In 2024, the aftermarket auto repair industry stands at the precipice of a transformative era. The next three to five years hold immense potential, fueled by a confluence of trends that signal a period of growth and opportunity unlike any time before. With vehicle ownership rising and the demographic of serviceable cars shifting, the industry is poised to capitalize on the evolving market dynamics. Here are key trends and opportunities for shop owners and managers to navigate challenges and harness the potential that lies ahead.
Growing and Aging Vehicle Fleet
The U.S. vehicle fleet's growing size and advancing age are primary catalysts driving aftermarket demand. Reflecting on the latest data, we observe a notable surge in the number of vehicles traveling the nation's roads, with an increase of more than 15 million since 2017. By 2025, projections indicate a staggering 290 million registered cars, SUVs, and light trucks operating across the United States. This escalation is not merely a number but a harbinger of the vast market potential awaiting aftermarket services, as an expanding vehicle population invariably signals a rise in the need for maintenance and repairs.
In 2023, the average vehicle age reached a mature 12.5 years, with a remarkable 42% in the industry's prime service age bracket of 4 to 11 years old and an additional 42% in the 11+ range. These vehicles are prime candidates for the aftermarket industry, more so than their newer counterparts, as they transition out of warranty and accumulate the inevitable wear and tear of time and miles driven. This maturing of the US fleet opens doors for aftermarket repair & maintenance providers to focus on specialized services and products tailored to this vehicle demographic. This trend doesn't merely suggest growth; it demands a strategic pivot to meet the nuanced needs of an aging vehicle demographic. However, the growing and aging vehicle fleet also poses some challenges for the industry, such as:
- The increasing complexity and diversity of vehicle models and technologies require more advanced skills and equipment to service and repair.
- Consumer expectations and preferences will demand more convenience, quality, and value from aftermarket providers.
- There is growing competition from OEMs and dealerships trying to retain or recapture customers by offering extended warranties, service plans, and loyalty programs.
The aftermarket must take decisive action to overcome these potential challenges. Businesses must double down on the training and education of technicians and staff, ensuring they are abreast of the latest vehicle technologies. Facilities and equipment will require significant investment and upgrades to accommodate growing and emerging technologies such as EV, hybrid, and ADAS-equipped vehicles. Enhancing customer service and marketing strategies will set businesses apart from competitors and foster enduring customer relationships. Additionally, the industry should harness technologies such as AI to compensate for gaps in the workforce, skillset, and experience.
Shrinking Service Bay Population
While the vehicle fleet is growing and aging, the service bay population is shrinking. In 2022, there were 1.11 million car and light truck service bays in the U.S., down 5% from 2017 and shrinking as more legacy properties sell out of the industry through retirement. This means fewer places for vehicle owners to get their vehicles serviced and repaired, creating a supply-demand imbalance in the market.
The shrinking service bay population also challenges the industry, requiring it to become more productive and efficient. The opportunity will require more technician training while embracing technologies, including artificial intelligence, to bridge the talent shortage and lack of experience. Aftermarket businesses that can leverage technology to improve their operations, such as online platforms, mobile apps, and diagnostic tools, and AI, will be able to attract and retain more customers and increase their profitability.
However, the shrinking service bay population also poses some challenges for the industry, such as:
- The difficulty and cost of finding and retaining qualified, skilled technicians, especially in rural and remote areas.
- The pressure and stress of meeting customers' increasing demand and expectations, especially in urban and crowded areas.
- The risk and uncertainty of investing in new technologies, especially for smaller and independent businesses.
To overcome these challenges, aftermarket businesses need to:
- Recruit and retain talented and motivated staff by offering competitive compensation, benefits, amazing cultures, and career development opportunities.
- Optimize and streamline their workflows and processes by adopting best practices, standards, and benchmarks for quality and efficiency.
- Evaluate and adopt new technologies by conducting market research, testing, piloting, and seeking external support and guidance.
Shift to Foreign Nameplates
The aftermarket industry is also witnessing a pivotal shift in the landscape of vehicle branding, with foreign nameplates increasingly becoming the vehicles of choice on U.S. roads. In the decade stretching from 2013 to 2023, foreign nameplates accounted for approximately 54% of annual new vehicle sales in the United States. While the current ratio of domestic to foreign vehicles on the road remains relatively balanced, a significant trend is emerging. By the onset of 2024, the domestic vehicle subset is anticipated to exceed an average age of 15.5 years. This trend signals a gradual but undeniable tilt toward foreign nameplate preeminence in the aftermarket repair sector as this older cohort of domestic vehicles begins to bow out of active circulation.
This evolution presents a strategic inflection point for the industry—a clear horizon exists for heightened demand for expertise in foreign vehicles. With their distinctive parts, tools, and service requirements, foreign vehicles and owners demand that businesses develop a focus on specialization. Aftermarket businesses poised to meet the discerning needs of foreign vehicle owners—through the provision of high-quality components, competitive pricing, and superior service convenience—are positioned to carve out a distinct competitive advantage. Foreign Specialist represents the largest growth segment in the aftermarket. Those who adeptly navigate this shift, aligning with the nuances of foreign vehicle maintenance and repairs, will capture and lead the market in this new epoch of the automotive service industry.
However, the shift to foreign nameplates also poses some challenges for the industry, such as:
- The difficulty and cost of sourcing (and stocking) foreign parts, especially for newer and less common models.
- There is a lack of familiarity and experience with foreign vehicles, especially for older and less-trained technicians.
- There are potential legal and regulatory issues with foreign parts and services, especially for safety and environmental standards.
To overcome these challenges, aftermarket businesses will need to:
- Establish and maintain reliable and efficient supply chains and inventory management systems for foreign parts to ensure availability and affordability.
- Seek and obtain relevant certifications and accreditations for foreign vehicles to demonstrate competence and credibility.
- Adapt a marketing and branding message specifically tailored to foreign vehicle owners.
- Train/retrain service personnel to be able to communicate precisely to discerning consumers.
- Provide specialty tooling and the technical training necessary for expert service and maintenance.
The road ahead for the aftermarket auto repair industry faces both challenges and opportunities. The expansion of vehicle ownership, the aging car population, the influx of foreign nameplates, and the necessity to innovate operationally are not mere trends; they are the markers of a new era in automotive services. It is incumbent upon industry owners and managers to recognize these signs and act decisively.
The journey forward requires a bold vision and a willingness to embrace change. By understanding the shifting landscape and adapting to the evolving needs of both vehicles and consumers, the aftermarket auto repair industry can survive and thrive in the future. Let us approach this new year with optimism and commit to seizing the tremendous opportunities that lie before us. Together, we can ensure that our industry navigates the road ahead and sets the pace for the future.
If you would like to explore and discuss this topic further, I’d love to connect. Feel free to email me- [email protected]
*Statistical data via AutoCare Fact Book and the Lang Report 2024
