Where Will The Winds of Change Take The Aftermarket in 2023?
By Nathan Shipley, Automotive Industry Analyst, The NPD Group
This year proved to be another one for the history books, both in a good and maybe not-so-good way, for the aftermarket. On one hand, soaring prices across our industry (and most of retail) put tremendous pressure on low-income consumers. On the other hand, dependency on the personal automobile remains stronger than ever, even though new cars are hard to come by and used car pricing is (well, was) literally off the charts. While the latter has become a new macro tailwind for the aftermarket, the inflation-driven pricing story continues to be front and center as 2022 comes to a close, causing many consumers to delay vehicle maintenance.
Looking back over the last few years, each has yielded unexpected curveballs for all of us. Of course, a global pandemic is a big one, but thinking specifically about the aftermarket, high-income households shifted their discretionary spending dollars our way. They bought boats, RVs and project cars. They picked-up detailing. Separately, we had mass-transit avoidance and stimulus money being spent on automotive categories. Work-from-home was a big story relative to tanking miles driven, yet that was offset by factors already mentioned. More recently, high gasoline prices and overall inflation have settled in as something new to create uncertainty in the market. Meanwhile, there has been some erosion among lower-income households earning less than $50,000 a year. This consumer cohort has historically been the most important to the DIY automotive categories, but their income is being squeezed by higher prices on basics like food, gas, and rent, so they are now deferring automotive maintenance to stretch where they can.
Where does all this net out in terms of 2022 performance and 2023 expectations? These unexpected curveballs have landed the aftermarket in a tug of war between the headwinds and tailwinds swirling in the consumer’s economic existence, yet the underlying fundamentals remain relatively strong.
At our free Aftermarket Outlook 2023 presentation on Nov. 1 during AAPEX, we will discuss all of these trends in detail and forecast what trends will impact the trajectory of 2023 performance. We hope you can join us!
Oct. 10, 2022