An industry analysis from the Automotive Aftermarket Suppliers Association (AASA) indicates that the shifting “aftermarket sweet spot,” generally defined as the age range of vehicles where the aftermarket thrives, may challenge suppliers. However, awareness of what lies ahead can help aftermarket companies prepare for the future.
Years ago, vehicles 4-7 years old were considered the sweet spot, but the ideal range shifted as warranties became longer and vehicles’ lifespans increased. Consumers are increasingly investing in their older vehicles rather than purchasing new ones. Coming out of the recent economic downturn, now vehicles between 6 and 12 years old are considered the most attractive range for the aftermarket.
The sweet spot of vehicles 6-12 years old has been a strong tailwind for the aftermarket, but it peaked in 2011. While this is a large, attractive market, the number of vehicles in this sweet spot is declining and is predicted to continue to decline until 2018, as noted by Paul T. McCarthy, AASA vice president of industry analysis.
However, the shrinkage of the sweet spot is predicted to be temporary. The AASA predicts that it will increase again around 2019 as vehicles from the current strong wave of new-vehicle sales begin to come into the sweet spot in greater numbers.
How suppliers can benefit
To prepare for the decline of vehicles in the sweet spot, aftermarket suppliers can look for opportunities on either side of the sweet spot by targeting older and younger vehicles (vehicles younger than age 6 and older than age 12).
While vehicles aged 6-12 will decrease temporarily, AASA expects a substantial rise in vehicles aged 1-5 and a continued rise in vehicles 12 and older. In 2011, there were more than 58 million vehicles aged 15 years or older in the United States vehicle population that accounted for almost 30% of the overall aftermarket revenue, as cited in the AASA “Automotive Aftermarket Status Report.”
In addition, the overall vehicle market is expected to increase again after several recent years of stagnation, boding well for the aftermarket over the long term. In order to succeed, many companies will need to expand into these arguably non-traditional growth markets until the sweet spot begins to increase again.