Aftermarket/Service Sector Overview
automotive aftermarket industry overview
The overall U.S. automotive aftermarket industry was valued at $257 billion in 2015 and is projected to reach $284 billion by the year 2018. Despite a $3 billion drop in 2009 from $209 billion to $206 billion, the market has experienced steady growth increments of between $7 and $10 billion dollars between the years 2009 and 2015. The market size was expected to increase by $10 billion to $267 billion by the year 2016, by $9 billion to $276 billion in 2017 and by $8 billion reaching $284 billion by the end of this year.
The US automotive aftermarket size by the professional services sector, OEM or factory parts, and DIY was $127.7 billion in 2015 and continued growth is expected.
KEY PLAYERS IN THE AUTOMOTIVE AFTERMARKET INDUSTRY
According to the 2015 Global Insight Report, key players in the automotive aftermarket industry with headquarters in the US include:
Cooper Tire and Rubber out of Finlay, Ohio is the 5th largest tire manufacturer in the United States with $2.92 billion in sales in 2016.
Delphi and ACDelco were also cited as Key Players in the report. O’Reillys Auto Stores with 4,829 locations in 47 states, are distributors for Delphi and ACDelco parts and mentioned in this request. In 2016 O’Reilly’s experienced sales of an estimated $8.6 billion.
TRENDS IN THE AUTOMOTIVE AFTERMARKET INDUSTRY
According to a 2017 IHS Automotive Survey, in the past decade, the average age of the U.S. vehicle fleet has increased 17%, the average age of a typical car in the United States is a record 11.5 years. Owners are keeping their vehicles 60% longer. This equates with a higher rate of maintenance, service, and parts replacement. 75% of owners prefer to use independent auto repair shops as opposed to 25% preferring to utilize the dealership for repairs.
More owners are taking their vehicles to large franchise auto shops housing smaller service shops, such as Jiffy Lube, and more emphasis is being placed on technological developments and R&D, which according to Global Market Insights, are driving the growth of the automotive aftermarket industry.
DEMAND DRIVERS FOR AFTERMARKET PARTS
The growing demand for more complex and specialized parts is being driven by the increased number of hybrid and electrical cars on the road. These parts call for highly skilled parts repair specialists for correct installation. This equates to more expensive repair and a decrease in the DIY market. The combination of gas and electric or electric only power leads to higher fuel efficiency which means more miles are being driven. The end results are lower maintenance intervals and increased wear and tear leading to a higher rate of aftermarket parts replacement.
THE FUTURE OF THE AUTOMOTIVE AFTERMARKET INDUSTRY
The integration of Omnichannel retailing in the growing industry will create a demand shift from the “brick experience” to the “click experience” as more repair facilities are utilizing mobile apps for appointment setting and maintenance reminders. Many stores will begin to create personalized platforms integrating non-repair products like accessories that attract women. In addition, e-commerce venues, such as Ebay and Amazon are utilizing personalized one-click ordering shopping experiences, increasing convenience and decreasing the wait time for parts delivery.
HYBRID AND ELECTRIC VEHICLES
The introduction of hybrid and electric vehicles is suggestive that repair costs for these engines is 35% lower than regular gas engines. As more and more electric vehicles are being introduced, the demand for traditional engine parts will decrease however, the demand for vehicle batteries will increase, potentially creating a challenge for retail parts suppliers such as Autozone, O’Reilly’s, and Advanced Auto Parts.
THE IMPACT OF SHARED MOBILITY
Although ride-sharing can slow vehicle sales, the concept may create new opportunities for the automotive aftermarket industry. A 2017 survey by McKinsey & Company indicates that 67% of U.S. respondents prefer driving their own cars as opposed to using ride-sharing apps, and 63% show little interest in substituting shared-mobility, even at no cost to them. Despite the consideration given to increased urbanization and macroeconomic growth, private vehicle utilization is expected to maintain a CAGR of 1.9-2.4 through the year 2030.
THE IMPACT OF AUTONOMOUS VEHICLES
A future market insight analysis by Deloitte, Inc. reveals the disruptive change created by the introduction of both shared mobility and autonomous or ADAS vehicles will result in significant economic value shifts over time. The expected decrease in cost-per-mile economics from approximately $0.97 for personally owned and driver-driven vehicles to $0.31 for shared autonomous vehicles on the opposite side of the spectrum may lead to shifts in favor of autonomus vehicles in urbanized settings, although all states of autonomous versus driver driven vehicles and private users versus shared mobility applications will continue to coexist. This disruption creates market projections for the automotive aftermarket industry of $73 billion in EV charging stations, $186 billion in aftermarket parts, $118 billion in the connected services sector, $21 billion for diagnostic services, and $2 billion in cybersecurity for vehicles in the future.
To wrap up, the Automotive Aftermarket Industry Market is expected to reach $284 billion this year. People are driving their vehicles longer equating to a higher demand in aftermarket parts, service, maintenance, and repairs. Owners are showing a preference towards larger chain independent service facilities over dealership service departments. Key players in the industry include Cooper Tires, Delphi, and ACDelco distributed by O'Reillys. Autozone and Advanced Auto parts are also major aftermarket retailers with a presence in the US. The introduction of hybrid and electric vehicles along with shared mobility and autonomous vehicle will shift demand from traditional gas engine parts and service to more complex parts and services. $73 billion in revenues is expected in the near future from EV charging stations alone. Areas with increased urbanization are expected to shift towards autonomous, shared-mobility platforms, however the majority of people will still prefer to drive their own cars.