The automotive aftermarket isn’t recession-proof, but it certainly doesn’t feel the effects of tough economic situations in the same way as others.
Whether or not Canada and the U.S. go into a recession is up for debate. A recent report from Scotiabank doesn’t see it happening, though “clearly the risks of a recession have risen.” An Aftermarket iReport from Lang Marketing suggested that recessions generally happen every six to eight years and believes the next one is coming soon as “one is long overdue.”
The health of the aftermarket will move with the economy but not suffer wild swings or major setbacks, explained Paul McCarthy, president and chief executive officer of the Automotive Aftermarket Suppliers Association.
His assessment of the economy is more in line with Scotiabank’s thoughts. He wouldn’t say fears have faded away but “the economy may be more resilient, at least this year, than we expected.”
But even if the scales tipped in a negative direction, he is confident in the industry’s ability to handle itself well.
“The way we like to say it is not that we are necessarily recession proof. But that instead, we outperform almost every other sector in a recession,” he said during an association-hosted quarterly media call.
“We are much less affected by that than almost every other economic sector that’s out there. So when you’re in a recession, we are one of the most appealing sectors to be in, as business people as employees — and we found that with investors as well.”
In tough times, consumers will generally cut back on discretionary items. Some maintenance will typically be ignored or at least deferred during a downturn. But repairs don’t usually fall in that category.
“There are the repair items — things that just need to be fixed to keep your vehicle on the road — [that] tend to be very resilient in any economic downturn,” McCarthy said.