Decline of domestics reshaping the aftermarket

Once a dominant force on the road, the U.S. automotive landscape is witnessing a steep decline of domestic nameplates, shifting the landscape.

According to Lang Marketing, the population of domestic nameplates, which peaked at 168 million in 2005, dropped by more than 18 million in the following decade. This downward trend is expected to continue, with an estimated reduction of 15 million more domestic nameplates by 2025.

In 2005, domestic nameplates made up about two-thirds of all light vehicles in the U.S. This figure fell to just over 59 per cent by 2015 and further to 54 per cent in 2019. Lang Marketing projected that domestic nameplates will represent less than 48 per cent of vehicles in operation (VIO) by 2025.

Two main factors are driving this decline. First, the domestic light vehicle population is shrinking due to high annual scrappage rates, with domestic nameplates accounting for over two-thirds of all light vehicles scrapped every year. Secondly, sales of new domestic nameplates have slumped, with volumes averaging less than 7.7 million from 2015 to 2019, despite a robust overall market.

The shift is further exacerbated by the Big Three automakers’ decision to almost discontinue passenger car production, focusing instead on light trucks. While domestic light trucks continue to hold a significant market share, the drop in car sales and increasing foreign nameplate volumes are contributing to the domestic nameplate’s overall market decline.

“Lang Marketing forecasts no letup in the downward spiral of domestic nameplates in operation,” the group said.

This change has substantial implications for the automotive aftermarket. Lang Marketing anticipates that foreign nameplates will drive all growth in the car and light truck aftermarket between 2015 and 2025, with domestic nameplates’ share in aftermarket products falling by nearly one-quarter.

The distribution landscape is also set to evolve. In the do-it-for-me (DIFM) market and service stations and garages market, which predominantly cater to domestic nameplates, will likely see a downturn in product volume. Similarly, in the do-it-yourself (DIY) market and jobbers markets, those heavily reliant on domestic nameplates are expected to experience a significant sales decline.

Among the five major distribution channels, the traditional channel, with a substantial share of its volume from domestic nameplates, will face the brunt of this shift. Major product brands, particularly domestic and private label brands, will need to adapt to encourage foreign nameplate use of their products to maintain their market share.