U.S. automotive aftermarket industry sales grew 2.2 percent in 2017, according to global information company The NPD Group. Growth was driven by a 3.3 percent increase in average selling price, as unit sales declined by 1.1 percent. Macro trends – including miles driven and e-commerce, extreme weather and aftermarket specific spending shifts – were some of the major factors to alter the landscape of the automotive aftermarket in 2017, with some here to stay for the long-term.
Macro Trends
There was a deceleration of the miles driven growth rate in 2017, a measure that NPD has found to be directly correlated to the aftermarket’s sales performance. With miles driven trending at a healthy clip of 2.6 percent in 2016, the aftermarket grew its sales by nearly 3 percent. In 2017, that rate slowed to 1.2 percent, slowing the aftermarket’s growth along with it.
“Miles driven was a big factor in creating a healthy environment for the aftermarket industry in 2015 and 2016. This slowdown has been a headwind for the industry in 2017. However, I expect the rate to stabilize in 2018, which will be a nice tailwind for the aftermarket and positively impact its outlook for this year,” said Nathan Shipley, executive director and automotive industry analyst, The NPD Group.
The e-commerce effect is another macro trend to impact the industry. While the aftermarket is one of the lowest e-commerce penetrated industries tracked by NPD, there is a steady progression of consumers moving purchases online, especially within the parts and accessories categories. The aftermarket’s online penetration rate has doubled in the past three years, from 7 percent in the fourth quarter of 2014 to 14 percent in 2017, reports the group.
“A slow migration to e-commerce for automotive products will be one of the most talked about topics in our industry in 2018. As the online channel chips away at brick-and-mortar, manufacturers and retailers alike will continue to find new ways to compete in this space, most notably in the buy online/pickup in store offering for consumers. Identifying and executing on new ways to drive foot traffic, which should be treated as a non-renewable resource, will be critical to long-term success,” said Shipley.
Mother Nature
Weather-related categories moved into the top ranks as hurricanes and heavy snow hit the country in 2017. Fluid management, which includes gas cans and funnels – products that are hurricane related – and batteries were the fastest-growing categories of the year, with sales for both up 6 percent. Other top-performing categories impacted by the weather were lighting (+5 percent), wipers (+3 percent), antifreeze (+3 percent) and cargo management (+2 percent).
Aftermarket Trends
There was a significant increase in the overall average selling price in 2017. Average price grew 2 percentage points more verus 2016, and this was influenced by a few different pricing factors. A change in the mix of what sold caused overall price to increase for the tire and wheel category. In motor oil, consumers traded up to higher priced synthetic oil in place of cheaper conventional oil. Price inflation caused an increase in selling prices for transmission fluid, as the same items were priced higher compared to the previous year.
“My expectation is that both miles driven and average selling price will strike their balance in 2018, bringing the aftermarket’s growth to about 2.7 percent for the year,” said Shipley. “While I expect pricing activity in the market to drive topline sales growth, should a strong winter storm hit over much of the country, we will see impressive sales results for a wide range of weather-related categories.”
