December 21, 2007

Demand for automotive aftermarket products should remain healthy, analyst says

Richmond Hill, Ontario – Demand for aftermarket parts, maintenance and repairs should remain healthy, with about $14,000 spent on each model-year 2007 vehicle in the future, according to industry analyst Dennis DesRosiers.

The report looks at light vehicles up to Class II trucks, and includes maintenance and repair items but not collision work, accessories, appearance products or gasoline. “If you look at the new cars being bought today, you can predict what will need to be repaired in the future,” DesRosiers said. “We estimate that every vehicle bought new in 2007 will have over $14,000 in aftermarket dollars attached to it over its lifetime. Since two-thirds of vehicles last at least 15 years, this represents a significant opportunity for aftermarket players. Looking at the current picture in this crystal ball, we see that aftermarket demand should be healthy over the next four to five years. There are some downside threats, but for the most part, the variables point to solid demand. If vehicles were not so well built, demand would be even higher.”

Because of rising long-term vehicle quality, the average amount of repair has declined from 5.27 hours per vehicle per year in 2000 to a forecast of only 4.60 hours per vehicle in 2010. “This represents a decline of approximately 15 per cent, and it means that improvements in vehicle quality have decreased aftermarket demand by about one per cent annually over the past 15 years,” DesRosiers said. “The aftermarket is still growing, but it would have grown that much faster had repair intervals not been stretched.”

New-vehicle sales in Canada grew rapidly beginning in 1993, and they continued to grow right through to 2002, when they peaked at more than 1.7 million units, DesRosiers said. Aftermarket demand remains at more than $1,000 per vehicle when they are 8 to 12 years old, and the high vehicle sales levels from the mid-1990s are now reaching their prime aftermarket years.

DesRosiers said that vehicles are also lasting a lot longer: in 1970, the average vehicle lasted only 150,000 km, but today are lasting more than 250,000 km. In 2000 there were only 6.3 million cars and trucks ten years of age and older registered for use, but there will be over 7.4 million on the road by 2012.

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