The post-COVID hangover is real for the aftermarket industry but there’s still growth to be had, according to an industry leader.
Speaking at the recent MEMA Aftermarket Suppliers Global Summit in Miami, Ben Brucato, vice president of membership and engagement with the group, highlighted the industry’s shift from the double-digit sales growth seen during the pandemic to a more modest growth.
“We were seeing double-digit sales growth. We were seeing an incredibly good market, and now we’re seeing three, four per cent growth, maybe 5 per cent,” he said at the event at the University of Miami. “Companies are saying, ‘Oh, man, things are really slowing down.’“
However, Brucato explained that while the market might be slowing down post-COVID, the aftermarket in North America has always been stable, with a consistent two to four per cent growth pre-COVID. This stability has attracted significant M&A activity and private equity interest.
“The aftermarket in North America, it’s always been a pretty stable … which is why there’s so much M&A activity and private equity is entering and continues to enter,” he said.
During the pandemic, many consumers opted to repair their vehicles instead of replacing them due to high prices and limited supply. This led to a surge in DIY vehicle repairs as people had more time at home and chose road trips over flights, increasing the demand for maintenance and repairs.
Brucato emphasized that despite the slowdown, the aftermarket is returning to its normal growth rate.
“Yes, things are slowing down for a lot of our businesses, but there’s still growth to be had, and it’s really going back to, I think, a normal rate as we’ve seen before in the aftermarket,” he said.
He also noted that automotive products have remained a priority for consumers despite rising interest rates and inflation. He noted data from research firm Circana, which asked consumers in what categories they would cut from in times of economic hardship. Restaurants and apparel were among the top choices while automotive parts and service was towards the bottom.
“Consumers are cutting back on spending, and we’ve seen that over the last year and a half or so,” Brucato explained. “The great thing is, you can see automotive products is pretty low on that list, which is great for the aftermarket.”
Image credit: Depositphotos.com
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