Automotive Aftermarket Insights: Market Trends, Online Sales, and Target Audience

2. Industry Insights • According to The NPD Group, total 2018 sales for the automotive aftermarket, which includes parts, tires, batteries and many other product subsections, increased 2.5%, following a 2.2% increase for 2017. • Based on data from GAMCO Investors, Inc., 2018 total sales were approximately $296 billion, with approximately $171 billion for auto parts, $32.1 billion for tires and $92 billion for labor. Total aftermarket sales are forecast to reach $433 billion by 2021. • A major factor driving the market is the number of light vehicles 6 to 11 years old, which will total 71 million during 2019, but increasing to 86 million by 2022. The record 3.2 trillion miles driven in the US as of August 2018 also contribute to the market.

3. Major Market Changes Challenge Dealerships and Independents • As stated in Media Group Online’s 2019 Automotive Update Reports, light-vehicle sales have declined, which put fewer vehicles on the road; however, auto dealers are turning to service and parts and used vehicles to increase sales. • The transition will be disruptive, but many dealers will respond to the electric and autonomous vehicles markets by operating multiple service lines for these drivetrains as well as vehicles still with internal-combustion engines, which should boost parts sales. • As with all retail sectors, various technologies will significantly affect the automotive aftermarket, such as more software-based parts, requiring new training; more connected vehicles; and more consumers basing purchases on online reviews.

4. Who Buys Auto Parts • Unsurprisingly, more men, 60.6%, than women, 39.4%, shopped at an auto parts store during the past 4 weeks, according to The Media Audit’s 2019 aggregated consumer surveys in 66 US markets, representing more than 143 million American adults. • Women are still an important target audience, as 12.4% of the base population of 74 million had shopped at an auto parts store – and an essentially equal percentage to men in the prime 25–49 age group, or 64.4%, to men’s 63.6%. • Counter to misperception that most auto parts customers are from lower-income households, 58.6% of adults 18+ shopping at an auto parts store had annual incomes of $50,000 or more, with 16%, $75K–$100K, and 12.2%, $100K–$150K.

5. Internet Purchases Accelerate • According to January 2019 analysis from Hedges & Company, online sales of new auto parts and accessories will total $12.3 billion this year, a 16% increase from 2018’s $10.6 billion. • Total online sales will increase to $14.2 billion for 2020, $16.4 billion, 2021; and $19.0 billion, 2022, or a 55.5% increase from 2019 to 2022. • Consumers will spend $7.4 billion, or 60.2% of 2019’s total, via mobile phones, an increase of 27.6% from 2018. Mobile purchases of new auto parts and accessories are projected to increase at an average annual rate of 25% through 2022.

6. Amazon Dominates Internet Sales, But Can’t Compete with Local Delivery • Hedges & Company estimates Amazon’s 2019 auto parts, accessories and car-care products sales will total $6.3 billion, with another $1.6 billion in OEM replacement parts, or a total of $8 billion; however, its future sales are forecasted to slow slightly. • Amazon’s entry into the automotive aftermarket negatively and significantly affected in-store sales at the top three retailers, Advanced Auto Parts, AutoZone and O’Reilly, especially during 2017, but they have essentially rebounded from the effect. • Speed-of-delivery is an advantage for the top three retailers, as auto repair shops need an ordered part within hours and can’t even wait for Amazon’s new one-day delivery for Prime members. Retailers are also touting their expertise to counter Amazon.

7. Auto-Parts Consumers and the Media • The Media Audit’s 2019 report also reveals 52.1% of adults 18+ who shopped at an auto parts store during the past 4 weeks had heavy exposure to the Internet, followed by outdoor, 36.1%; direct mail, 35.9%; radio, 30.1%; TV, 28.6%; and newspaper, 22.3%. • Newspaper had the highest percentage of non-exposure, or 60.5%, with radio next, at 15.9%, and the Internet, the lowest, at 1.3%, indicating spending ad dollars in newspapers is not a good strategy for auto-parts retailers. • Although, it’s not surprising, the largest percentage, or 55.5% of auto parts consumers 18+, watched TV during the 8–11pm period weekly, the largest index was those who watched from 5–7am, at 132, with 11pm–1am second, at 116.

8. Advertising Strategies • To counter online auto parts sales (and Amazon, specifically) local stores should promote their delivery capabilities of a few hours to light-vehicle dealerships and independent repair shops. • Despite the increasing complexity of new light-vehicles, auto parts stores still have an estimated DIY market of $90 billion. Stores may want to promote a 1% or 2% discount/year for purchases for any vehicle 10 years+, as there are many still on the roads. • Auto parts stores may want to consider partnering with used car dealers, offering a coupon for future parts purchases or a road emergency kit to enhance the safety of drivers or one or more products, or a package of products, to improve driving comfort.

9. New Media Strategies • Local auto parts stores that do significant business with car dealers and independent shops can ask those customers to record short testimonial videos, touting fast delivery and order accuracies, and then used as social media content. • Conduct a social media contest for consumers, asking them to submit stories about why they keep their old vehicles (10 years+) and any unusual driving “adventures.” Ask everyone to vote on the best or most-unusual story and reward an appropriate prize. • Auto-parts stores also have an opportunity to be involved in their communities by, for example, “sponsoring” a local church, charity, etc. that has a vehicle for transportation, offering parts at a discount and/or free repair expertise. Post involvement on social media.