Regardless of where automotive professionals are located, understanding the vehicles on the road, specifically which segments are most prevalent, will help them to stay informed on the latest trends and have additional insight on what the aftermarket industry may entail in the near future.
To gain a more comprehensive understanding of the vehicles on the road and how they may differ in the United States and Canada, Experian’s Automotive Market Trends Report: Q2 2022 took a deep dive into the data.
VIO trends
When comparing light-duty vehicles in operation (VIO), data shows the U.S. has substantially more vehicles on the road than Canada. In fact, there were 284.4 million light duty VIO in the U.S. through Q2 2022, while Canada had 26.1 million.
Furthermore, of all vehicles on the road in the U.S. today, 87.9% fell within the current 20 model years and 95.1% were within the current 25 model years through Q2 2022. In comparison, Canada had 93% of vehicles fall within the current 20 model years and 96.7% within the current 25 model years this quarter.
With Canada having approximately 6% more current model years than the U.S., this may indicate that the vehicles in Canada are somewhat newer and there are a limited number of older models, of course by percentage.
Additionally, with U.S. domestic brands not being as popular in Canada, 57.5% of all light duty vehicles in Canada are non-U.S. brands or imports, while the remainder 42.5% were domestic through Q2 2022.
There was a similar trend in the U.S., where import brands comprised 50.1% of all light duty VIO in the U.S. through Q2 2022, surpassing domestic brands for the first time, which came in at 49.9%.
Analyzing multiple data points will give automotive professionals a better understanding of what vehicles consumers are currently opting for so they can market strategically, as well as prepare for potential parts and services that may be needed now and in the future.
Current top vehicle segments
When looking at the top vehicle segments on the road, there are three categories that break down the metric—the vehicle type, size, and class.
In the U.S. luxury class, full-size pickups were the leading segment at 16.3% through Q2 2022, followed by midsize vehicles at 14.1% and crossovers at 11%. In addition to that, trends for the non-luxury class in the U.S. were similar this quarter—with midsize vehicles coming in at 16.4%, followed by full-size pickups (16.3%) and crossovers (13.6%).
Meanwhile, in Canada, the compact vehicles in the luxury class comprised 17% of the total VIO through Q2 2022. Rounding out the top three were full-size pickups (15.2%) and midsize crossovers (13.7%). Similarly, compact vehicles were the leading segment in Canada’s non-luxury class—followed by midsize crossovers (16.4%) and full-size pickups (15.2%).
It’s important for automotive professionals to have insight on the types of vehicles currently in operation, so they are better equipped when catering to a consumer’s needs. Furthermore, analyzing the other metrics—such as the aftermarket “sweet spot”—will paint a fuller picture when preparing for what’s ahead in the aftermarket industry.
Aftermarket sweet spot continues to grow
The sweet spot consists of vehicles between six-to-12 model years old and are still considered to be in good condition but have aged out of general OEM warranties for repairs. Through Q2 2022, the model years that landed in the sweet spot were between 2011 and 2017.
Breaking the data down further, the U.S. sweet spot made up 35.1% of total VIO through Q2 2022, an increase from 33.2% the previous year. As more vehicles are expected to enter in the coming years, the continuous growth sheds a positive light of potential revenue and market activity.
In comparison, 38.3% of total VIO in Canada landed in the sweet spot; and similar to the U.S., there is projected growth over the next few years as lower volumes of older vehicles transition into the post sweet spot and new vehicles enter the market.
Staying up to date on the vehicle trends as well as analyzing what the aftermarket currently looks like and what it’s anticipated to be will help automotive professionals in both countries have a better understanding as they plan to assist consumers now and in the months to come.
Marty Miller is Experian’s director of data for automotive.
According to a report from S&P Global Mobility (previously the auto team at IHS Markit), the average age of light vehicles in operation has climbed for five consecutive years, reaching a record age of 12.2 years as of Jan. 1, 2022.
So, perhaps it’s not surprising that the automotive aftermarket continues to demonstrate its market strength with higher-than-expected sales in 2021 in the wake of a slow economic recovery from the COVID-19 pandemic in the United States.
Total U.S. light duty automotive aftermarket sales are forecasted to increase 8.5% in 2022, totaling $356.5 billion, according to the 2022 Joint Channel Forecast Model produced by the Auto Care Association and the Automotive Aftermarket Suppliers Association (AASA).
The associations distributed a news release on Tuesday and said an additional 5% growth is expected for 2023 and growth will average more than 3% in 2024, bringing the light-duty aftermarket to $401.5 billion by 2025.
Experts said the compound average annual growth rate from 2019 to 2022 will be 5.7%, more than making up for losses seen in 2020 due to the pandemic.
“Year after year, the auto care industry continues to show its strength and reliability,” Auto Care Association president and chief executive officer Bill Hanvey said in the news release.
“In the midst of the highest gas prices on record and an inflation rate at a 40-year high, coupled with persistent supply chain disruptions and war in Eastern Europe, vehicle miles driven, vehicles in operation and consumer spending all increased in 2021 and are projected to increase into the coming years, as well,” Hanvey continued.
Other key data in the joint channel forecast model include:
—Market trends influencing the aftermarket
—A 2021-2025 review of industry growth and forecasts
—Industry sales by channel including history and forecasts
—Industry sales by distribution channel
The market sizing and forecast are conducted on behalf of the Auto Care Association and AASA by S&P Global Mobility. The forecast is based on the U.S. Census Bureau’s Economic Census; IMR Inc.; and proprietary data, economic analysis and forecasting models from S&P Global Mobility.
“The automotive aftermarket once again shows its resiliency with a stronger than expected recovery from the pandemic,” AASA president and CEO Paul McCarthy said. “In fact, the automotive aftermarket rose nearly 25% in the past two years despite ongoing headwinds, and we are excited to see the landmark market size of $400 billion in 2025.
“But as the industry advances to that landmark number, look for a new challenge to emerge as we may shift from a market supported by high demand and availability to a battle for market share. With that, we’ll see one more strength of the aftermarket emerge, collaboration with the right partners to ensure the same pace of success in this next phase of industry dynamics,” McCarthy went on to say.
The Joint Channel Forecast Model is available in the Auto Care Association’s 2023 Auto Care Factbook at digital.autocare.org/2023factbook and in AASA’s Aftermarket Size & Forecast Report available at https://www.aftermarketsuppliers.org/resource.
Mighty Distributing System, which provides parts, lubricants and other supplies for service departments, recently added the 14th dealership group to its franchise system.
Now operating three Mighty Auto Parts franchises in two states is the Florida-based Step One Automotive Group. According to a news release, the new Mighty businesses are based in Orlando, Fla., Pensacola, Fla., and Dothan, Ala., operating as separate, vertically integrated distribution points servicing the greater Orlando market, the Florida Panhandle, as well as southern Alabama.
Step One Automotive Group was founded in 2016 by chief executive officer Fernando Arellano Geddes. Headquartered in Fort Walton Beach, Fla., the company operates 22 dealerships in Florida, Alabama and Georgia, representing 16 brands including Chrysler, Dodge Jeep, Ram Fiat, Volkswagen, Subaru, Kia, Hyundai, Genesis, Ford, Buick, GMC, Cadillac, Alfa Romeo and Maserati.
The news release mentioned that Step One will centrally distribute Mighty’s preventive maintenance products, shop supplies, detailing products, chemicals, lubricants and equipment to its own dealerships.
The new relationship also presents Step One with an opportunity to add profits with B2B product sales to its wholesale customers and other non-affiliated automotive businesses in its exclusive territory.
“We are excited about our partnership with Mighty Auto Parts. This will allow us to expand business throughout the region and we look forward to a long and productive relationship with Mighty,” Arellano Geddes said in the news release.
Mighty president Josh D’Agostino added, “Car dealerships continue to see the value in adding a Mighty franchise to their portfolio of companies. We are so proud to welcome Fernando and the entire Step One Automotive Team to our family. They have made a significant investment in our program by adding three Mighty operations and will have our full support to achieve success in each market.”
In the latest episode of the Auto Remarketing Podcast, we turn to the parts and service segment of the auto industry.
Jay Maxwell of the Costco Auto Program returns to the show to discuss the company's work in the space, the increase in vehicle ownership period and its impact on parts and service and much more.
To learn more about the Costco Auto Program, visit www.costcoauto.com.
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