Auto Service World
News   February 23, 2024   by Adam Malik

From the Magazine: Introducing this year’s Executive Outlook

Challenges facing the broader economy point to opportunities in the aftermarket. But leading industry experts highlight the challenges that lie within

Canadian jobbers and their supply partners appear to have an equal amount of hope and skepticism for the year ahead.

On the positive side, many of the factors that kept the aftermarket chugging along last year will continue in 2024.

Driving trends show that people are still driving. Data from the U.S. showed vehicle miles travelled didn’t drop as they were expected to through the first three quarters of 2023. In fact, miles travelled may be up compared to the year before. DesRosiers Automotive Consultants reported gas consumption in the summer of 2023 surpassed what was seen at the same time in 2019.

Supply constraints eased throughout 2023. Though port strikes and wildfires slowed down some goods movement, the situation improved overall. Suppliers were forced to enact better, or different, forecasting actions. Inventories were too high in some areas, forcing a correction. Distributors and jobbers should expect a smoother supply of product going forward.

On the consumer front, new vehicle prices and availability continue to work in the aftermarket’s favour. While new vehicle sales rebounded mightily in 2023 — up to 1.66 million from 1.49 in 2022 — prices have stayed elevated. Part of the problem is the wrong kind of inventory sits in dealerships. It’s the top-line, fully equipped vehicles that are not affordable to most of the buying population.

“That’s the kind of inventory we have right now. It’s not the stuff that is reasonable to most consumers; it’s not the kind of stuff that is affordable to most consumers,” said Guido Vildozo, senior manager of light vehicle sales forecasting for the Americas at S&P Global at Canadian Black Book’s Talk Auto 2023 event near Toronto in the fall.

“So yes, inventories from a larger picture perspective are starting to normalize … but it doesn’t mean that it’s the right product.”

And this leads into talk about the economy. Interest rates are up and staying there for now. Inflation was elevated but has come back down to more manageable levels — but consumers are still feelings its effects.

Times like these can lead to pessimism about certain industries. But not for the automotive aftermarket. Not entirely, anyway.

When times are tough and the price of a new vehicle seems too high — even in normal times — owners will opt to repair their vehicle rather than replace. These are not normal times, pushing greater emphasis on the advantages of consumers visiting the aftermarket to keep their vehicles in good shape. This was the case in 2023 and leaders across the industry expect it to continue in 2024.

But there are real challenges ahead. One can expect pressures of the economy to leak into consumer preferences in the aftermarket. Furthermore, the implementation of electric vehicles remains a question mark in terms of how it will progress. Goals are one thing, but will consumers respond to more affordable options and ones that better fit their lifestyle? Labour and talent issues will continue to pose challenges. Consolidation isn’t expected to slow down.

So we turned to the leaders of this industry to help shed some light on what can be expected going forward. We reached out to 10 of the top aftermarket minds and asked them: What will be different about 2024? What’s the biggest challenge the sector will face and how can it be tackled? What opportunity is out there for jobbers and suppliers to grab?

In alphabetical order over the coming weeks, we’ll present the analysis they provided in the January/February 2024 issue of Jobber News.

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