What the Auto Industry Reveals About the American Shopper

Consumer spending makes up roughly 70 percent Of the total U.S. gross domestic product (GDP), a significant portion comes from consumer spending. Therefore, there is considerable focus on understanding consumer behavior, leading economists to create various methods for assessing the vitality of this sector.

Included among these are thorough surveys monitoring consumer sentiment and confidence, continuous tracking of interest rates with a focus on government bonds, indices measuring price changes over periods, and labor market statistics like job vacancies and unemployment filings.

The difficulty in recent times lies in interpreting economic indicators, which has been quite erratic. Predictions have grown increasingly unreliable—it seems something crucial is amiss.

A potential source of insights could be the automotive aftermarket sector. This part of the economy often goes unnoticed but significantly affects consumers. The automotive aftermarket could very likely be the largest market you've barely encountered before.

Used Car Sales Readily Surpass New Car Sales

The United States heavily relies on automobiles. Approximately 93 percent of American workers who travel from home to their jobs use vehicles such as cars and light trucks for transportation. based on U.S. Census information Overall, Americans possess an astounding number of 291 million vehicles Those automobiles are what we use to commute to work, take our children to their after-school activities, do our errands, go to church, and carry out numerous other everyday tasks in our lives.

Many of these vehicles are "pre-owned," and although news about new car sales often grabs most of the attention, the used car market is considerably bigger. Keep in mind that there are roughly 16 million new cars sold annually in the U.S. In comparison, there are over two times more used cars were sold every year.

We recognize that purchases of used cars are included in certain economic indicators like the Consumer Price Index (CPI). Nonetheless, these deals only scratch the surface. Market observers have much broader aspects of the secondary market to consider.

Older Cars Often Require More Maintenance

The typical age of a personal car in the United States is 12.6 years And it continues to grow. On average, vehicles remain on the roads for 19 years. These older vehicles require regular maintenance and repair work. In total, American consumers invested considerable amounts in this regard. more than $400 billion Regarding minor car repairs and upkeep from last year.

The aftermarket sector is expected to expand as well in the coming years. With increasing costs and financial instability, people in America are extending their spending limits and keeping their cars for extended durations. Consequently, it’s logical to expect that the typical age of these automobiles will increase gradually. This trend will necessitate further upkeep and servicing throughout the vehicles' lifetimes to ensure safe and efficient operation.

Customers Are Delaying Maintenance

There are nearly 200,000 auto repair and maintenance shops in the U.S. As with new car sales, such numbers might conjure up an image of your local dealership, however, dealerships account for a small fraction of the available auto service centers. About 80% of the repair capability after the warranty period ends In our nation, this issue originates from standalone repair stores.

As joint owners of the Automotive Aftermarket Products Expo ( AAPEX We frequently engage with these store proprietors and other stakeholders in the sector via various polls, conferences, and during our trade fair. For some time now, they’ve informed us that voluntary spending on automobiles has decelerated. The backlog of overdue upkeep tasks has grown larger, and we've come across stories illustrating how customers aim to reduce costs—say, opting only for replacing the front brakes when needing new ones and delaying work on the rear brakes indefinitely.

Operational and safety constraints dictate how long certain repairs can be delayed, making the aftermarket industry resilient during economic downturns. Consider a daily commuter depending on their car for transportation to work; they would not delay fixes necessary for keeping their vehicle functional. Additionally, with modern, technologically advanced cars requiring stricter regulations and frequent inspections, drivers must undertake maintenance tasks to ensure safe operation of their vehicles.

A Concealed Ecosystem and Logistics Network

It’s impressive that we can take our car to a repair shop, receive a diagnosis, replace the necessary components, and be back on the road within just a few hours. This convenience is frequently overlooked considering there are numerous makes and models of new cars, along with more than 290 million vehicles out there featuring thousands of distinct types and upwards of tens of thousands of individual parts each.

This highlights that the automotive aftermarket encompasses more than merely repair centers. It involves an intricate network including suppliers, manufacturers, distributors, parts retailers, and many others.

Although this aspect of the automotive aftermarket may not be as noticeable, it plays a crucial role within the broader industry and contributes significantly to economic growth. Alongside repair shops, the automotive aftermarket sector provides employment for almost 4 million people , or about 2 percent part of the entire U.S. labor force.

Customers Rely on the Aftermarket

The U.S.'s reliance on old cars implies that people depend more on the after-market sector for their vehicle needs. This dependence stimulates economic expansion by generating goods, services, and employment opportunities. Additionally, it offers insights into consumer behavior since it significantly impacts personal finances. Therefore, gaining deeper knowledge about future trends in American consumer habits might be found within this auto parts market.

Paul McCarthy serves as the president of MEMA Aftermarket Suppliers. MEMA jointly produces AAPEX , one of the quickest expanding gatherings globally, alongside its partner the Auto Care Association .

The opinions stated in this piece belong solely to the author.

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