Three factors have boosted annual growth: diagnostics, pricing pressure on parts margins, and the cost of tools and equipment required by the growing complexity of vehicle repair
Fort Wayne, Ind.—Purchased repair service generated over half of total car and light truck aftermarket product growth (products and purchased service) during the five years prior to COVID-19. Over the next five years, Lang Marketing expects that purchased service share of light vehicle product growth will increase.
Here are key takeaways from Lang’s latest report.
DIFM is the Dominant Aftermarket Driver
DIFM products and purchased service generated over 85% of light vehicle aftermarket growth between 2011 and 2021. During this period of DIFM aftermarket dominance, purchased service (product installation and diagnostics) climbed at a faster annual pace than DIFM products.
DIFM Product Growth
DIFM products (products installed by automotive technicians) increased by an estimated $16 billion at user-price between 2011 and 2021. Preliminary findings by Lang Marketing indicate that DIFM products and purchased service generated over 90% of the 2022 aftermarket product growth, at user-price.
Products Climb by 22%
Lang Marketing estimates that the 2021 DIFM product volume was nearly 22% higher than 10 years earlier. This represents a 2.0% average annual growth. While DIFM products recorded a strong growth rate over the past 10 years, light vehicle purchased service climbed even faster.
Light vehicle purchased service increased from $53.9 billion in 2011 to $71.1 billion in 2016 at user-price. Lang Marketing states that light vehicle purchased service topped $83 billion in 2021.
Purchased Service Outpaced DIFM Products
Purchased service for light vehicles averaged 3.5% annual growth over those 10 years. Light vehicle purchased service climbed at a three-quarters faster annual pace than DIFM products between 2011 and 2021.
Growth Share of Total Market
The total light vehicle aftermarket in the U.S. (DIFM and DIY products plus purchased service) increased by over $46 billion between 2011 and 2021. Car and light truck purchased service accounted for 52% of this gain, and products (DIFM and DIY) were responsible for 48% of light vehicle aftermarket growth.
Preliminary findings of Lang Marketing indicate that purchased service exceeded DIFM and DIY Product volume growth during 2022.
DIFM Market Growth Share
The DIFM market (DIFM products and purchased service) generated over $40 billion of light vehicle aftermarket growth between 2011 and 2021. Lang Marketing estimates that purchased service growth expanded the DIFM market by 60% between 2011 and 2021.
Purchased Service Growth Factors
Three factors have boosted the annual growth of purchased service: diagnostics, pricing pressure on parts margins, and the cost of tools and equipment required by the growing complexity of vehicle repair.
Vehicle complexity has increased the need for more diagnostics to determine the repairs and parts required. For many repair jobs, diagnostics exceed product installation in the amount of purchased service required by automotive technicians.
Parts Pricing Pressure
The internet has increased the visibility of parts costs to consumers and boosted their sensitivity to parts prices charged by repair outlets. To counter this pressure on repair parts’ gross margins, many outlets are increasing charges for purchased service.
Cost of Tools & Equipment
Increased diagnostics and the growing complexity of vehicles require repair outlets to purchase additional and more expensive tools and equipment. To offset rising tool and equipment costs, many outlets are increasing the hourly rates charged for the work of automotive technicians.
Next Five Years
Lang Marketing expects that factors boosting purchase service growth will intensify over the next five years. Diagnostics will become more pervasive and expensive. The visibility of parts costs to consumers through the internet and other sources will increase downward pressure on prices that repair outlets can charge for parts.
Purchased service will increasingly be used to maintain gross margins threatened by parts pricing pressures and to offset the cost of tools and equipment needed to perform the increasingly complex vehicle repairs. Accordingly, Lang Marketing expects that purchased service volume will increase at about twice the annual growth pace of light vehicle DIFM Products, at user-price, from 2023 through 2027.
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