Life After COVID-19: Coming Soon!
Wednesday, June 03, 2020
By Ted Hughes, director of marketing, MAHLE Aftermarket Inc.
The diversity of thought within our nation has never been more prevalent than these last few months. While we have certainly all experienced plenty of frustration at times, stories of hope have also emerged … particularly within our great aftermarket industry. Many organizations, like us at MAHLE, are full of employees who have made “the extra mile” a normal part of the journey. From those manufacturing auto parts, to the men and women using those parts to keep our vehicles on the road, and every link in the distribution chain in between; we have come together to keep America on the road.
While the functions we perform may not be as urgent or critically important as those front line medical professionals working so hard to keep us all healthy, we are no less essential, and also critically important to keep America moving forward to emerge on the other side of this global crisis.
Now we face the question of recovery, and what the economy will look like moving forward. The next week, month, likely the next year have rarely seen the uncertainty with which we view those time periods right now.
Most experts agree that the economy is headed for some level of slowdown. However, the severity with which they predict ranges from a modest downturn to a calamitous event the likes of which would make the Great Depression pale in comparison. History remains a great resource for predictability, so the natural inclination is to look back on the most recent recession from 2008 to 2010. This period brought us programs commonly referred to as “automotive bailouts” and consumer incentives to spur demand, such as “Cash for Clunkers.”
Credit goes to the Auto Care Association and AASA/MEMA for getting in front of this possibility and petitioning lawmakers to continue to support the aftermarket and opposing scrappage programs as the nation emerges from this crisis. I believe the re-emergence of this industry as a positive influence on the economy will happen sooner than later. Especially given the pent-up demand for returning to some form of normalcy, domestic travel and vacations, and concerns about using public transportation, miles driven is expected to rapidly increase.
If we use 2009 as the defining low point for the last recession, average vehicle age would have been about 11 years old. That means that in 2009, the average year of manufacture would have been 1998. For most of us, that may seem like yesterday, but if we equate that to the technology on vehicles manufactured then, it seems archaic compared to technology in vehicles produced today. There may never have been a period of more technological advancement that occurred in vehicles than what we witnessed during those 10 years. Vehicles were much easier to repair and maintain, thus a more significant amount of work could be performed via the DIY channel compared to today.
Fast forward to 2020 where the most recent IHS Markit data published in Auto Care Association’s Factbook and AASA’s Aftermarket Size & Forecast Report put average vehicle age at nearly 12 years old. This means the corresponding year of manufacture would be 2008. The increased vehicle complexity in these newer vehicles makes DIY repair and maintenance more challenging, and much more likely to require the expertise of a professional automotive service technician to keep these vehicles on the road.
Estimates suggest that new vehicle sales thus far in 2020 are lagging upwards of 35% compared to previous years, meaning that owners will rely on their current vehicles for transportation as the country emerges from the Coronavirus pandemic. Looking longer term, the staggering unemployment rates the nation faces will likely continue to depress new vehicle sales, putting more pressure on the independent aftermarket to repair and maintain the current vehicle car parc.
Collectively, these statistics place renewed importance on Vehicle Data Ownership, which continues to be at the forefront of challenges we face as an industry. Automotive service professionals are going to be called upon with a renewed importance in order to see our great nation through the pending economic recovery. They will need continued access to that vehicle data to perform these repair jobs effectively, and to make sure they do not have to deal with the dreaded comebacks. Dealers, OEMs, and their associations will continue to bring significant pressure on government to keep that data flowing almost exclusively to themselves.
The curve of COVID-19 cases has now flattened and will continue to decline. As this continues, medical professionals who have worked so hard to keep our nation healthy and recovering from this virus will be joined by automotive technicians as new frontline heroes forging ahead to expand American recovery from medical to financial health. As technicians will no doubt answer that call, we must do our part and ensure their ability to perform effectively amid this new normal. I encourage you if you have not yet done so, please visit the Your Car Your Data website (yourcaryourdata.org) for more information on this critical initiative, as well as take action by clicking the link and signing the petition.
Together, we can make the change that is needed for the betterment of all of our livelihoods.