The aftermarket stands strong amid the winds of change
Wednesday, November 01, 2023
The aftermarket stands strong amid the winds of change
The state of the aftermarket is strong. With a responsibility for keeping 1.5 billion vehicles on the road and contributing $1.8 trillion to the global economy, the U.S. aftermarket grew 9.7% in 2022 and is estimated to grow another 8.1% to $389 billion this year.
“We are actually one of the highest performing retail sectors in 2023,” noted Paul McCarthy, president and CEO of MEMA Aftermarket Suppliers, during the MEMA press conference at AAPEX. “That’s a very impressive result. Nonetheless, we absolutely face a little bit of whiplash because we’re shifting from what had been the fastest growth that the aftermarket had experienced in over 50 years.”
McCarthy noted that the importance of not just AAPEX, but “Industry Week” — the collaboration and joint activities of partners including the Auto Care Association and CMA — underscores the importance of a unified approach to advocating for the future of the industry.
The aftermarket has its fair share of challenges: supply chain disruptions, generational shifts in manufacturing, customer bankruptcy and consolidation, and rising interest rates. These challenges, combined with the need to invest in new technologies and businesses to take advantage of automated, connected and electrified vehicles, have created a complex landscape for aftermarket suppliers.
“We need to fight for growth through product and technology innovation, through disciplined pricing, through improving our relationships and our execution with our channel partners,” McCarthy noted. “Make no mistake, as I said from the stage yesterday, we are a technology industry and it’s technology that will bring our next level, our next ‘normal.’”
Still, the outlook for the aftermarket industry is positive as it’s positioned to take advantage of new vehicle technologies, such as advanced driver assistance systems (ADAS) and electric vehicles (EVs), as well as the increasing complexity of vehicle systems and components. These factors, combined with a growing demand for vehicle mobility around the world, point to a bright future for the aftermarket industry.
“Increasing vehicle content means more opportunities for things to break or need service,” McCarthy said. “Then, we also have adjacent growth opportunities like charging stations, which definitely need some repairs.”
Fight for Your Right to Repair
One of the key issues facing the aftermarket industry is the Right to Repair movement, which seeks to ensure that consumers and independent repair shops have access to the information and tools they need to repair vehicles. The importance of this issue cannot be overstated, as it impacts not only consumers and aftermarket professionals, but also the future of the industry itself. In support of this cause, the industry has launched the supplier Right to Repair Pledge, asking supplier members to commit their resources to raising awareness and support for the Right to Repair.
“At the beginning of this year, United States Congressman Neal Dunn and more than 40 co-sponsors introduced HR 906 to Congress. It addresses repair access for the maintenance and repair of vehicles, light vehicles and heavy vehicles,” noted Ann Wilson, senior vice president, government affairs, MEMA. “This week, we actually have what is called a markup in the subcommittee. And, this is a very important, necessary step if this bill, if this legislation is ever going to be considered on the floor of the house.”
The challenges facing the Right to Repair movement are substantial, with significant opposition from various stakeholders, notably the OEMs. One of the primary concerns raised is cybersecurity with opponents questioning whether the aftermarket industry can protect the cybersecurity of vehicles and their drivers.
“Suppliers will tell you they manufacture components every single day that go into new vehicles, that go through repair maintenance, and that protect the cybersecurity of those vehicles and the drivers on the road every single day,” Wilson noted. “For the vehicle manufacturers to come back and say that the aftermarket cannot protect privacy through cybersecurity is just not true. The aftermarket does this. We know the ways to do this. We know the ways to address this as we move forward.”
Another issue that has been raised is the exclusion of heavy-duty vehicles from the bill, which is unacceptable to many in the industry. Heavy vehicles are an integral part of the American economy, Wilson stated, and their maintenance and repair need to be addressed in any Right to Repair legislation.
Enforcement is another key concern. While a memorandum of understanding was entered into between vehicle manufacturers and a small number of repair shops over the summer, it lacks enforcement measures.
“You can’t ask an independent repair shop to file litigation in federal court every time they have a problem,” Wilson said. “You’ve got to have something that is open to them that they can actually address it in some way that makes sense to them.”
As technology continues to evolve, the Right to Repair movement needs to adapt accordingly. Wilson said that the Federal Trade Commission should be given the ability to expand the list of technologies covered by the legislation and conduct fact-finding to provide the industry with the necessary information to grow and adapt.