Written By: Pete Kornafel
Most people in the automotive industry are painfully aware that the US recession created huge swings in new vehicle sales a decade ago. New vehicle sales in the US exceeded 16 million units per year from 1999 through 2007. New vehicle sales fell to about 13 million in 2008 and 10 million in 2009. They slowly came back but did not reach 16 million again until 2014. This created a huge “gap” in the population of vehicles during the recession years.
It did not impact all makes and models equally. For example Chevrolet Silverado 1500 sales fell from about 500,000 in 2007 to about 300,000 in 2009. That was just one factor that led to GM’s bankruptcy in 2009. Silverado 1500 sales continued to fall to below 200,000 in 2010. As a comparison, Lexus sales dipped a lot in 2009, but fully recovered in 2010 to their 2007-2008 level of almost 300,000/year.
The DIFM professional side of the aftermarket has faced this “gap” as a headwind over the past few years. The lower populations of 2008-2009 vehicles began to enter “prime” age for aftermarket professional repairs starting a few years ago. On the other hand, aftermarket retail companies like AutoZone have enjoyed a tailwind, as fewer vehicles were scrapped in the recession, average vehicle age continued to grow, and the population of 12-13+ year old vehicles increased greatly.
Now the trend is beginning to reverse. The roughly 10 million 2009 vehicles will be 10 years old in 2019, and are moving out of the DIFM “prime age” range. The roughly 16 million 2014 vehicles will reach 5 years of age in 2019, and are entering “prime age” for DIFM work. The overall population of 5-10 year old vehicles will grow over the next several years.
Here again, the impact is not uniform. Many people who purchased a new vehicle as the recession ended bought smaller, less expensive cars and SUVs. One example is Kia Optima. Here are estimated Vehicles in Operation today, by model year. As you can see, sales surged from 2010 through 2015.
These vehicle demographics are significant, and in many cases, will cause large year over year changes in demand for many replacement parts. Here is the progression of Kia Optima VIO population of “prime age” 5-10 year old models.
|Sum of 5-10 Year Old Kia Optima Vehicles|
In addition, there continues to be a significant change in the mix of new vehicle sales. Over the past 30 years, there has been a complete swap of market shares. In 1988 sales were about 70% cars, 30% light trucks. In 2018, the mix is reversed, to about 70% light trucks (including SUVs and vans) and 30% cars. Here is a chart from the Wall Street Journal 11/27/18. This was part of the article on GM’s announcement closing several car assembly plants as part of an overall staff reduction. As the chart shows, the change in shares has been particularly dramatic in the past 5 years.
The result can be significant and rapid change in demand for many aftermarket replacement parts.
Many supply chain forecasting packages fail to sense these changes and trends, and therefore do not do a good job forecasting demand for individual SKUs. This is particularly important in categories supplied from outside the US, where 60+ day lead times require very accurate forecasts.
So, suppliers and distributors need tools that include SKU to vehicle data, VIO detail, replacement rate models for individual part types, and more, to accurately forecast these trends.
Several companies offer parts of the data needed to project these trends at the SKU level.
One example is Aftermarket Analytics. They offer licenses for a full US VIO database, replacement rate models for many part types, and can consult with customers to combine this data with “catalog” data of SKUs to vehicle specifics. Their Inventory Analyst product does this to develop a forecast for any defined market area and vehicle set.
The result can be a powerful tool to supplement and enhance existing forecasting programs.
To schedule a demo of Inventory Analyst contact Shawn Wills on (303) 956 2848 or via email email@example.com