Automotive Aftermarket Market Research & Business Solutions

This study will explore the journey of the oil change consumer and the various purchase decisions made along the way. This study will include both the Do-It-Yourself and Do-It-For-Me consumer and will aim to identify how consumes proceed down the path to purchase, which are the most prevalent paths, and how they differ by key demographic segments or channel/outlet shoppers.

This study will explore the journey of the oil change consumer and the various purchase decisions made along the way. This study will include both the Do-It-Yourself and Do-It-For-Me consumer and will aim to identify how consumes proceed down the path to purchase, which are the most prevalent paths, and how they differ by key demographic segments or channel/outlet shoppers.

According to NPD’s Checkout E-commerce Tracking, online sales of hard parts grew 29 percent in the last 12 months. Representing one-quarter of total sales, the brakes category is a particularly influential aspect of this market, as brake part buyers spend significantly more and make three-times as many online auto purchases.

The top three categories purchased online in 2017 were Automotive Lighting, Interior Accessories and Exterior Accessories. Consumers are most attracted to the buy online and pick up in store option, which captures 40% share of e-commerce sales.

The NPD Group, a leading global information company, announced today that Steve Flavin will return to his automotive roots as president of NPD’s Automotive Aftermarket practice. He will succeed the group’s current president, Dawn Zieren, who is moving into a new corporate role supporting NPD’s cross-practice global and strategic initiatives. Flavin will report to Perry James, president of NPD’s Hardlines sector.

U.S. automotive aftermarket industry sales grew 2.2 percent in 2017*, according to global information company The NPD Group. Growth was driven by a 3.3 percent increase in average selling price, as unit sales declined by 1.1 percent. Macro trends including miles driven and e-commerce, extreme weather, and aftermarket specific spending shifts were some of the major factors to alter the landscape of the automotive aftermarket in 2017.

Global information company The NPD Group has named Nathan Shipley as executive director/industry analyst for the firm’s Automotive Aftermarket business.

The storyline for the U.S. automotive aftermarket mid-way through last year was that average retail prices were down, yet dollar sales continued to grow; that story has changed in 2017. With a nearly 3 percent increase in average selling price, dollar sales grew just shy of 1 percent in the first six months of the year, while unit/quart volume declined by 2 percent*, according to global information company, The NPD Group.

According to global information company The NPD Group, 12 percent of U.S. consumers who have made an automotive purchase have done so online . While this e-commerce penetration falls on the lower end of the spectrum compared to other industries tracked by NPD, online is steadily gaining more share in the aftermarket as consumers, especially Millennials, turn to the internet to seek products and research discounts.

The Passenger Car Motor Oil Purchase Journey, a recent study conducted by global information company The NPD Group, found that less than half of do-it-yourself (DIY) consumers report purchasing motor oil on promotion. At the same time, promotional activity has increased for this product, as there were 14 percent more in-store circular motor oil advertisements in 2016 compared to the year prior*.

The U.S. automotive aftermarket industry reached $15 billion in retail sales in 2016, growing 2.9 percent over the previous year*, according to global information company The NPD Group. While dollar growth slowed, unit/quart growth accelerated, which correlates closely to the decline in overall average selling price. Macro trends including an increase in miles driven and new car sales, lower-priced gasoline, and unpredictable weather patterns impacted the industry’s annual performance.

Compared to last year, the majority of automotive do-it-for-me (DIFM) consumers have shifted more of their vehicle maintenance and repairs to a professional, according to global information company The NPD Group’s Do-It-For-Me Consumer Report 2016. Convenience is the leading reason for the transition, followed by having the right tools for the job.

It has been almost a full year since the launch of NPD’s Retail Tracking Service – Expanded Channels for the U.S. automotive aftermarket. This has enabled NPD to report on point-of-sale data from channels that do not represent the major players of the aftermarket, but are still important to suppliers and consumers alike. This includes convenience, drug, grocery, and mid-tier/value stores (including dollar stores), representing over 50 retailers in the U.S.

When we look at how this aggregate of channels performed during the first half of 2017, we see a picture that is also consistent across each channel. In aggregate, sales declined 4 percent during the first half of the year, with all four channels posting a similar result. Motor oil had much to do with this trend. As the largest category tracked, motor oil’s sales performance was indicative of how the overall market performed. The convenience store channel is most important to the motor oil category, representing over $75 million in motor oil sales for the first half of the year. Dollar volume in the category dropped by almost 13 percent, due in part to a retail selling price increase of over 12 percent. This price increase in the convenience channel for motor oil follows a trend that most categories in the channel have experienced, as the channel overall posted a selling price increase of almost 8 percent.

Midway through the year, 13 of the 16 tracked categories experienced declines in dollar volume, which followed the same trend noted above with motor oil. With consumer confidence trending positive in 2017, and gasoline prices staying at relatively low levels, it is feasible that consumers have slightly shifted away from these channels as it relates to the automotive aftermarket. Separately, we know that e-commerce is also slowly taking share away from brick-and-mortar stores in this space. With that said, we estimate that this group of channels represents 10 percent of the total retail marketplace. In our current aftermarket retail environment, that 10 percent is very important to the overall picture.

Being a resident of Katy, Texas (a suburb about 20 miles west of downtown Houston), I found myself right in the middle of Hurricane Harvey as it made landfall on the Texas Gulf Coast at the end of August.  While my home was spared from flooding, many of my close friends, neighbors, and colleagues were not so lucky. Now that the storm has passed, it has been inspiring to watch so many people volunteering to help others in need. I am confident that the same spirit of helping others is taking place in southern Florida, where Hurricane Irma recently hit.

We know that major weather events have a direct impact on the performance of the automotive aftermarket. Looking back over the last several years, extreme hot and cold months have changed the trajectory of the industry’s performance. November 2014, and December 2016 are two months that come to mind. December 2016 sales grew over 9 percent versus the prior year, due to December 2015 being abnormally warm. Weather related categories – refrigerants due to heat; batteries and wipers due to cold and snow – perform well during these periods. 

In a span of 12 years, the U.S. has been faced with the costliest natural disasters on record thus far, namely Hurricane Katrina and Hurricane Sandy. Fast forward to August of this year when Harvey slammed the Gulf Coast, creating a situation unique in its own way as it struck one of the nation’s most important energy hubs. Throughout the area, multiple refineries were forced to halt production because of the storm. The resulting impact on national gasoline prices has been dramatic over the last three weeks. In the week ending September 11, 2017, the average national price was $2.80 a gallon, up from $2.50 a gallon the month prior. This $0.30 increase is significant as gasoline prices haven’t been this high in over two years.  Gasoline demand in the most recent week is down 4.5 percent from the same week the year prior.

For the aftermarket, we know that gasoline prices, miles driven, and industry performance are all highly correlated. What happens to gasoline prices in the coming weeks and months will be important for our industry to closely watch. Might they come back down to pre-Harvey levels once production normalizes?  Or is $2.80 a gallon our new national normal? Only time will tell. 

The automotive aftermarket will see a complete transformation of its core consumer over the next 10 years. Millennials, who have now surpassed Baby Boomers as the largest living generation in the United States, are entering their peak driving years as their predecessors are actively retiring and changing their driving behavior. Statistics from the Federal Highway Administration show that 20-34 year olds today, on average, drive twice as much compared to drivers over 65-years old.

Millennials have a very different relationship with the aftermarket compared to their older counterparts. NPD’s 2017 Consumer Outlook Survey found that younger Millennials are most likely to be driving the oldest cars on the road, and are 50 percent more likely to have purchased their vehicle used. Younger millennials (ages 18-24) drive cars with an average age of 10 years, and are expecting to spend over $2,000 on repairs in 2017, which is double the average. These Millennials are also more likely to be do-it-yourself (DIY) or switchers (some DIY and do-it-for-me/DIFM) when it comes to vehicle maintenance and repairs, which is certainly positive news for the aftermarket. Older Millennials (ages 25-34), on the other hand, are twice as likely to have leased their vehicle.

We all know that Millennials are also online – a lot. When considering where to go for researching products online, they significantly over-index in terms of retailer websites, online retailers, and search engines. They are also more likely to seek out online auto deals through social media. You can find out more about the aftermarket’s e-commerce penetration by reading NPD’s recent news release here.

With a changing consumer base, automotive aftermarket players must reevaluate who their primary customer is today. Millennials approach researching, repairs, and buying vehicle products differently. Shopping online is second nature, and the fast-paced world they’ve become accustomed to means they seek instant gratification. Millennials are also ripe for aftermarket development; they lack the same level of vehicle experience as their older counterparts and so, there are not only promotional but also educational opportunities that exist with this demographic. 

I kicked off the New Year by attending the Consumer Electronics Show (CES) in Las Vegas – the largest trade show to come to town all year. If you have never been, it is definitely bucket-list worthy.  Manufacturers from all over the world come to show off the latest and greatest gadgets that you didn’t know you needed until you laid your hands on it!

A major focus of this year’s show was the automotive industry and the future of mobility: self-driving cars. As one of the largest industries in the world, at over one billion cars strong, the automotive industry is embarking on a transformation to become an autonomous industry. Here are some of my biggest takeaways:

1. The automotive industry will see more innovation in the next 10 years than it has in the last 50.  It has been compared to the evolution of the iPhone – a product that was launched 10 years ago this month.
2. By 2030, the assumption is that consumers won’t choose which car to buy; instead, they will decide if they should even buy a car at all. Today, most cars spend 20+ hours a day parked. In the future, shared ownership will enable cars to be driven 20+ hours a day.
3. Vehicles of the future will all be connected to the internet. Enhanced battery technology will enable most vehicles to be electric. Range anxiety will become a thing of the past. Vehicle emissions will no longer exist.
4. Today, most consumers are apprehensive about self-driving cars in any form. In the future, we will look back at today and say, “Remember when over 33,000 people died each year in the U.S. in car accidents?” or, “How did we ever deal with rush-hour traffic every day?”

Change in our industry is coming, and it’s happening quickly. How will these changes impact how the aftermarket does business? It is easy (and important) that we focus on the short term – profit, margin, assortment, and foot traffic—but is your business keeping an eye on what’s to come? For example, down the road, will our industry’s focus need to be on fleet management companies instead of individual car owners? If self-driving cars never hit anything, does the collision repair industry become obsolete? Focusing on the long-term evolution of our industry today, rather than ignoring it, will position auto-related companies for success down the road.

The macro environment for growth in the DIY aftermarket auto parts channel has been very favorable so far in 2016 (through June).  There are a number of macro-economic trends that we closely monitor to better understand why our channel is performing the way it is.  The two main areas of focus are miles driven, which is heavily influenced by gasoline prices, and weather patterns.  Year to date, miles driven and gasoline prices have been positive influencers, while the lack of weather extremes hasn’t helped generate growth.

May 2016 set a new single-month record high for miles driven, and on a 12-month rolling basis it is trending at +3.4%.  Gasoline prices for the first 26 weeks of the year were, on average, $0.39 per gallon cheaper than the same period in 2015.  If we take a step back and look at the bigger picture for miles driven, we are starting to see a deceleration of the growth trend.  And if we change the lens to look at miles driven on a per capita basis, we see that as individuals, we are driving no more than we were 20 years ago.

Extreme cold, rain, snow, and even heat can really help the industry to move product.  The first six months of year, as an aggregate, ranked #3 out of 122 years for warmth.  On the precipitation front, so far, it has been an average year with no real extremes.  This lack of extreme cold and rain hasn’t benefited the industry.

For the first six months of the year, dollar volume in our channel only grew 1.5%.  There are a few factors that kept that number from being higher.  First, we are lapping two prior years of 4% growth.  Second, we’ve noticed that the average selling price in over half of the categories we track actually declined, which drove the overall average price of all tracked categories down 0.2%.  A change in the mix of what is selling has influenced this trend.  The battery category, ranked #1 in dollar volume, saw the “good” grade of batteries gain unit share at the expense of “better” and “best”.  In the full synthetic and high mileage motor oil segments, all top brands saw a decline in the price per quart, while private label volume increased.  A similar story emerged in the wiper category where “standard” blades grew share at the expense of “premium” blades.  Those three categories alone have a big influence on overall channel performance; in aggregate, they make up over 43% of total tracked volume in our channel.  All of this led to unit volume growth of 1.8%, marking the first time in the history of our sales tracking service that we’ve seen unit growth outpace dollar growth.

Our analytics and modeling team produced a forecast late last year that said our channel would grow 2.7% in 2016.  We are trending behind that forecast.  How will the second half of the year shape up?  Has our industry shifted promotions earlier in the year leading to soft performance?  A big winter storm in Q4 could dramatically influence the overall results as well.  Stay tuned.

Looking at the automotive aftermarket industry, the overriding fundamentals remain: people are driving more, the weather is favorable for maintenance and appearance, and the industry has experienced dollar growth for each month of 2015 thus far. Whether it is an aging vehicle or brand new car, the categories supported by these vehicle segments are experiencing strong growth*.

Old Car
Dollar sales of performance chemicals, a category traditionally driven by aging vehicle maintenance, grew 6 percent in August. Complete fuel system cleaners grew 8 percent – a major contrast to what has been seen over the past year. Other top growing segments include power steering fluid, oil stabilizers, and brake cleaners, which contributed a combined $1.2 million in growth to the category.

New Car
Unit sales reached 17.5 million for new cars in the 12 months ending August 2015**, the highest level since 2005, which could be driving growth in the appearance chemicals category (+5 percent). This category includes scratch removers (+18 percent), detailers (+15 percent), carpet/fabric care (+13 percent), and protectants (+5 percent).

Clean Car
Up 12 percent, the air fresheners category ranked #1 for dollar volume growth in August. Vent/clip on fresheners grew 21 percent and contributed the bulk of the dollar growth.

Cool Car
Items within the refrigerants and accessories category were heavily promoted all summer. The category overall experienced an 11 percent lift in dollar sales. In particular, a/c charging kits grew 12 percent and contributed nearly half of the total dollar volume gains for the category in August.

Old, new, clean, cool… Regardless of what phase your vehicle is in, a positive story continues to be told for various automotive aftermarket categories.

*Source: The NPD Group, Inc. / Retail Tracking Service, 4 weeks ending August 29, 2015 versus same weeks in 2014
**International Business Times: ‘August 2015 US New Auto Sales: Americans Shrug At Global Market Volatility, Buy Cars At The Highest Pace In A Decade’

This year, the Millennial generation is expected to surpass the Baby Boomers and become the largest living generation in the United States*. With a projected population of 75.3 million and a reported $200 billion in annual purchasing power, it is necessary for retailers, manufacturers, and marketers to understand and pay close attention to the behaviors of this newer, diverse breed of consumers.

Technology and fashion may be among the top industries that come to mind when considering Millennial consumption, but this generation is also leaving its tracks in the automotive aftermarket world. While they love smartphones and sneakers probably more than any other generation, we can also say the same about fuel additives. A recent study conducted by NPD found that 30 percent of younger Millennials (aged 18-24) said they would increase their usage of fuel additives, making them three times as likely as consumers aged 35-54 and six times as likely as those aged 55+ to say this**. Whether Millennials upgraded their fuel at the pump or treated it with a packaged additive, they are using more additives and are more concerned than any other generation about treating their fuel.

What is spurring this behavior? When asked why they would use more fuel additives, most Millennials cited “aging vehicles,” “problems with vehicles,” “a clean engine,” and “more educated about benefits” among their reasons. According to NPD’s Motor Fuels Index Database, Millennials are the most likely of any generation to drive older vehicles, as 36 percent report that their vehicle is at least 11 years old.

Understanding that Millennials are driving older cars and purchasing more fuel additives for a variety of reasons indicates that they are looking to increase their vehicle’s longevity and stretch their dollar. To attract Millennials, messaging around additives, cleaner engines, and increased vehicle longevity may help to capture this important group of consumers.

*Source: U.S. Census Bureau
**Fuel Additives: Consumer Insights on the Uptreatment of Fuel, July 2015