Despite recent low new-vehicle sales, several key factors will fuel an increase, not a decrease, of annual aftermarket volume
Fort Wayne, Ind.—Starting next year, the number of vehicles in the auto repair-age sweet-spot (cars and light trucks 6 to 10 years old) will shrink significantly for a prolonged period. The depressed new vehicle sales from 2020 through 2024 (and probably longer) have some aftermarket analysts concerned, according to the latest Lang Aftermarket iReport.
“They fear that the aftermarket impact of millions of vehicles disappearing each year from the repair-age sweet spot will seriously erode aftermarket volume through 2030,” states the report.
However, Lang Marketing points to several key factors will fuel an increase, not a decrease, of annual aftermarket volume, despite the millions of vehicles not entering the nation’s repair-age sweet spot.
The following are key takeaways from the report.
Aftermarket Sales Drivers
Sales of some aftermarket parts, such as accessories, are concentrated in the first few years of vehicle operation. In contrast, the aftermarket demand for replacement parts depends on many years of vehicle use. The same is true of many types of chemicals and tools & equipment.
Vehicle Repair-Age Sweet-Spot
The repair-age sweet-spot has vehicle age boundaries of 6 to 10 years old. For many products, these cars and light trucks have an above-average annual rate of aftermarket use. The 6-to-10-year range of the repair-age sweet spot reflects the wear and tear caused by the accumulated miles traveled by those vehicles.
Changing Aftermarket Growth Dynamics
The dynamics of aftermarket growth are evolving. Cars and light trucks are being driven fewer miles per year, rolling up odometer miles at a slower pace than in the past. At the same time, the average age of vehicles is reaching new heights, and a record number of them top 15 years old.
Due to these developments and the changing age profile of vehicles in operation (VIO), three factors will help to fuel aftermarket product growth: not all vehicle miles generate equal aftermarket product use, annual mileage is shifting to older vehicles, and the upper-age boundary of the sweet-spot age group will likely increase.
Millions of Sweet-Spot Vehicles Erode
The consequences of decreasing new vehicle sales during 2020 and a still anemic new vehicle market (down about 15% compared to 2015 through 2019) are working through the vehicle population. They will begin to hit the repair-age sweet spot in a few months.
Starting next year, the number of vehicles 6 to 10 years old will decrease significantly, falling annually through 2030 and beyond. In 2025, 85 million vehicles 6 to 10 years old will be on U.S. roads. By 2030, this repair-age sweet spot population will shrink by over 12 million, down about 15% for this critical vehicle age range.
However, three factors will help the aftermarket to grow even with millions fewer vehicles 6 to 10 years old.
Growth Factor No. 1: Not All Miles Are Equal
As vehicles age, they generally require more repairs (parts and purchased services) per mile than newer cars and light trucks. Accordingly, not all miles are equal in creating vehicle wear and tear that generates aftermarket product use.
If a consumer with a 5-year-old vehicle does not replace it with a new model, they will drive the aging vehicle for several more years at about the same annual miles they would have driven a new model. This will generate more aftermarket product use than if they had been driving a newer model.
Growth Factor No. 2: Miles Shift to Older Vehicles
With fewer new vehicles added each year, compared to the record-high sales from 2015 to 2019, older vehicle are driven additional miles, boosting aftermarket parts and purchased services per vehicle mile.
This example will be repeated millions of times over the next several years as the nation’s aging VIO increases the aftermarket parts and purchased service volume per vehicle mile.
Growth Factor No. 3: High Sweet-Spot Age Boundaries
As a result of low new vehicle sales (2020 through 2024 and probably longer), a shift in the top boundaries of the repair-age sweet spot will likely occur, reflecting changes in the age mix of vehicles and their accumulated mileage.
Strong Aftermarket Outlook for Many Products
While some aftermarket products, such as accessories, could suffer reduced annual volume due to sinking new vehicle sales, replacement parts (and the purchased services required for diagnosis and installation), chemicals and tools & equipment sales will benefit from the vehicle population shift in which older cars and light trucks are driven more miles annually and accumulate higher mileage.
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