Auto Service World
Feature   November 16, 2012   by CARS Magazine

Future looks bright for aftermarket, new study says

New Outlook Study, released by AIA Canada, reports positive indicators for automotive repair and service industry.

A just-released report on the Canadian automotive aftermarket suggests repair shops have a lot to be optimistic about these days.

Employment, consumer spending, miles driven, and the average age of vehicles on the road are all up, while the size of do-it-yourself (DIY) segment of the market is down, according to the Automotive Industries Association of Canada’s 2012 Outlook Study.

The 81-page report, prepared biennially by DesRosiers Automotive Consultants Inc., contains comprehensive data on a number of key indicators, all of which portend good health for the industry in the years to come.

Most notably, according to DesRosiers, “demand for the aftermarket is improving as maintenance levels increase.”

The authors of the report point out that over the past decade, as vehicles increased in complexity, the Do-It-For-Me (DIFM) segment of the market has increased and the Do-It-Yourself (DIY) segment has shrunk.

Predictably, new car dealers led the DIFM market among newer vehicles (1-5 years old) while independent repair shops were stronger among the older vehicle segment.

Consumer spending is recovering after being stunted in 2008 by what has become known as The Great Recession.

“More positive growth over the past two years… has placed the Canadian economy on a recovery footing and has translated into a more positive outlook for the aftermarket industry in the coming years,” the report says.

According to the results of DesRosiers’ proprietary Light Vehicle Study (LVS), a study that probes the vehicle maintenance habits of 2,500 Canadians, the incidence of repair for the majority of vehicle categories increased in 2010 as compared to 2008 when economic conditions led consumers to delay vehicle maintenance. However, due to the long-term trend of improving vehicle reliability, the incidence of repair in 2010 was still lower than the rates recorded in 2004 and 2006.

“Improved vehicle reliability, the ratio of do-it-yourself versus do-it-for-me repairs, and the growing number of imported vehicles in the Canadian market will have profound impacts on the industry moving forward,” said AIA president Marc Brazeau. “Though recovering from an economic slump always takes time, being aware of the factors that influence growth potential, like those outlined in this study, can help members of the aftermarket stay on the right track.”

Other highlights from the study include:

* The aftermarket is now estimated to be worth $19.4 billion and employs 420,000 Canadians representing 50% of all employment in the automotive industry.

* 54% of all vehicles registered in Canada are now over the age of 8 years, with the average age of a vehicle on Canadian roads now standing at 8.54 years.

* There were 22.2 million vehicles registered in 2011, with average annual kilometers driven standing at 21,995 kilometers per vehicle.

* Used vehicle sales represented 65.6% of all vehicles sold in Canada in 2011.

* The average mileage recorded on a retired vehicle is now estimated at 320,000 kilometers.

* If the current growth rates continue, the overall size of the aftermarket is expected to increase by 3.5% annually from $19.4 billion in 2011 to $22.3 billion in 2015.

“While the aftermarket industry has enjoyed somewhat of a resurgence over the past two years, it is clear that this dynamic industry will continue to be affected by changes in vehicle technology, regional trends, consumer demographics, and vehicle maintenance habits,” the report concludes. “Moving forward, aftermarket players must be prepared for these changes in order to maintain their competitive advantage and better serve their customers.

The 2012 Outlook Study is available to all AIA members free of charge to give them greater context for the overall state of the aftermarket. Members can access the report by logging onto AIA’s website and visiting the Publications section. The study can also be purchased by non-members in the Publications section of AIA’s website.