Our team recently returned from SEMA and AAPEX, and we’re still trying to process it all! These are two of the biggest automotive trade shows in the world, and there’s so much to see it’s impossible to cover everything. No matter how busy we are, we always make sure we send someone over to AAPEXedu to listen to Mark Seng from IHS Markit give his take on the four top trends to watch for the automotive aftermarket in the coming year. Here’s what he had to say this year.
Light Vehicle Sales Have Leveled Off, But That’s OK
At first glance, this sounds like disappointing news. However, when we dig into the numbers we see that although IHS Markit is not forecasting a record year for sales in 2020, the total vehicles on the road will continue to increase. Also encouraging is the fact that although sales have hit a plateau, they have settled at a very high level that will continue to sustain the aftermarket for a long time to come.
Cars are Giving Way to Light Trucks at a Rapid Pace
Around 2011, a big shift started to take place in consumer preference. Consumers began to choose light trucks over cars at a significant rate, and in 2019 IHS Markit is predicting that light trucks will make up 71% of the total market, leaving cars with 29%. By 2026 the gap is expected to widen further, with light trucks making up 76% of the vehicle market and cars making up 24%. Digging deeper into the light truck numbers, we learn that although minivans and large SUVs fueled early growth in this market segment, crossovers and small SUVs are leading the way today with 70% of new vehicle sales. Also interesting is the body style loyalty we see when it comes to SUVs and crossovers – 70% of customers who purchase this body style purchase another.
The Total Car Population is Aging
This is fantastic news for the automotive aftermarket. The average age of a car on the road in 2019 is 11.8 years, a number that has been steadily increasing over the past two decades. Even more exciting, 44% of the vehicles on the road today are 12 years or older. There are plenty of opportunities here for the automotive aftermarket, but some will require a shift in strategy. We’ll cover these opportunities in a future article.
The Internal Combustion Engine Isn’t Going Anywhere
There’s been a lot of talk in the automotive aftermarket about the need to service electric vehicles, but don’t panic. The internal combustion engine (ICE) is still a staple of the market and will continue to be so for a long time. Electrification is on the rise, but by 2035 IHS Markit estimates that 88% of new vehicles will still use an ICE, even if it’s part of a hybrid model. In short, start learning about and training on electric engines but don’t worry about the ICE becoming obsolete anytime soon.
Looking to the Future
There’s a lot to be excited about in the automotive aftermarket today. In addition to the exciting things happening under the hoods of today’s vehicles, technology is making it easier than ever for shop owners to give their customers the experience they demand. In payment processing, 360 Payments is leading the charge. From integrated payments to Text-to-Pay, we are the automotive aftermarket’s leader for credit card solutions. Give us a call at 1-855-360-0360 or drop us a line on our website. We’d love to help you take your auto shop to the next level.
PS – Check out our five big takeaways from the SEMA Show this year here.
PPS – Here’s how to connect with your millennial customers.