Management: Optimistic Industry Trends Can Mean Full Bays

Management: Optimistic Industry Trends Can Mean Full Bays

As the editor of an automotive aftermarket business-to-business magazine, I get forests of news items, press releases and industry trend reports each month. Looking over some recent releases, I've found that there seems to be quite a bit of optimism for our industry and your businesses.

By Edward Sunkin
Editor, UNDERHOOD SERVICE

As the editor of an automotive aftermarket business-to-business magazine, I get forests of news items, press releases and industry trend reports each month. Looking over some recent releases, I’ve found that there seems to be quite a bit of optimism for our industry and your businesses.

For example, one headline that just crossed our desks is that unperformed maintenance dropped in 2005 to $52 billion, according to a new report from the Automotive Aftermarket Suppliers Association (AASA). While the $52 billion represents a drop of $4 billion from 2004 figures, AASA says many American vehicle owners are still neglecting many of the vital maintenance and service procedures that their cars and trucks require to operate safely, reliably and fuel-efficiently.

However, a $4 billion drop could mean that the industry’s efforts to educate consumers on vehicle maintenance could be paying off. And with $52 billion of estimated unperformed maintenance still out there, there’s much more service work available for shops.

According to AASA, this is the lowest level of unperformed maintenance since 1998 when it was $47 billion. In 2002, the untapped market reached its high of $62 billion and has gradually decreased since.

Frank Hampshire, AASA’s senior director of research, explains there are numerous factors that influence unperformed maintenance, including vehicle miles traveled, the number of vehicles in use, the state of the economy, the average age of vehicles, recommended service intervals, parts durability and, to a growing extent in recent years, skyrocketing gasoline prices.

“One important factor to watch in 2006 will be the effect of rising fuel prices on consumers’ discretionary spending,” Hampshire noted. “While a consumer may have less money to spend on fixing and maintaining his/her vehicle, the owner also may opt to spend money on products and services that may enhance vehicle fuel economy.”

According to Hampshire, many consumers in 2005 replaced products such as air filters, which they had previously neglected, in the hopes of achieving higher fuel economy. Other often postponed items, such as engine overhauls and clutch replacements, were performed in an attempt to extract a few more years from an aging vehicle.

Products that represent the most untapped potential in 2005 include alternators, A/C condensers, exhaust pipes, wheel bearing, shocks (or struts), radiator service, catalytic converters, CV joints, fuel pumps and steering service.

“While it is true that economic and environmental conditions have combined to reduce the size of the untapped market, some credit must be given to the aftermarket industry in its attempt to recapture some of this tremendous potential. The Be Car Care Aware campaign is a good example of what can be done to reach this market,” Hampshire noted.

In another recent report, AASA research shows that DIY activity continues to decline. AASA’s finding show that all types of DIY activity have dropped over the past 10 years.

Based on consumer surveys conducted by IndustrialMR, AASA grouped service jobs into light, medium or heavy DIY categories. AASA data reveals that between 1995 and 2005, “heavy” DIY activity fell from 33% to 25%; “medium” DIY activity dropped from 35% to 28%; and the percent of jobs in the “light” DIY service group declined from 54% in 1995 to 40% in 2005.

According to AASA Executive Director Steve Handschuh, increasing vehicle complexity and changing demographics have led to all three levels of DIY activity declining, with light DIY declining more rapidly than the other two types.And finally, we see that the aftermarket is expected to grow 4.2% in 2006 (see the news article on page 52 of this issue).

All of these trends can be good news for your shop, and it’s up to shop owners like yourselves, along with a properly trained staff, to keep the 232 million vehicles on U.S. roads running safely and efficiently.

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