THE FUEL BEHIND THE AUTOMOTIVE AFTERMARKET
When most think of the auto industry, the first thought that comes to mind is driving a shiny new car out of the dealership. Drivers carefully examine their budget in order to make a thoughtful purchase that will cover down payments, insurance, registry etc. If you’re that person, you’re not alone.
New car sales in the U.S. are expected to hit 17 million this year, which is up from 10 million just five years ago. However, the latest vehicle trends show that what is really driving the industry forward is the automotive aftermarket. The manufacturing, remanufacturing, distribution, retailing and installation of vehicle parts after the initial sale have grown steadily for the last 20 years. In fact, with the automotive aftermarket projected to top more than $722 billion worldwide by 2020, there appear to be no brake lights ahead in this segment. Every driver in need of a vehicle part, accessory, equipment and chemical adds up to more growth, and there’s never been a better time to examine what is fueling this booming industry.
Causes of the Growth
The fluctuating economy has had many effects on the auto industry, but it’s most notable influence is that drivers are holding on to their cars longer. The average age of vehicles on the road stands at a record high 11.4 years and is expected to continually creep up to 11.7 years by 2019. Compare that with the average age of just 8.2 years in 2000.
In the long term, drivers are taking better care of their investments, and any investment needs maintenance. Drivers know that with everyday wear and tear it’s just a matter of time. The automotive aftermarket is continuously refilled with aging cars in demand of a fix-up. As the U.S. economy slowly recovers, car owners are cautious about where they are taking their cars to be serviced. Alternative car care companies, such as Meineke, are seeing a boost in customers looking for a great value.
Drivers hate having to fill up at the gas station, but with the average price per gallon lower than recent years, drivers are less hesitant to put miles on their car. Last year, prices at the pump were averaging a staggering $3.65 a gallon; this year it’s down to about $2.40. The decrease has a significant impact on driving habits. Lower prices at the pump lead drivers to stay on the roads longer and choosing their personal vehicle rather than public transportation.
The added miles, while cheaper on the tank, are costly on the rest of the vehicle, especially with the recent harsh weather conditions in many regions in the country have recently experienced. The abundance of snow and freezing temperatures do a number on roads and vehicles. General non-warranty automotive repairs and maintenance cost consumers $1.6 billion in 2014. Between fluid refills, tire replacements, shocks, struts and suspension work due to potholes and collision repairs from icy conditions, projections for the auto care industry this year are expected to grow even further.
Moving into spring as consumers thaw from the winter season, auto repair shops are seeing increased oil change requests increase as well as routine maintenance needs as customers prepare for road trip season.
Effects of the Growth
Auto franchises are taking notice of the encouraging growth within their systems and putting their foot on the gas with incentive programs. Meineke has developed several financing and incentive programs for new and existing franchisees to boost unit growth. Recently partnering with BoeFly and offering multi-unit incentive programs, the industry-leading franchise is now able to provide faster start-up periods and better financing options for qualified franchise partners.
Consumers are also benefiting from the industry growth as competition heats up between auto care providers. For starters, Meineke is revolutionizing the customer experience by applying technology for better understanding. Too many people associate the auto shop experience with encountering a mechanic who hands them an oil covered post-inspection report with scribbled hand-written notes. This year, the franchise is launching an initiative that will integrate the use of iPads with videos to help customers better understand what mechanics see under their hood. Video demonstrations visually explain any ailments found during a check-up, and instead of a jotting the rest down on a carbon copy, mechanics will be able to provide an electronic version of their notes to customers. The days of customers feeling like auto shops are cheating them will soon be over.