5 Trends (& Opportunities) for Automotive Aftermarket Parts Makers

I'm always looking for ways to help more manufacturers grow their businesses, and I’ve read a few interesting articles on current trends in the Automotive Aftermarket Industry that made me stop and think about their marketplace opportunities. According to Hedges & Company — a highly regarded market research company serving the automotive aftermarket and motorsports industries — new data on consumers’ auto parts buying behavior shows some big market changes.

Trends create opportunities and challenges for aftermarket manufacturers

1. Expanding vehicle population.

• Estimated to grow in the United States alone by 5% to 261 Million light duty vehicles by 2018.

2. Increase in older vehicles on the road.

• People are keeping vehicles longer and longer (32 Million U.S. cars are 12+ years old today).

3. Growing complexity of parts.

• More intricate parts, including those for Hybrid/Electrical cars, are attractive to both ends of supply chain. They are more expensive and usually require automotive repair specialists to correctly install them, i.e., fewer do-it-yourself mechanics (DIY).

4. More miles driven.

• More efficient cars and lower fuel prices result in more miles driven over the life of a vehicle. This increased usage leads to more wear and tear and demand for aftermarket products.

5. Worldwide opportunities.

• Globally vehicle population is expected to grow 50% in a decade — from 1 Billion cars in 2010 to 1.5 Billion by 2020. In addition, trends in OEM (original equipment manufacturer) production will create new markets to sell similar, if not the same, components around the world, particularly in Mexico.

Hedges research also finds that the internet has not only opened the door for aftermarket parts and accessories manufacturers to sell directly, that is exactly what buyers increasingly want, i.e., going to manufacturer and brand websites as part of their parts shopping process.

The manufacturer of aftermarket parts and accessories faces challenges: modernizing to adapt to the next generation (digital/mobile), the speed of change and demand, and the growing complexity of parts and parts configurations. The opportunities are to integrate sales channels (traditional/online), to adopt new technologies and gain better insight into customers, and to improve supply chain efficiencies for quick and accurate order fulfillment.

At $6 Billion annually just a year ago, online sales are expected to reach $16.6 Billion by the end of this decade.

One final observation — less than one half of aftermarket manufacturers can process online orders from service center chains or independent shops and fewer than 1% sell direct. That’s a big mismatch between manufacturers and industry trends.

I’ve also thought that these trends may present an even greater opportunity for professional  enterprise resource planning (ERP) and technology experts who sell, implement and customize software.

Sources: Hedges & Company (https://hedgescompany.com), Albi Dhimitri, U.S. Automotive Aftermarket Industry Report.