The increased selling prices of automotive aftermarket products are unlikely to be sustainable as consumers of all income levels shy away from auto care, according to a new report.
A forecast from The NPD Group — which regularly presents data and forecasts for the industry at AAPEX — found that key aftermarket products like spark plugs, tires, wipers, motor oil and paint have seen a 30 per cent increase in prices.
Lower-income consumers are feeling the pinch of this increase and higher-income earners are focusing less on auto care, it reported. As a result, industry revenue will soften going into 2023.
“The automotive aftermarket is in a tug of war between the headwinds and tailwinds swirling in the consumer’s economic existence,” said Nathan Shipley, automotive industry analyst for NPD. “Caught between mobility needs and elevated prices, consumers have moved from a mindset of getting what they need when they need it, to one of prioritized spending and making do.”
Lower-income households most prefer the DIY route. But NPD reported they’re deferring maintenance to stretch their dollars as they feel the burden of higher grocery, gas and other costs.
NPD noted that households earning more than $100,000 were the biggest drivers of aftermarket growth for a few years. But these consumers are now taking their discretionary dollars elsewhere — such as travelling and other activities they couldn’t take advantage of during the pandemic.
The industry has benefitted from a number of factors, such as an aging vehicle population, and reduced new and used vehicle inventories. Public and air travel are still below pre-pandemic levels. But miles driven and gasoline demands still haven’t returned to typical numbers.
NPD noted a recent survey of its own showed that more than three-quarters of consumers plan to cut back on their spending due to inflation.
“The consumer behaviour during the pandemic shifted to favour aftermarket industry sales. However, while the fundamentals remain strong, automotive aftermarket consumers are now feeling more pain from higher prices and other macro-economic factors,” Shipley said. “Now is the time to reinforce the industry’s relationship with lower income buyers, by offering more cost-effective options while also maximizing the spending ability of higher income shoppers.”