By
Counterman
Six in 10 automotive businesses expect demand for aftermarket parts and services to grow this year. That’s according to
link hidden, please login to view by the Automotive Aftermarket Products Expo (
link hidden, please login to view). Open-ended commentary points to higher new vehicle prices, which are causing consumers to hang onto their existing vehicles longer, as the driving force for rising demand in the aftermarket.
“The price of new cars is high, so people are purchasing, repairing and maintaining older vehicles,” wrote one respondent. “People are keeping their cars for longer periods of time,” noted another. “Price of new cars justifies repairs on older vehicles,” noted a third.
One caveat to that finding is that price sensitivity shows up in the aftermarket, too. The majority (53%) have observed more interest in lower-cost parts and services. However, customer motivation appears to be focused on value, rather than pure cost savings. Respondents said quality (34%) was the top influence of buying preference, followed by price (25%) and availability (20%).
Perhaps as a consequence, respondents said their business’s sales expectations for this year are flat, compared to sales performance the year prior. This reinforces the aftermarket’s reputation for stability no matter what’s happening with the economy.
Uncertainty is the Top Challenge
Respondents identified the top challenge as “uncertainty” (45%), which was a recurring theme throughout the findings. Many aftermarket businesses are engrossed in supply chain diversification initiatives, carrying higher inventory levels, and struggling to find skilled labor.
Among the other key findings are the following:
Customer service is the top AI initiative. About one-fifth (21%) of respondents have implemented enterprise-grade AI tools and another 20% are in the planning stages. Of those implementing enterprise AI, the top areas of AI investment are customer service (60%), inventory management (42%) and product development (36%).
Supply chain diversification. 70% of respondents have completed diversifying their suppliers (6%), are in the planning stages (18%), or have plans in progress (46%).
Inventories are on the rise. 38% of respondents are managing higher inventories of parts, compared to 20% who say they are managing fewer parts.
Electric vehicle (EV) investments. More respondents (26%) said they will invest less in the EV segment, compared to 17% who will invest more. Another 27% said they will invest about the same as last year. Notably, the largest share of respondents (29%) remains uncertain about EV investments.
Solving the Skilled Labor Shortage
Attracting skilled talent ranked second on the list of the top three challenges. Repair shops struggle with this because automotive technicians are retiring faster than the industry can replace them. The problem is compounded by the fact that demand for repair and maintenance services is rising.
When asked about the steps their business is taking to address the shortage, respondents pointed to an array of enticements. These include offering more training (30%), boosting compensation (27%) and improving benefits (22%), among other steps.
However, 25% of respondents aren’t taking any of those actions. In open-ended comments, respondents offered a variety of answers ranging from hiring retired people part-time to employing temporary help. One respondent commented [that we] “just stopped looking for help.”
It’s important to note that it’s not just repair shops that need skilled labor in the aftermarket. Respondents who work in manufacturing comprised the second largest demographic in this survey, following repair shops.
One manufacturing respondent wrote in to offer a solution, calling for “a national apprenticeship program that is deeply integrated into the manufacturing sector.” That person later added that technical institutes should synchronize their curricula with the “real-time needs of the factory floor.”
The full report is freely available for download (no registration required) on the AAPEX blog:
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By elizabeth
By Counterman
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