We're expecting great things for new car sales in 2013. Forecasts show automotive dealers can look forward to strong sales as new car purchases continue to gain momentum. With consumers trading in their old vehicles for shiny, new ones, how will the auto aftermarket industry be impacted? Should businesses that deal with auto repair, paint, body, tires, and maintenance be worried that consumer dollars will be spent on purchasing new vehicles rather than fixing up the old ones? Some industry experts point to higher activity in new car sales but also say that there's lots of opportunity in the auto aftermarket.
Let's take a look at new car sales. Last year we saw auto sales hit the highest numbers ever since 2007. Sales for the first part of this year have been good, as well. Paul Taylor, chief economist of the National Automotive Dealers Association, expects more than 15.4 million new vehicles will be purchased or leased in the US in 2013, an increase of 1 million vehicles over last year. Low-interest rates, attractive new models, lower unemployment, and pent-up demand are some of the factors driving these sales.
New car sales don't necessarily mean a downshift for businesses that supply auto repair and maintenance. According to a report from NPD, new car owners subscribe to the notion that if you have something nice, take care of it and they spend more on vehicle maintenance and appearance. Owners of cars three years old or newer spend more money on motor oil and car accessories than owners of cars more than three years old.
Not everyone is in the market for a new car, however. The same report found that 62 percent of consumers say they will be driving the same car this year that they did last. RL Polk found that US drivers are also holding on to their cars longer today, about two more years longer, than they did ten years ago. Owners of new cars keep them for an average of 71.6 months. Owners of used cars hold on to them for an average of 50.7 months.
The average age of cars on the road is 11 years old and older cars continue to create demand for replacement parts. More good news for the independent aftermarket business: 86 percent of the cars on the road today are no longer under warranty which means more work will be done at non-dealer-owned shops.
Aftermarket businesses that provide parts and supplies for those who like to work on their own cars will appreciate that there has been an increase in DIY repairs over the past few years. Changing oil at home and tinkering under the hood in the driveway is possible as a result of a slow economy and high unemployment.
Also impacting sales of new cars and aftermarket products are the newest drivers - Millennials. This group of approximately 80 million 18-34-year-olds is a huge market for auto dealers, but they don't drive as much as older groups do. Many members of this young generation put off learning to drive until their late teens. The high price of fuel is a concern to them. Add to that the high unemployment rate among this group, and a value-driven, frugal sensibility, and the auto aftermarket business owner should be just as excited (or challenged) as the new car dealer with the sales potential from these drivers.
After some very difficult years for the auto and auto aftermarket industries, let's hope that 2013 continues to show strong results as consumers embrace new cars and hold tight to their favorite old vehicles, too.
To help customers visiting the showroom or the repair garage, consider adding payment services such as a Multiple Check program that can help with large purchases by extending the time to pay. 