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Trends and Outlook – Aftermarket

Trends and Outlook – Aftermarket

May 22, 2020

The COVID-19 crisis continues to have a profound impact on British Columbia, Canada and the entire globe. Besides the immediate health crisis, the pandemic is having a significant effect on the global economy – and the auto industry is no exception.

Many consumers are feeling the economic sting of the pandemic and this has affected their purchasing power. Consumers are also moving around in different ways due to travel restrictions and changes in how work is being conducted.

Desrosiers Automotive Consultants Inc. (DAC) recently released a study about what we can expect from the automotive aftermarket industry due to the COVID-19 pandemic.

The aftermarket is a vast and important area of the automotive parts and accessory industry and employs over 190,000 Canadians, with more than 30,000 of those in BC. These individuals are involved in the maintenance and repair, along with sales, refurbishment and management of used vehicles.

In DAC’s analysis, they note that the aftermarket operates in a different cycle than new vehicle sales. This was clearly seen in the last recession, which saw a decline of new vehicle sales in 2008-2009, while the aftermarket remained resilient.

The aftermarket has multiple and complex variables which include things such as size of vehicle fleet, consumer replacement patterns, used car market refurbishing, kilometers driven, vehicle technology and more.

In regard to this current situation, there is one factor that makes the downturn more striking than previous recessions. This is that there was a sudden and unprecedented drop in kilometers driven, which is one of the key drivers of market demand in the aftermarket along with the age structure of vehicles.

According to DAC, mobility to workplaces was down by 57% for Canadians as of April 30. Workplace data is incredibly important to examine, as it is the preferred method of commuting across the country. An earlier analysis by DAC showed that more than 78% of Canadians prefer to commute to work by personal car.

DAC reports that early data for gas consumption showed a 17% decline for March and that figure would likely continue to deteriorate for April. That being said, as we see things begin to open up in BC and we see consumers going on short road trips and taking drives – all with the necessary precautions – we may see that number start to go up as we get into summer.

We are just in the early stages of analyzing the impact of COVID-19 and its implications for the aftermarket, but this early data is certainly fascinating and offers a snapshot into what is to come. A positive takeaway from this is certainly that privately owned vehicles seem to be the transportation of choice in countries that have relaxed restrictions – so we can safely predict we will see the same in Canada. In fact, amongst working Canadians, more than 78% prefer their private automobile as the preferred method of commuting in Canada!

Though the future is uncertain for the auto industry and for so many other sectors, we will work to get through this together and come out stronger on the other side.

Stay safe out there and remember to follow all health guidelines as BC moves into Phase 2 of its Restart Plan.

Blair Qualey is President and CEO of the New Car Dealers Association of BC. You can email him at bqualey@newcardealers.ca

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