The Canadian automotive aftermarket service and repair sector saw business drop by more than a quarter in 2021 in the wake of the COVID-19 pandemic, says a new report.
Aftermarket business took a serious hit this year, falling 28 per cent from $9.2 billion last year down to $6.6 billion this year for vehicles between four and 12 years of age. The J.D. Power 2021 Canada Customer Service Index—Long-Term (CSI-LT) Study attributed this to shifting driving and vehicle ownership habits.
Drivers are putting fewer kilometres on their odometers and there’s also a shortage of service availability in some major markets, J.D. Power said in an announcement about its findings. The result was a 20 per cent drop in total service occasions.
Aftermarket locations captured 54 per cent of those service occasions, compared with 46 per cent for new-vehicle dealers. In turn, the aftermarket increased its share of overall industry revenue in 2021 to 44 percent, up four percentage points from 2020. That represents a swing of more than $200 million in relative revenue share, J.D. Power said, and is a reversal of a multi-year trend of new-vehicle dealerships steadily taking a greater share of revenue.
Despite the higher share, the aftermarket’s total revenues are down. The average spend at non-dealerships went from $241 in 2020 to $226 in 2021. That’s a drop of 6 per cent.
J.D. Power’s study also found that dealers saw more than 3.5 million fewer service visits this year compared to last. The average cost per service at those dealerships also fell to $332 from $375, a drop of 11 per cent.
In total, dealer revenues fell about $1.83 billion while non-dealer service facilities dropped $725 million overall.
“We’re seeing the effect of broader macro-economic forces in the automotive space,” J.D. Ney, automotive practice lead at J.D. Power Canada, said in a statement. “Besides the decline in service visits and revenue, there is a bright spot for the service business. Many vehicle owners opted to make more expensive repairs to their current vehicle rather than to trade it in for a new vehicle or absorb the added cost of a pre-owned vehicle, where we’ve seen prices soar recently.”