2016 aftermarket overview - memafsg.com aftermarket... · 2016 aftermarket overview ... source:...
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AASA is the aftermarket division of the Motor & Equipment Manufacturers Association
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State of the U.S. Aftermarket
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US aftermarket represents a $246.7 billion industry with steady growthProjected growth rate expected to average + 3.6% annually
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2016 AASA Joint Channel Forecast Model
-1.4%
3.7%
4.7%
3.5%3.1%
3.5%
4.4%4.1%
3.3% 3.4%3.6%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F
% C
hang
e Y
ear-
Ove
r-Y
ear
Mar
ket
Tot
al (
in b
illio
ns o
f do
llars
)
Light Vehicle Aftermarket Growth
Key driver of $ growth is value of parts
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Wiper Blade$5 $19
Fuel Pump$45 $225
Wheel End$15 $185
Source: AASA Analysis
Examples
Improved OE quality / warranty has constrained parts replacement and unit volume…
6Source: DIFM Outlook 2025, IMR Inc., 2016 AASA Replacement Rates Report
This has been offset by the increased longevity of vehicles
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9.69.7 9.7
9.8 9.89.9
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10.3
10.6
10.911.1
11.311.4
11.5
9.5
10
10.5
11
11.5
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average Age of Light Vehicles in Use (Years)
Source: IHS
There is currently a dip in number of vehicles in “sweet spot”By 2017, the “sweet spot” is expected to stabilize and rise again
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103.1 102.3
98.5
93
88.6
80
85
90
95
100
105
2011 2012 2013 2014 2015
In m
illion
sAftermarket Sweet Spot (Vehicles 6 – 12 years old)
Source: Experian
2015 saw record New Car sales
9Source: NADA
16.616.2
13.2
10.4
11.6
12.8
14.5
15.6
16.5
17.5
8
9
10
11
12
13
14
15
16
17
18
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
In m
illion
sVehicles Sold
As we wrap-up 2016…
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New Car sales have likely peaked - rate of increase beginning to slow
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14%
5%
4%3%
6%
2%
6%
3%
10% 10%
6%
3%
0%
2%
4%
6%
8%
10%
12%
14%
16%New Car Sales (YOY Change)
Source: NADA
2015 By Month
Gas prices continue to be lowPump prices down 35% from two years ago
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$1.50
$2.00
$2.50
$3.00
$3.50
$4.00Average US Gas Price
Source: EIA
2015 By Month
Peak Price$4.10 in 2008
Miles driven continues to increaseSupported by low gas prices; important driver for aftermarket growth
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2,000
2,200
2,400
2,600
2,800
3,000
3,200
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
In M
illion
Mile
s
Annual Vehicle-Distance Traveled
Source: DOT
Drop in unemployment rate is supporting miles driven
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5.7
5.5 5.55.4
5.5
5.3 5.3
5.1 5.15.0 5.0 5.0
4.0
4.2
4.4
4.6
4.8
5.0
5.2
5.4
5.6
5.8
6.0US Unemployment Rate
Source: BLS
Peak Unemployment10% in 2009
Weather in 2015 was unusually warm for most of the year and much of the U.S.
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0
20
40
60
80
100
120
140
His
toric
al R
ank
National Average Temperature Rank
Source: NOAA
January 2016: drier conditions in Midwest and the first strong winter storm in the Northeast
16Source: NOAA
2016 - 2018Looking ahead:Challenges and Opportunities
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Channel Trends
• At Consumer Level• DIFM growth
• Trade Level• Big 4 consolidation
A data-driven landscape
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DIFM share growth
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Key Shifts
• DIFM
• All the dollar growth• + 4 points market share
• DIY
• Share loser• Dollar volume flat
Independent• Remains largest• Dollar Growth
OES• Share winner• Dollar gains
26%
74%
2013
DIY DIFM
22%
78%
2025
Source: DIFM Outlook 2025
Aftermarket parts volume
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• DIFM increases $14 B (+ 25%)• OES and Independent both grow
• DIY stays flat at $20 B value2013 2025 Growth
DIFM $56 B $70 B +14 B (25%)-Independent $43 B $52 B +9 B (21%)
-OES $13 B $18 B +5 B (38%)
DIY $20 B $20 B ---
Source: DIFM Outlook 2025
DIFM outlet share forecast
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60% 55%
3%5%
6%6%
16% 18%
14% 16%
2013 2025F
DealersTire DealersProduct Repair SpecialistsIndependent ChainsIndependent Non Chains
Reduction of over 13,000 outlets
Source: DIFM Outlook 2025
Vehicle age and owner income greatly influence outlet choice
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61% 51%38%
18% 16% 6%
39% 49%62%
82% 84% 94%
0-3 3-6 6-9 9-12 12-15 15+
Yes No
Vehicle Age
79% 71% 66% 62% 63% 54% 47%
21% 29% 34% 38% 37% 46% 53%
Lessthan$25K
$25K -$50K
$50K -$75K
$75K -$100K
$100K -$150K
$150K -$200K
$200K+
Independent Dealer
Income
Did you go to the dealer the last time you needed vehicle repair or maintenance?
Source: DIFM Outlook 2025
OE Dealer recovery
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• Outlets and share declines have bottomed out from the recession era
• Dealer closings over; + 200 locations in 2014
• 2014 product increase *first time in 7 years
• OES service occasions increasing along with car sales
• Consumer visits• Warranty / Diagnostics
*Source: Lang Marketing and NADA
Big 4 channel players continue to increase their share of the aftermarket
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28% 28% 29% 31% 34% 35% 36% 37% 39% 41% 42%
72% 72% 71% 69% 66% 65% 64% 63% 61% 59% 58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AAPAZOGPCORLY
Source: DIFM Outlook 2025 and AASA analysis
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“Online” Impact on Aftermarket
• E-Tailing
• Price Transparency
• Consumer Expectations & Maintenance Behavior
• New Digital Business Models
e-Tailing market: ~5% of overall market
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Source: DIFM Outlook 2025
3
13
0.4
1.7
3.4
14.7
2013 2025
e-Tailing Growth
DIY DIFM
+13%
Internet is driving transparency
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• E-tailing will grow share of DIY
• Much faster growth of consumer search online
• Internet driving price transparency and new business models
… and consumer expectations are growing
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Source: DIFM Outlook 2025
New online business models
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• Open Bay Repair
• Auto MD
• Maintenance Apps
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Vehicle Connectivity Impact on the Aftermarket
New vehicle “connectivity” and “autonomous” impact on the aftermarket
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• Telematics to date in existing vehicles have not had a dramatic impact on repair behavior
• The coming “connected car” and autonomous vehicle technologies will begin to roll into vehicle parc
Vehicle Technology Stages
Source: MEMA
Telematics – ADAS – Connected – Autonomous
Deep-dive on a key opportunity: Advanced Driver Assistance (ADAS)
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Ground-breaking new study released
Our key findings on advanced driver assistance systems (ADAS)
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Advanced driver assistance systems (ADAS) that are available today could potentially reduce cost by around 30% and reduces fatalities by one-third
Penetration of key technologies only 7% or less in 2015 model year
BCG analyses show that ADAS features have a cumulative safety benefit to society of around $16,000 per car
To help reduce the societal harm of vehicle crashes, all stakeholders will need to take action
Motor vehicle crashes cost the United States $910B or $4,000 per vehicle each year
Source: BCG/MEMA study “A Roadmap to Safer Driving”
New era: recent Consumer Electronics Show (CES) had 917 automotive exhibitors!
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Automotive Electronics
464
Audio 748
Robotics 233
Sensors 493
Telecom 324
Wearables 761
Auto Accessories
453
Performance Audio 534
Source: IHS
CES trends show some of the complexity around coming connectivity
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Cyber-Security• Connected cars are vulnerable to outside attacks (either directly or via
cloud back-end access)• Risks: Theft, espionage, deception, privacy, damage or destruction• Solution: Iterative design of SW security on top of HW security
Apple CarPlay & Android Auto• Sales of CarPlay [OR] Android Auto: ~500K (2015) 45M+ (2022)
Software Over-The-Air (OTA)• Value >$35 billion by 2022 (savings, updates, royalties, bandwidth)• OEMs cannot build software OTA platforms fast enough• Driving M&A activity among automotive suppliers and IT firms• OTA and cyber-security must be deployed together
Source: IHS
A more connected car could lead to an increase in key business drivers for the aftermarket
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Increased awareness of: - failure, replacement rates & location information for better demand forecasting- prognostics that alert motorists, service providers, distributors and suppliers of pending failure. - more end consumer awareness would allow for suppliers to benefit from the increased maintenance performed on vehicles.
Regulations & government policy must protect access for Independent Aftermarket
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• Member of the Aftermarket Telematics Task Force, working collaboratively with all industry stakeholders
• Drafting “model-language” legislation bringing clarity to our wants and needs
• Working with ISO and SAE, promoting a technical solution (Vehicle-station Gateway) for safe aftermarket access to the vehicle
• Educating regulators and policy makers of the “unintended” impact of rulemaking related to data-privacy and cybersecurity
• Legislative Summit and Ride & Drive: Used this platform to regulate and educate policy makers on aftermarket issues
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KEY TAKEAWAYSIndustry Growth
• 5 year forecast of steady annual growth for Aftermarket Industry• Increased dollar value of replacement parts a key driver
• Aftermarket benefits from very old cars still on road (11.5 avg age)• Record miles driven supported by low gas prices• Offsets impact of lower overall replacement rates
• Record New Car sales in 2015 indicate peak annual volumes• Repair “sweet spot” group reduced near term
Will continue to monitor and report on these trends
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KEY TAKEAWAYSChannel Trends
• DIFM continues to grow vs. DIY• OES growing again but constrained• Independents still dominant and favored by consumers
• Big 4 Channel Players continue to grow share of market
• 2017 white papers to update changes within DIFM channel• New M&A reports available
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KEY TAKEAWAYS“Connected” Technology
• Consumer expectations from digital lifestyles to impact maintenance behavior
• On-line will drive innovation in new tools and business models
• OE adaptive safety systems (ADAS) and autonomous vehicles coming
• Government policy integral to how technology will impact Aftermarket
• Legislative Summit and Ride & Drive
“Connected Aftermarket” communications outline impact on aftermarket from the new technologies