ICE vehicles will continue to generate strong aftermarket sales for many years, even if the most robust estimates of EV new vehicle sales materialize
Fort Wayne, Ind.—Increasing product use per mile among older vehicles will generate continued aftermarket product growth for Internal Combustion Engine (ICE) cars and light trucks, as they dominate the older vehicle age groups for this decade and beyond.
“Car and light product sales climbed several times faster than light vehicle mileage over the past five years (2016 through 2021),” stated the latest Lang Aftermarket iReport. “Together, the growing average age of vehicles in operation (VIO) and the increasing number of cars and light trucks topping 12 years old boosted aftermarket product volume per light vehicle mile during these five years.”
The following are key takeaways and highlights from the analysis.
Aftermarket Growth Factors
Three factors largely determine aftermarket product growth: VIO, annual mileage, and aftermarket product use per mile traveled. Over the past five years, these factors have experienced significant changes.
VIO Growth: 2016 to 2021
The nation’s VIO increased at a moderate pace between 2016 through 2021. From 262 million cars and light trucks in operation at mid-year 2016, the VIO climbed by 6.9% over the following five years, topping 280 million in 2021.
The new vehicle market averaged nearly two million fewer annual sales during 2020 and 2021 than the record-high new vehicle sales of the preceding five years, creating a headwind for car and light truck VIO growth.
VIO and Mileage
Covid-19 decreased light vehicle mileage to a double-digit annual loss during 2020. While mileage rebounded the following year, it did not quite return to pre-pandemic 2019 levels.
Light vehicle mileage increased by less than one-fourth the annual pace of VIO growth between 2016 and 2021, 1.7% compared to 6.9%. As a result, the average car and light truck recorded lower annual mileage last year than in 2016.
Aftermarket Product Growth
Historically, light vehicle aftermarket product growth resulted from an increase in the number of cars and light trucks and the consequent mileage expansion.
The situation changed between 2016 and 2021. Despite a moderate increase in the VIO (nearly a 7% gain), light vehicle miles failed to respond accordingly.
The average car and light truck traveled approximately 500 fewer miles in 2021 than in 2016, resulting in light vehicle mileage climbing at a rate less than one-fourth the VIO growth.
Surprising Light Vehicle Product Growth
Despite only a 1.7% increase in total miles between 2016 and 2021 and a sizeable drop in the annual mileage of the typical car and light truck, light vehicle aftermarket product volume climbed approximately $10 billion over these five years, a 9.2% total gain.
Aftermarket product growth was 50% stronger than the VIO increase and nearly six times the pace of total light vehicle mileage growth.
Aftermarket Product Use and Mileage
There is not always a direct relationship between mileage growth and aftermarket product use. First, older vehicles generally use more aftermarket products per mile than newer cars and light trucks. Not all miles traveled are equal, with higher vehicle age being a product-use multiplier per mile.
Second, the volume of accessories (and some other products) is related more to the number of newer vehicles on U.S. roads, especially light trucks, than mileage growth.
Boost for ICE Aftermarket
The ability of the aftermarket to generate product growth from increased product use per miles traveled by older cars and light trucks is good news for ICE aftermarket volume in the coming years.
Since ICE vehicles will represent virtually all cars and light trucks in older age categories for a long time, these vehicles will disproportionately contribute to aftermarket product volume compared to their percentage of the total light vehicle population and miles driven.
This will be an aftermarket sales multiplier for ICE cars and light trucks over the next 10 to 20 years.
ICE vehicles will continue to generate strong aftermarket sales for many years, even if the most robust estimates of EV new vehicle sales materialize.
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