the automotive aftermarket.
For September, DesRosiers Automotive Consultants reported a 4.5 per cent drop in new sales compared to the same time last year. It’s the lowest number of unit sales in September since 2009, it added.
Lang Marketing highlighted five ways lower sales are helping the aftermarket in its recent report, Low New Vehicle Sales Boost the Aftermarket.
The first is the price of used vehicles. With reduced options for new vehicles, used options were seeing higher values as customers move to the used market to buy a new set of wheels. It’s unique in the sense that reduced sales are driven by supply shortages rather than customer apathy.
“With used vehicles fetching high prices, consumers are more likely to repair their older cars and light trucks to keep them in good operating condition,” Lang explained. “This spells aftermarket product sales growth, especially for ICE vehicles, which comprise virtually all vehicles over five years old.”
With more used vehicles on the road, the average age of vehicles in operation is being pushed higher. And the number of older vehicles on roads is only increasing now.
“This combination of the increasing average age of vehicles and more older vehicles will escalate aftermarket sales since older vehicles require more aftermarket products than newer vehicles,” Lang observed.
As consumers choose to hang on to their vehicles rather than replace them — due to rising costs of even used vehicles — these older vehicles are accumulating more digits on the odometer.
“Older vehicles use more aftermarket products per mile, and rolling their odometers higher will boost aftermarket product use, especially for ICE cars and light trucks,” Lang said.
The aftermarket sweet spot will see a change, the report noted. A reduction in new vehicle sales between 2020 and 2023 will drive down the number of cars and light trucks in the repair-age sweet spot (aged sic to 10 years old) from 2026 through 2030, compared to today’s vehicles.
“However, this does not mean that fewer repair parts will be sold. Instead, older vehicles will account for a larger number of miles driven and the upper age boundary of the sweet spot will be increased by a year or two,” Lang predicted. “Since older vehicles use more aftermarket products per mile than newer cars and light trucks, this will boost the aftermarket.”
It is also expected that sales of electric vehicles will cool off as new vehicle sales see a slowdown, according to Lang. “With EVs stuck as a small share of the total VIO, ICE vehicles will retain their population dominance longer,” the report said. “Aftermarket volume will be bolstered since ICE cars and light trucks use more aftermarket products than EVs.”
The group predicted that new vehicle sales struggles will extend through 2023 and could last longer — meaning the aftermarket could see strong momentum for product growth.