The aftermarket is seeing a boosted bottom line, according to market research. That’s thanks to a lack of new cars available to be sold, leaving consumers to either hang on to their older vehicles or opt to buy a used one.
In a note for Nasdaq, David Cohne of business forecaster Kiplinger explained that the global chip shortage that has plagued automakers is resulting in more aftermarket sales and sending stock prices of publicly traded aftermarket retail stores soaring.
Since the COVID-19 pandemic started in March of last year, personal electronics demand skyrocketed. The same chips needed for automakers became more in demand, along with semiconductors, where demand has exceeded supply.
Because people are holding on to their older vehicle or buying a used one, they’re driving vehicles that generally require more maintenance.
The Automotive Industries Association of Canada said in its 2020 Outlook Study that, by 2025, 74% of vehicles in operation in Canada will be at least four years old. Furthermore, 33% of them will be at least 12 years old.
And even though auto manufacturing is expected to pick back up, Cohne said there’s still optimism for aftermarket retailers. He noted increased e-commerce capabilities.
“Consumers can now buy auto parts online, which should help drive additional revenue for these suppliers,” he wrote. “Plus, the rising demand for electric vehicles (EVs) and new injection systems, as well as turbochargers, makes the auto industry very attractive.”