When times are tough, people will say they’re going to cut back on certain things. If their actual behaviour plays out to what they intended, it points to good news for the automotive aftermarket.
Comparing the intention of how consumers intend to spend their dollars versus what they actually do is always interesting to Nathan Shipley, executive director of industry analysis in automotive at Circana.
At AAPEX 2023, he pointed out that 77 per cent of consumers said they’re going to cut back on spending as inflation grows and interest rates stay elevated. But when they listed what they’re going to cut back on, auto care wasn’t one of the first options.
“Automotive products typically fall at the bottom of the list,” Shipley said during his Aftermarket Outlook 2024 presentation. That was the same this time around. “When we asked, ‘Where do you plan on cutting back?’ automotive products usually falls to the bottom.”
Especially during times of economic uncertainty or challenges — such as inflation being high along with interest rates — consumers will cut back on their spending. While they may have a plan on where to spend or not spend, things change. But automotive tends to hold stronger than other sectors.
“When you think about intention, in times of tougher economic environment like we’re in right now, a lot of folks decide to maybe hang on to their car longer — ‘I’m not going to go replace this car. In fact, I need to maintain this car so it doesn’t break on me and cost me more money or I have to replace it,’” Shipley described as the thinking of consumers.
That said, while they may not defer maintenance or completely avoid buying the accessory they want, they may look for cost savings.
“So while there may be some trade down that goes on with decisions, typical intent is pretty low for cutting back on spending as it relates to inflation,” Shipley said.