Upcoming Trends for the New Year
While the future may not be completely predictable, trends and patterns help us put the pieces together for what the next year will look like. This is exactly what R.L. Polk & Co., did during AAPEX with their “Five Trends in Five Minutes” presentation.
To support their trends, they first provided the economic background. There’s no doubt in anyone’s mind that the economy has been in the longest and deepest recession since World War II; however, there are signs of recovery. The country is not out of the hole yet, but it’s not sinking down further and has a minimal incline, which is a good sign for the automotive aftermarket industry.
On the other hand, there are still obstacles standing in the way. The change in driving volume is a significant factor. It’s the first time that sustained flat miles driven has been under 3 billion miles since 2007, and Polk estimates that at the end of 2012 driving volume will remain flat and may even decline further.
It’s nothing new to state that the job market is suffering. This leads to less money spent on automotive aftermarket endeavors, which can be harmful to the industry.
Trend No. 1: OEMs becoming more aggressive as new light vehicle sales continue to rise.
In 2006, the new light vehicle registration count was at 1.4 million per month. There was a sharp decline in 2009 at 0.88 million per month; however, 2012 year-to-date (as of Nov.) is looking up at 1.28 million per month, so the figures yield that more people are buying vehicles. In fact (as of press time), light vehicle sales were on track to hit 14.3 million units for 2012. Volkswagen is predicted to become the No. 1 automaker by 2018, and their new vehicle sales are currently up 34 percent when compared to the previous year-to-date. This can be chalked up to the bad economy and expensive gas prices driving consumers to opt for more fuel-efficient vehicles. Mark Seng, Global Aftermarket Practice leader, said auto manufacturers, Toyota and Honda, are back on track, while Kia and Hyundai are focused on maintaining their current market share. The Big Three, Ford, GM and Chrysler, have lost market share. Their market share has deteriorated to 54 percent in 2012, compared to 77 percent in 2000. Polk is projecting them to lose 4 more percent by 2018.
However, the Big Three are not going down without a fight. In the last two years Chrysler has redesigned 16 of its models, while launching two different brands: Ram and Fiat.
Ford Motor Company has transformed dramatically. Its debt is down, while labor costs are on par. It also eliminated its Mercury brand.
General Motors has less debt, as well, with only four makes. They have churned out some new models, too.
Automotive manufacturers have sensed the recovery approaching and are aggressively marketing their brands, as more consumers purchase vehicles.
Trend No. 2: The vehicle population continues to age.
The average age of all light vehicles is now 11.3 years, while the length of ownership increases, as well — new and used combined generates a 24-month increase in ownership since 2001, making the total average 58.2 months. This has led to a 50 percent decrease in scrappage rates over the past 60 years, as consumers continue to hold on to their vehicles for lengthy amounts of time.