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Fuel for Thought: Top 5 Global Automotive Aftermarket Trends


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It’s fall again, which only means one thing…attention is turned
to the aftermarket! S&P Global Mobility participated in two
events recently—Automechanika Frankfurt, a five-day event on
the Frankfurt exhibition grounds in September, self-heralded as the
world’s leading trade fair for the automotive service industry, and
AAPEX in Las Vegas on 1-3 November, with total visitor numbers
expected to be over 160,000 for AAPEX and SEMA combined.

On the opening day of AAPEX, our resident expert Todd Campau
presented our insights into the emerging top-five aftermarket
trends we can see within the automotive industry.

Top-five aftermarket trends

  1. Cars getting older, aftermarket stakeholders remain
    cool about it.

    Augmented by the lack of new car supply, as well the concerns over
    economic stability and the constrained new car supply, vehicles are
    being kept longer and therefore the rates of car parc scrappage are
    falling. With these historically low levels of scrappage, even with
    the softer new car sales, the trend is showing that the vehicles in
    operation (VIO) are continuing to rise. The executives we
    interviewed at both shows did not seem too concerned about this as
    the effect will not be perceived before five or six years.
    Meanwhile, for their cousins in the aftersales segment, which
    typically depend on the 1-4-year-old segment vehicles, the feedback
    we gathered was quite the opposite.

    The aging fleet, with vehicles being retained longer, the average
    age has now risen from just over 11 years in 2012 to 12.2 years in
    2022. The most significant growth sector of the fleet is among the
    6-13-year-old vehicles, a cohort that was already poised for
    significant growth in volume prior to the current economic climate,
    and is showing the most annual miles traveled, marking it an
    aftermarket sweet spot. These more-traveled vehicles may be on
    their second or third owner and likely to already be a prime
    aftermarket customer.

  2. Mileage has returned but is different
    Annual miles traveled has returned and even exceeded prior pandemic
    totals, but the composition of the miles traveled have changed as
    we have emerged from the pandemic. Insights derived from congestion
    data have indicated that rush hours have not returned to
    pre-pandemic levels in all locales, while in many locales
    congestion throughout the day has displayed a slight uptick as
    drivers are spreading trips throughout the day.

    The aggregated effect of the changing vehicle miles traveled is
    expected to add about 1 percentage point to the overall VMT for
    2022, increasing to 3.5 trillion miles for passenger cars and light
    trucks, which will fall within the range of typical year-on-year
    VMT change prior to the pandemic. That said, the regional change is
    expected to vary greatly year on year, ranging from a 1.2% decline
    in Mississippi to a 5.4% increase in New York. Likewise, demand for
    aftermarket maintenance and repair opportunities based on miles
    traveled is expected to see varied growth from region to
    region.

  3. Digitization of the workshop as connectivity
    rises

    With vehicle connectivity now enabled with longer serviceable
    connections, we expect that one-third of the VIO will be connected
    by 2024 and 5G connectivity will be the dominate service for new
    vehicles in 2027. By the end of the decade, it is expected that
    over one-third of the VIO will be connected, and 95% of them will
    be capable of receiving manufacturer-driven software with
    over-the-air (OTA) updates.

    From Automechanika, and the conversation with diagnostic providers,
    OTA updates were expected to lead to fewer warranty visits and
    could reduce revenue opportunities for OEMs. Focus has been on
    successfully developing relationships with OEMs and securing access
    to their secure gateways to enable the aftermarket’s ability to
    complete all repairs. This has given many providers the ability to
    offer this level of connectivity on a subscription or
    pay-per-repair basis and also offer technical repair solutions and
    guidance.

  4. Autonomy opportunities
    Increased adoption of automatic driver assist systems
    (ADAS) will continue to penetrate the vehicle fleet at pace. As an
    example, in 2022, more than 60% of new models have adaptive cruise
    control compared with about 15% just five years ago. As a share of
    VIO, the significance of vehicles enabled with adaptive cruise
    control has risen from 0% in 2015 to 12% in 2022.

    To the body repair industry, as the technology continues to
    penetrate the VIO, it could influence the rates of collision and
    the increased adoption of cosmetic and smart repair service
    offerings.

    The main opportunities that were presented at AAPEX and
    Automechanika were that ADAS systems are a focal point as they were
    vulnerable to the effects from poor roads conditions and wheel
    impacts. The importance of ADAS provides an opportunity to service
    offerings around calibration and safety checks, as well as the
    associated need to ensure that wheel alignment was checked and
    adjusted to ensure all ADAS systems remained operational and safe.
    These services offered a significant revenue and upsell
    opportunity.

  5. Transition to electrification
    With VIO of 1.4 million electric vehicles (EVs) in the US
    currently, a conservative estimate puts that total to be close to
    17 million VIO by 2030 as new models will increase from 26 in 2021
    to more than 250 in 2030. Conservative and aggressive outlooks lead
    to overall share of the vehicle fleet of less than 15% in
    2030—even as EVs show significant growth in new registrations,
    transformation of the fleet will take years.


    More states in the US are proposing regulations to restrict new
    registrations to either zero- or low-emission vehicles, and similar
    trends are following in Europe, which is creating additional
    influencing factors as to why we have seen customers choosing to
    adopt EVs sooner. However, recent surveys show continued reticence
    in consumer acceptance. In 2021, 81% of those surveyed would have
    considered purchasing a battery-electric vehicle (BEV); however, in
    2022, only 58% shared that view. The reason for this change seems
    to be skepticism toward EV technology, pricing, charging
    infrastructure, and battery technology being barriers. Pragmatism
    is strongly encouraged in developing and implementing an EV
    strategy because while the transition will take time, preparation
    will be key to a successful future.

    Of the new vehicle registrations in 2022 in the US, the light truck
    sector dominated the electric segment, representing 60% of all EVs
    registered.

    Although there will be challenges, the future of the aftermarket
    still presents an aging car parc with increased repair
    opportunities. This aging is likely to continue as the economic
    influences have a destructive effect on new car sales while the
    constraints on new car supply are likely to continue through 2024.
    Although BEV growth is good, the proportion against total VIO
    indicates there is still caution, with many waiting to gain
    confidence in the technology and infrastructure before switching to
    fully electric.

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Dive Deeper — Check out our automotive
insights

Download Presentation: 5 Automotive
Trends Impacting the North America Aftermarket

Webinar Replay: Digitization of the
automotive aftermarket through connectivity

Read the Blog: Average age of
vehicles in the US increases to 12.2 years, according to S&P
Global Mobility

Report Available: Analysis of
vehicle miles traveled trends in the US and the impact on the
aftermarket

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.



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