Even as used vehicles come down from record high prices, they’re not retreating at a quick pace. And that means the aftermarket is likely to see growing business from consumers, according to an industry leader.
Canada Black Book has reported that used vehicle values have declined for four straight months. But they’re not decreasing at the same rate they increased — used vehicles are still up 28 per cent year over year as of July.
So even though prices are coming “back down to Earth,” it’s a slow movement and vehicles are still expensive, said Paul McCarthy, president and chief executive officer of the Automotive Aftermarket Suppliers Association (AASA). That means that when a customer takes their vehicle into a shop for repair and maintenance needs, the price gap between what a shop would charge for a significant repair and the cost of replacing that vehicle with something used is still wide.
“And because these are assets — it’s hard to find good quality substitute goods and it’s expensive to find substitute goods — that people are taking care of their cars,” he said during an AASA quarterly media call.
That’s one of the ongoing positive trends for the aftermarket, McCarthy added. Another one is that people are placing a higher demand on vehicles and the desire to be mobile.
“People are more dependent on our cars, and where we live and how we need cars than we were coming into [the COVID-19 pandemic],” he observed. “So we need cars even more.”
These signs point to strength as the economy signals it is headed into a recession. Historically, this industry has done well when others have faltered in tougher times.
“We think we may even outperform our previous historical pattern in any near-term recession because of these factors,” according to McCarthy. “When your car is worth that much, it’s worth spending a little bit of money to make sure it continues to run, be reliable and have that value.”