Today’s edition of The Pulse comes from R.L. Polk & Co., which recently released the results of its market study, titled, “The Changing U.S. Auto Industry – The Impact of Declining New Vehicles Sales on the Aftermarket Business." The study’s author Dave Goebel is a solutions consultant with Polk. Included in the study is data compiled by Polk as well as IMR.
As the economic crisis continues and consumers shy away from purchasing vehicles, drivers will hold onto their vehicles longer. In fact, the average length of ownership of both new and used vehicles has increased from 37.2 months in 2002 to 46.3 months in 2008, a 24 percent increase.
While this increase in average length of vehicle ownership is an adverse trend for automakers and dealerships involved in the sale of new vehicles, it’s positive news for many segments of the aftermarket industry, which will benefit from increases in the number of older vehicles on the road, especially those in the 11+ age group. As proof, stocks for aftermarket repair chains O’Reilly Automotive, Advance Auto Parts and AutoZone have shown strong results so far in 2009.
Reinforcing this point, in a recent Polk study of U.S. consumers, 64 percent of consumers said they were “very or extremely likely” to keep their current vehicle longer than they normally would due to current economic conditions. Additionally, 81 percent of the 713 interviewed vehicle owners in this same study also said they planned to take better care of their vehicle to keep it running longer, which could translate to additional aftermarket revenue.
As the number of older vehicles on the road climbs and consumers focus more on vehicle maintenance, the aftermarket must be ready to meet the increased need for parts and service, which has implications for inventory management planning. Also, as consumers continue to look for ways to cut costs, retailers targeting Do It Yourselfers and, to a lesser extent, independent aftermarket repair facilities could stand to gain additional share of market.
To view the entire report, click here.
