The Automotive Aftermarket Suppliers Association (AASA) held a webinar in May to provide an update on projections for the aftermarket as states across the nation began to reopen their economies and lockdown measures were lifted amidst a global recovery from the coronavirus pandemic.
Paul McCarthy, president and chief operating officer of the AASA, opened the webinar by offering thoughts and prayers for those who have fallen ill or have been impacted by the coronavirus. He noted that this point in history is the busiest the association has ever been.
“This crisis is the busiest we have ever been, probably, in our 116-year history,” said McCarthy. “As we connect members to insights and guidance and navigate through this crisis, it really has hit home as families of many member companies in our industry and our members face tremendous challenges in this crisis.”
McCarthy shared some insights on what the association is currently witnessing n the marketplace.
“There are certainly some headwinds,” he said. “There are also some tailwinds, which may not be fully appreciated given what we’ve been going through of late. We’re probably going through what is going to be the worst quarter the aftermarket has seen since World War II.”
McCarthy noted that April was likely the market bottom, but it will take some time for a full recovery, given the depth of the economic downturn that followed and the ongoing impacts of the virus.
“The biggest headwind may be uncertainty,” McCarthy said. “The reality is that no one knows for certain what this summer and fall will hold. It’s very hard for business. It’s even harder for us as individuals but there are also tailwinds – signs of hope – at least from an aftermarket perspective.”
He noted that miles driven – a primary driver for the aftermarket – are beginning to pick up again. “It will pick up further as we continue to reopen our economy,” he said. “Business at both shops and stores seems to be picking up a bit from the trough we experienced, and the economic restart will hopefully bring increased employees, which is a very big driver for the aftermarket.
“Gas prices are at rock bottom and there are over 300 million stir-crazy Americans, there are billions of people around the world, who want to be able to move again and do so safely. And that is something that cars are offering,” he emphasized.
Another positive indicator McCarthy shared was that Wall Street has identified the aftermarket as a valuable investment opportunity in the recovery. “And, it’s worth noting that our industry has been deemed essential throughout this crisis, which really is a testament to our importance to consumers and to the economy. We are the literal wheels that keep our society and economy functioning,” he said.
McCarthy noted that outlook for the aftermarket looks positive and more so than many other industries trying to recover at this time.
“As far as outlook, in the end we are hearing rational caution in our industry and we’re also hearing rational hope that at least, from a business perspective, the rest of the year may look better than what we have recently experienced,” he said. “Compared to other industries, we do have a brighter outlook in the recovery period. Some of these things are future-oriented and I know for many of our members it’s hard to think about the future right now, but it is worth saying what said at our Vision Conference, which is, as an industry we will overcome this and we will come out stronger.”