Automotive Aftermarket Market Research & Business Solutions

Despite the decline in gas prices compared to the previous November, the continuation of fall’s warmer-than-average temperatures in much of the country led to the first dollar volume decline of 2015 for the U.S. aftermarket. 

The overall U.S. Consumer Confidence Index may have grown by +3.7 percent in October versus year-ago, but confidence in the Texas Region declined by -9.7 percent in the same period. Lower gas prices have had a negative impact on the oil and gas industry – resulting in layoffs or potential layoffs and less driving (which, in turn, means less maintenance).

It was the perfect storm for the automotive aftermarket in September – mild weather prevailed, and average gas prices were a dollar less than they were at the same time last year. The extended good weather and less expensive gas combined to generate growth in several categories.

In August, the overriding fundamentals remained – people were driving more, and the weather was favorable for maintenance and appearance. Growth in the overall aftermarket industry continued – even units/quarts were positive over the past six months.  Key categories supported by both aging vehicles and brand-new cars experienced strong growth.

July saw car care heat up –categories related to hot weather and appearance had their moment in the sun. Batteries and battery accessories, along with refrigerants and accessories, were up in July. Appearance accessories and chemicals, too, got a summertime boost. See which products drove the growth and what it translated to in dollar gains.

Despite the decline in gas prices compared to the previous November, the continuation of fall’s warmer-than-average temperatures in much of the country led to the first dollar volume decline of 2015 for the U.S. aftermarket. 

The overall U.S. Consumer Confidence Index may have grown by +3.7 percent in October versus year-ago, but confidence in the Texas Region declined by -9.7 percent in the same period. Lower gas prices have had a negative impact on the oil and gas industry – resulting in layoffs or potential layoffs and less driving (which, in turn, means less maintenance).

It was the perfect storm for the automotive aftermarket in September – mild weather prevailed, and average gas prices were a dollar less than they were at the same time last year. The extended good weather and less expensive gas combined to generate growth in several categories.

In August, the overriding fundamentals remained – people were driving more, and the weather was favorable for maintenance and appearance. Growth in the overall aftermarket industry continued – even units/quarts were positive over the past six months.  Key categories supported by both aging vehicles and brand-new cars experienced strong growth.

July saw car care heat up –categories related to hot weather and appearance had their moment in the sun. Batteries and battery accessories, along with refrigerants and accessories, were up in July. Appearance accessories and chemicals, too, got a summertime boost. See which products drove the growth and what it translated to in dollar gains.

U.S. drivers logged more than 3 trillion driving miles in the year ending March 2015 – the most ever recorded. And gasoline consumption was up 4% in April. Which categories gained most from all those miles and gallons? What were the top-growing categories as consumers turned their attention to springtime car maintenance?

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