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.

In NPD’s consumer outlook study, A Look into 2016, only 11 percent of vehicle owners plan to do all vehicle repair and maintenance in 2016. And while 17 percent will do some of the work themselves, the majority of vehicles owners continue to depend on service providers for the bulk of their automotive needs. With this large number of consumers depending on service facilities for vehicle maintenance and repair, it is important to understand how the consumer thinks about automotive service providers, including their reasons for choosing service providers, satisfaction with providers and what drives the choices they make when having maintenance and repairs performed on their vehicle.

Changes in fuel prices have led some to ask how this will impact consumer behavior. How will this shift impact the sale of bottled fuel additives as well as gasoline buying behavior? Using a combination of consumer research and analytical modeling, this research will explore the relationship between the price of gasoline and fuel additive usage. In addition, the report will provide insight into the awareness and usage of fuel additives, the impact of gasoline brand and gasoline grade on the purchase of these aftermarket additives. In the end, manufacturers and retailers will better understand how consumers react to changing gasoline prices.

With more than 3,000 Supercenters and a variety of other formats, Walmart is a driving force in the US economy. For the automotive aftermarket, Walmart shoppers represent a significant, largely untapped market. This research will explore motivations for selecting a retailer and in-store experience among three different groups of consumers: Walmart automotive shoppers (~550 product buyers), general Walmart shoppers (non-automotive), and "other" automotive shoppers (non-Walmart). Additionally, the study will explore the barriers for those Walmart shoppers already in the store who do not shop in the automotive department.

New car owners often “baby” their vehicles, making sure that scratches and dings are immediately repaired, cleaning and waxing more frequently, and often using higher-quality products; these behaviors seem to decrease as a vehicle ages. But what about new owners of used vehicles? Do people treat their vehicle based on the age of the vehicle or how long they have owned it? This research will explore the differences between how people care for their vehicles based on the age of the vehicle and their length of ownership. It will explore differences in how people think about their cars and how they take care of their cars

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.

Global information company The NPD Group, Inc. has signed a market information services agreement with Nielsen, a leading global provider of information and insights into what consumers watch and buy, for retail market data within the U.S. automotive aftermarket. The market information licensed from Nielsen, which includes sales data from the food, drug, and convenience store channels, will complement NPD’s existing automotive business, which covers the mass and automotive specialty channels, allowing NPD to deliver the industry’s most complete view of the automotive aftermarket industry.

The story for a number of years within the U.S. automotive aftermarket industry has been that dollar sales have always outpaced unit sales, but the mid-year 2016 results show that a turning point has been reached, according to retail sales data from global information company The NPD Group, Inc. Unit/quart sales grew 1.8 percent in the first half of 2016, and for the first time in four years unit sales outpaced dollar sales within the industry.

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