COVID-19 has left disruption and a rapidly changing automotive aftermarket.
A McKinsey report has predicted that US aftermarket demand will take many years to return to 2019 levels.
Depending primarily on the size of the car parc, the light-vehicle aftermarket has been the most resistant to recession because of an increased emphasis on repairs to current and older vehicles. Even the financial crisis of 2007-9 saw a very resilient US aftermarket compared to greater declines in the German market.
There are five additional aftermarket factors which make the COVID crisis different:
- a drastic reduction in vehicle miles travelled (VMT)
- fewer collisions
- lower retail traffic
- a significant increase in digital channels and e-commerce volumes
- lower public transportation
The pandemic has led to people delaying inspections or discretionary repairs and mandatory technical controls and inspections have been relaxed by some government transportation agencies. As a result, visits to garages, service stations and repair workshops have been reduced.
The automotive market's reponse to post-COVID will depend on the economic scenario that emerges. Whatever that is, McKinsey anticipates that within maintenance and consumable parts, such as motor oil and wiper blades, there is an expectation of declines of about 5% to 7% in the US and 10% to 20% in Europe.
Longer term, VMT could remain low because of physical distancing and remote working, which would slow the aftermarket recovery. However, passenger anxiety about contagion is likely to keep people in their cars rather than using public transport and, if 2021 is similar to the financial crisis of 2007-9, there will be older vehicles on the road, requiring repairs and maintenance.
The US Department of Transportation figures shows a 2% decline in aftermarket motor oil sales in US in the first half of this year, according to Lubes'n'greases. A 6% fall in miles were driven in the US between May 2019 and May 2020. The previous year, miles driven grew 1%.