LAS VEGAS — Five trends — vehicles sold, rising age and increased options, enhanced technology and growing competition — are driving future service repair opportunities in North America
Mark Seng, Global Aftermarket Practice Leader, IHS Automotive presented “Automotive aftermarket trends: What will drive future repair opportunities in North America?” during the NAPA Expo 2015 on May 6 in Las Vegas.
The auto industry is back
New light vehicle sales are up, with five straight years of growth, three of those years with double-digit growth, Seng says. In 2014, 16.5 million vehicles were sold, marking the first time the industry has broken 16 million units since 2007. The industry is on track to break 17 million units by 2017, if not sooner.
“The automotive industry has really led the US out of the recession and into recovery,” he says.
“These are all vehicles that will be repair opportunities for us going forward.”
Vehicle mix continues to evolve
The economic recovery is helping fuel an increase in vehicle purchases, along with a dramatic increase in the rate of new model introductions and redesigns.
“Consumer tastes evolve and change, and we are seeing this reflected in the choices available,” Seng says.
Four vehicle categories — compact CUV, traditional midsize, traditional compact and full-size pickup — represent more than 58 percent of new registrations in 2014.
There is a shift to smaller vehicles globally, and by 2020, the three smallest vehicle segments — A, B and C — will represent 70 percent of all production globally, Seng says. The vehicles will be smaller, but also more powerful with continued evolution of 4-cylinder engines, which are gaining popularity.
“People are also holding on to vehicles longer. We have seen a huge increase in the average length of ownership,” Seng says.
Average age of vehicles continues to rise
The average age of light vehicles in 2015 is 11.5 years, compared to 9.6 years in 2002.
But the rapid acceleration of average light vehicle age in the U.S. is slowing down. By 2019, vehicles 12 years and older will grow 15 percent, but vehicles 6-11 years old will decline by 21 percent.
OEM dealers are seeing aftermarket potential
OEMs are seeing the power of the aftermarket, driving them to compete harder than ever before.
“We are no longer competing with just the service and repair departments, but we will now be competing with those selling the cars as well,” Seng says.
OEMs are focusing on building service loyalty with drivers of vehicles that are 3-7 years old that are out of warranty. If OEMs can solidify relationships with these drivers, the chances of that consumer purchasing another vehicle with the same make is much higher.
They are also working harder to get customers to come to their service departments for more routine work, like oil changes. “This is the most common service opportunity,” Seng says.
Vehicle complexity is increasing
As vehicle technology continues to evolve, it offers more challenges, but also more opportunities.
Fuel efficiency continues to increase, but hybrid vehicle models are very common only in select markets, mostly along with West Coast. So internal combustion engines continue to be the focus of OEMs, particularly with stop-start and direct injection technology.
Add to this infotainment, car-to-car communication and many others, and the complexity of vehicles continues to rise.
“As the vehicles become more and more complex, it causes the consumer to rely more on the automotive aftermarket to repair their vehicles,” Seng says. “The challenge lies in convincing the consumer that the independent aftermarket can repair these vehicles just as efficiently and even more cost effectively than the OEM dealer can.”