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Automotive Aftermarket: Parts 2020The Pandemic Put the Brakes on the Auto Parts MarketAccording to US Census Bureau data, 2019 sales at retail automotive parts stores (including tire stores) (NAICS 4413) increased 3.8%, totaling $95.37 billion. Total sales for January and February 2020 maintained that 3.8% increase, or a total of $14.60 billion.As with many other retail sectors, March 2020 was when sales began a significant decrease, including the automotive parts sector, which declined 11.0%, to $7.43 billion, compared to $8.25 billion for March 2019.Like the entire automotive industry, parts manufacturers and suppliers were severely impacted from the pandemic. During May and into June, major automakers had, or were planning to open assembly plants, which increased parts orders.US Automotive Aftermarket 2020 Revenue Forecasts, Based on Various Pandemic Scenarios, April 2020ScenarioForecastPre-COVID-19$212 BEarly coronavirus containment (high estimate)$206 BEarly coronavirus containment (low estimate)$202 BRecurrence of coronavirus (high estimate)$187 BRecurrence of coronavirus (low estimate)$181 BStatista, April 2020The Retail Auto Parts SectorAccording to Hedges & Company’s analysis of M Science data, aftermarket chain store retail sales hit bottom the week of March 22–28 at -21% from March 1. The trend then began to increase dramatically to +15% for the week of April 26–May 2.O’Reilly Auto Parts had the largest sales improvement from the week of March 1 to the week of April 26th, or 23%, primarily on the strength of DIY customers. AutoZone increased the least of the major retail chains, or 10% from March 1. Rebounding sales for the other two major retail chains, Advanced Auto Parts and NAPA, were more modest, comparing the same two weeks, or +14% and +11%. The DIFM (do-it-for-me) market is the majority of their businesses. Change in Retail Auto Parts Chains’ Sales, March–April 2020WeekPercentWeekPercentMarch 1–70%April 5–11-12%March 8–14-2%April 12–April 18+1%March 15–21-14%April 19–April 25+8%March 22–28-21%April 26–May 2+15%March 29–April 4-16%Hedges & Company (M Science), May 2020 Significant Increases in Online PurchasingAs with many other retail sectors, e-commerce came to the rescue for closed stores and consumers in lockdown. Compared to retail chains’ 21-point improvement in sales from March 1, aftermarket online purchases increased 47% from March 1 to the week of May 10.Despite this substantial increase in online sales, it’s important to remember auto-aftermarket e-commerce is more complex than many consumer items. The DIY sector is small compared to the DIFM sector and many large components can’t be shipped to a home.Similar to gardening, home improvements and other in-home consumer sectors, DIYers looking to fill their time, the arrival of government stimulus checks and upticks in weekly miles driven all contributed to many consumers ordering auto parts online.Changes in Automotive Aftermarket Ecommerce Sales*, by Sectors, March–May 2020SectorChange?All parts and accessories+47%OEM parts +32%Powersports parts and accessories+124%Performance and racing+36%Light-truck/Off-road+33%Accessories+53%Hedges & Company, May 2020 *The week of March 1, 2020 is the baseline, or 0% ?week of May 10–16From the Perspective of Repair ShopsSome analysts estimated the pandemic negatively affected multiple-store-owned (MSOs) auto repair shops the most since they must generate much higher monthly sales, have larger operating expenses and may have furloughed or dismissed more employees.According to May 2020 research from IMR/, approximately 25% of surveyed auto repair shops said they “very frequently” (14.8%) or “frequently” (11.0%) experienced a disruption obtaining parts. More than 50% said “rarely” or “never.”The survey also revealed 61% of shops that “very frequently,” “frequently” or “occasionally” experienced a disruption obtaining parts said they then purchased the parts they needed from online sources, with 31% wholesale direct, 28% retailers and 23.2% dealerships.Reasons Auto Repair Shops* Purchased Parts from a New or Different Supplier and Switched from Regular/Preferred Brands to Alternative Brands, May 2020New or Different SupplierPercentAlternative BrandsPercentRegular supplier didn’t have needed parts49.4%Lack of availability73.4%Faster delivery27.1%Couldn’t obtain fast enough10.9%Regular supplier is closed14.1%Better price9.4%Had guaranteed delivery3.5%Regular supplier closed3.1%Regular supplier has limited hours1.2%Other3.1%IMR/, May 2020 *shops that answered “very frequently, “frequently” and “occasionally”Parts Sales at Auto DealershipsAccording to the National Automobile Dealers Association (NADA), 2019 parts sales at dealerships increased 4.5% to $71.72 billion and, no doubt, the 3.1% increase in service labor sales, to $53.24 billion, contributed to the increased parts sales.As the pandemic pummeled new and used light-vehicle sales, Automotive News reported 51% of dealerships expected their service business to be their greatest opportunity for growth after the pandemic, compared to 27% before the pandemic. Based on that rapid reversal of dealerships’ expectations, they may be able to improve their 2019 share (23.2%) of non-warranty DIFM service work, which was still where most people took their vehicles for service; independent repair shops were second at 19.5%.New-Vehicle Dealerships’ Share of 2019 Non-Warranty DIFM Service Work, by Vehicle Age, 2020Vehicle AgePercentVehicle AgePercentTotal share23.2%12–16 years12.1%0–3 years46.7%17–20 years7.2%4–7 years35.2%21+ years4.6%8–11 years22.6%IMR/, May 2020 Safely Under the Shade TreeAdditional research from IMR/Automotive revealed the largest category of DIY auto repairs during 2019 was windshield, glass, mirror and lamps at 58.4%, followed by electrical 49.4%, collision paint and body parts 33.7% and ignition and engine 32.1%.During 2019, 15% of vehicle owners delayed maintenance, a significant decrease from previous years, which averaged approximately 22%, indicating more owners were focused on maintaining their vehicles. Although the installation of wiper blades was last (2.1%) on a list of the top 10 delayed maintenance for 2019, it was first (65.2%) vehicle owners planned as a DIY project.DIY Consumer Demographics, by Auto Parts Sector, 2019MetricParts StoresMass/ DiscountMetricParts StoresMass/ DiscountAge: younger than 3012.0%11.4%Household: single male20.9%19.2%Age: 30–39 24.9%23.3%Household: single female12.3%14.0%Age: 40–4919.9%20.5%Income: <$25K19.3%18.5%Age: 50–5921.7%19.6%Income: $25K–$30K7.8%7.0%Age: 60 or older21.4%25.3%Income: $30K–$50K21.0%20.8%Education: some college or less69.6%63.2%Income: $50K–$75K20.4%19.6%Education: college graduate30.4%36.8%Income: $75K–$100K13.0%14.3%Household: family66.8%66.7%Income: $100K and more18.5%19.9%IMR/, May 2020 More Valuable InsightsAccording to the table at the bottom of page 3, two-thirds of family households were automotive aftermarket DIY consumers at auto parts stores and mass merchandisers/ discount stores. Data from The Media Audit’s September 2019 Aggregate Survey (57 US markets, more than 157 million adults) offers some complementary insights to the IMR/ numbers.Adults 18–49 and 50+ Who Shopped at an Auto Parts Store During the Past 4 Weeks, by Their Familial Situation, 2019Family MetricAdults 18–49Adults 50+PercentIndexPercentIndexAffluent blue collar worker, family income $75K+3.7%1733.2%219Affluent white collar worker, family income $100K+12.1%10312.9%128Two-income family34.8%12225.1%135Family size: 1 person4.0%559.5%60Family size: 2 persons14.3%9139.1%88Family size: 3–4 persons43.6%10334.0%120Family size: 5 or more persons38.1%11017.4%154Based on The Media Audit’s September 2019 Aggregate SurveyTakeaways from this data:The larger percentages and indices for two-income families in both age groups is not surprising, as they are very likely to have two vehicles that are used virtually every day, resulting in a high rate of needed repairs.The percentage of adults 50+ living in a 1-person family is more than twice adults 18–49, indicating more older adults perform maintenance on their vehicles. Since many are probably retired, they are living on fixed incomes.The difference is even greater for 2-person families and older adults are probably empty nesters and/or retired couples, again, trying to save money on car maintenance. The smaller percentage of adults 18–49 in two-person families could be couples with careers and no children. They might have little or no interest to work on their cars and probably have the combined incomes to afford the work performed at repair shops or dealerships.Another inference is the larger family sizes, especially for adults 18–49, who may have two, three or more vehicles, with one or more for teenage children. Larger families, especially Latinx Americans, are also more likely to have multiple generations living in the home, adding one or more vehicles for grandparents, aunts and/or uncles.Sources: US Census Bureau Website, 5/20; Automotive News Website, 5/20; Statista Website, 5/20; Hedges & Company Website, 5/20; IBIS World Website, 5/20; Vaimo Website, 5/20; Website, 5/20; IMR/ Website, 5/20; National Automobile Dealers Association Website, 5/20; The Media Audit Website, 5/20.Updated: May 2020? 2020 Media Group Online, Inc. All rights reserved.Local Market and Station Information ................
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