How rising prices are eroding secondary market demand

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Rising selling prices for automotive aftermarket products are unlikely to be sustainable as consumers at all income levels avoid car maintenance, according to a new report.

A forecast from the NPD Group – which regularly presents industry data and forecasts at AAPEX – found that major aftermarket products like spark plugs, tires, windshield wipers, oil engine and paint have seen their prices increase by 30%.

Lower-income consumers are feeling the pinch of this increase, and higher-income people are focusing less on car maintenance, he reported. As a result, industry revenue will decline by 2023.

“The automotive aftermarket is in a tug of war between headwinds and tailwinds swirling around the economic existence of the consumer, said Nathan Shipley, automotive industry analyst for NPD. “Caught between mobility needs and high prices, consumers have shifted from a mindset of getting what they need when they need it, to a mindset of spending first and do with.”

Low-income households prefer the DIY route the most. But the NDP signaled it was postponing maintenance to stretch its budget as it felt the burden of rising grocery, gas and other costs.

NPD noted that households earning over $100,000 have been the primary drivers of secondary market growth for a few years. But those consumers are now taking their discretionary money elsewhere — like travel and other activities they haven’t been able to take advantage of during the pandemic.

The industry has benefited from a number of factors, such as an aging vehicle fleet and reduced inventories of new and used vehicles. Public and air transport are still below pre-pandemic levels. But the kilometers traveled and the requests for gasoline have still not returned to the usual figures.

NPD noted that a recent survey by it showed that more than three-quarters of consumers plan to cut spending due to inflation.

“Consumer behavior during the pandemic has evolved to favor aftermarket industry sales. However, while fundamentals remain strong, automotive aftermarket consumers are now feeling more pain from higher prices and other macro factors,” Shipley said. “Now is the time to strengthen the industry’s relationship with low-income shoppers, providing more cost-effective options while maximizing the spending capacity of high-income shoppers.”

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