New Industry Indicators Suggest Trend Toward Stability

With the nation in the swing of Fall, it appears that some of the things we wondered about in the summer are being resolved, at least for now. Working on site (offices, manufacturing and warehouses, retail) is still at about half of pre-pandemic levels as pictured below.

Source: The Wall Street Journal, Sept. 17, 2020.  

As the school year has started, “back to school” has been largely virtual: of the more than 13,000 school districts across the country, 62% are in session virtually, 19% meet in-person, 18% use a hybrid approach, and 1% remains undecided, as of Sept. 2, according to Burbio ( https://info.burbio.com/press/).

Industry Statistics

Despite the lower levels of on-site work and in-school instruction, we have seen some sectors of the aftermarket recover well. As pictured below, retail sales of automotive parts, accessories, and tires soared in the summer, reflecting considerable pent-up demand as consumers began driving again and prepared their vehicles for summer travel.

Source: TrendLens™, Auto Care Association 

The auto care industry bodes positively – as pictured below, employment and industry sentiment have risen considerably since bottoming out in April:

Source: TrendLens™, Auto Care Association 

Will these positive trends continue? There are some indicators that suggest continuation of these trends.

Consumer Sentiment and Behavior

According to IMR Inc. ( AutomotiveResearch.com), while vehicle maintainers remain highly concerned about travelling via ride share (68.1%) or via public transportation (62.4%) in the context of COVID-19, they are less concerned about taking their vehicles to a repair shop for service (32.1%) or shopping- in-store at an auto parts retailer (e.g., AutoZone, Advance Auto Parts, O’Reilly Auto Parts) (34.4%).

Perhaps as a result, in addition to spare time and the need for a “project,” Do-It-Yourself (DIY) activity has increased to its highest levels over the summer – 38.2% in July and 43.3% in August – accelerating from 28.9% in 3Q2019, according to weekly surveys of U.S. consumers who are responsible for maintaining their vehicles, conducted by IMR Inc. | ( AutomotiveResearch.com).

Positive Trends for the Aftermarket

In September, IHS Markit adjusted its 2020 light vehicle sales forecast to be 408,000 units higher than previously modeled in August ( link).

Source: IHS Markit 

While sales of new vehicles for 2020 (and beyond) continue to be significantly less than previous years, this bodes well for the aftermarket. The average vehicle age rose to 11.9 years this year, and is likely to continue rising, particularly as owners hold onto their vehicles longer ( link).

Other Considerations

Other uncertainties continue to loom, including the upcoming presidential election, COVID-19 cases, travel restrictions, office and school policies … the list goes on.

We encourage you to “stay tuned” to this column for updated insights, to continue takinge our survey on COVID-19's impact to your aftermarket organization ( click here), and to log in to our TrendLens™ data platform ( trendlens.autocare.org) for access to additional industry data. We are planning webinars and other supplemental materials for navigating the TrendLens™ platform and look forward to providing updates as we create them.

Mike Chung is director, market intelligence at Auto Care Association. With more than a dozen years of experience in market research, Chung and his team provide the industry with timely information on key factors and trends influencing the health of the automotive aftermarket and serving as a critical resource by helping businesses throughout the supply chain to make better business decisions. Chung has earned several degrees, including a Bachelor of Science in chemical engineering from Massachusetts Institute of Technology (MIT), a Master of Science in environmental health management from Harvard University and a Master of Business Administration with a concentration in marketing from Montclair State University. Mike can be reached at michael.chung@autocare.org.