A rush to buy larger vehicles a few years ago is going to pay greater dividends to the automotive aftermarket, according to an industry expert.
Furthermore, with consumers buying fewer new vehicles, the young end of the average vehicle age spectrum will shrink while the other end grows.
All of that means plenty of dollars for the automotive aftermarket.
“The ‘new to five’ is going to shrink somewhat,” explained Todd Campau, global aftermarket solutions associate director with IHS Markit. “We believe that just this shift in age is already going to lead to as much as three to four billion new dollars coming in just as the fleet moves through the age spectrum.”
Todd Campau,of IHS Markit speaks at AAPEX 2021 in his session “5 Trends in 5 Minutes”
Remember the consumer movement to buy bigger cars and, in particular, crossover utility vehicles (CUVs) almost a decade ago? Those vehicles are now entering the aftermarket sweet spot. That means they’re going to start entering repair bays on a more frequent basis, Campau noted.
He wondered if CUVs will behave like typical light trucks, where they last longer, generate more miles and maintain a higher residual value. If so, “those vehicles are going to be with us for a long time.”
Don’t forget, CUVs have a lot more content than smaller passenger cars, Campau pointed out.
“There’s a lot of all wheel drive CUVs; there’s a lot more things that can break for the aftermarket to repair,” he said. “So this will be interesting to watch and see: Will it stay there? Will it behave like a car or will behave more like its big brothers up there at the top; the pickup trucks and things like that?”
Talk of average vehicle age raised some questions for Campau: Just how high could average age go? Will it always go up? At what point will it come back down?
“Pickup trucks average almost 14 years of age in [the U.S.],” he said. “So I think there is room for continued average age growth. And I think it is good because our average age is growing people are seeing value in their vehicles for a longer period of time. Once that vehicle passes, three or four years, all those repairs come to us. So I think it’s really good news for the aftermarket.”