R.L. Polk & Co. 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"In today's AMN, we reported, "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, an 24% increase.
While this increase in average length of vehicle ownership is not good for automakers and dealerships that sell new vehicles, it's positive news for many segments of the automotive aftermarket. Many segments will benefit from increases in the number of older vehicles on the road, especially those in the 11+ age group. As partial proof, stocks for aftermarket repair chains O'Reilly automotive, Advance Auto Parts, and AutoZone have shown strong results so far in 2009.
Polk recently studied U.S. consumers on vehicle purchase plans. 64% 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% 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 DIYers and, to a lesser extent, independent aftermerket repair facilities could stand to gain additional share of market."
After reading this, here's my first thought - does this mean the retailers will expand their DIY section of automotive? For instance, right now Target carries primarily appearance chemicals, wiper blades, car accessories, and fuzzy-dice-type stuff. I haven't been in a K-Mart, TSC or WalMart for years to see their automotive section - so I'm not sure what they carry.
But if this information is true, isn't now a good time to go back to the retailers and sell them the tools and equipment that DIYers will need to perform more of their own work? In addition to the pickup you should start seeing in your traditional markets, this unique situation in the aftermarket provides an incredible opportunity for some tool or equipment manufacturers to branch out into new markets.
You can read the entire 28-page report by going to www.aftermarketnews.com.
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