Will the good times continue for aftermarket shops?

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Most automotive aftermarket service and repair shops are continuing to see a solid boost in business, according to a new report. But DesRosiers Automotive Consultants wonder if issues related to the supply chain will act as a wet blanket.

The group noted that the aftermarket was a “pillar of strength” and provided stability amid turbulent times in the automotive industry as a whole. Canadians continued to use their vehicles as kilometres travelled increased to pre-pandemic levels. This resulted in continued maintenance and repair, showing the market to be resilient and remain relatively strong.

The consultancy surveyed members of the Automotive Aftermarket Retailers of Ontario (AARO) to get their feedback on sales performance, sales outlook, supply concerns and more to gather their feelings on the industry’s performance last year and how they feel about the future.

More than half reported sales increases in 2021, with more than three-in-five having a positive future outlook.

Specifically, 34 per cent of respondents reported sales increases of upwards of 10 per cent in 2021 compared to 2020; another 20 per cent saw increases of more than that. On the flip side, 14 per cent reported no change, the same reported losses of upwards of 10 per cent and 19 per cent saw losses above 11 per cent.

Indeed, both extremes were well represented.

“While a majority of service and repair facilities noted sales at or above pre-pandemic levels in 2021, there were still some that faced difficulties,” observed Andrew King, Managing Partner at DAC. “In addition, supply issues impacted the aftermarket in a meaningful way and may have hampered growth even though the larger picture remains positive.”

The future is more positive as 58 per cent of respondents expect sales increases of upwards of 10 per cent, plus another 4 per cent predicted more. Meanwhile, 21 per cent are not expecting a change. Only 17 per cent overall are expecting a decrease in sales next year.

The types of jobs shops performed generally remained unchanged. Oil changes, regular maintenance, tire changes and diagnostic were generally seen having little change in 2021. However, looking at preventive maintenance, respondents were pretty much evenly split as to whether there was an increase, decrease or little change.

AASA president and COO Paul McCarhy speaks at the AASA’s 2022 Global Summit in Coral Gables, Florida

But when it came to getting parts, more than three-quarters (77 per cent) said they experienced issues. Furthermore, virtually all (96 per cent) noted price increases from their jobber. Specifically, 47 per cent of them said parts prices from jobbers increased upwards of 5 per cent and 49 per cent reporting price increases higher than that.

But while DesRosiers wondered if the aftermarket financial performance would suffer from supply chain issues, Paul McCarthy, president of the Automotive Aftermarket Suppliers Association, noted that despite higher costs, people need to get their vehicle repaired at the end of the day.

“Now, compared to most other products, when our price goes up, our volume doesn’t go down that much. When you need your vehicle repaired, you need it repaired,” he said during the recent AASA Global Summit in Coral Gables, Florida. “You need to go to work. You need to get your kids to practice or to school. And that price elasticity is one of the fundamental appeals of our industry.”