Aftermarket Echoes of the Recession

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.  

MakeModelYearVIO
KiaOptima200837,000
KiaOptima200932,000
KiaOptima201022,000
KiaOptima201155,000
KiaOptima201288,000
KiaOptima2013174,000
KiaOptima201493,000
KiaOptima2015174,000

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 20172007-2012         263,000
In 20182008-2013         407,000
In 20192009-2014         463,000
In 20202010-2015         606,000

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 shawn.wills@aftermarketanalytics.com

Technology Newsmaker Q&A

Check Out the Q&A with our CEO Justin Holman in Aftermarket Business Word.

Earlier this year, Aftermarket Analytics in Pueblo, Colo., launched its Inventory Analyst tool – a web-based software to help aftermarket companies improve inventory planning. Company CEO Justin Holman recently discussed the new product with us and talked about the challenges of inventory planning…

Read the full article here.

Discover in 90 seconds how you can increase accuracy and improve your margins.

 

10 features of Inventory Analyst, our demand forecasting software solution

 

10. Now you can generate accurate SKU level demand forecasts

9. Cloud based software. Available on the web. Anywhere at anytime

8.Simply upload your part catalog and P2V files for SKU level demand forecasts

7. Easily download your demand forecast reports (CSV)

6. VIO data comes with your IA license – no need to buy third party data

5. Includes one Replacement Rate (RR) category. Additional RR categories available

Justin Holman, CEO of Aftermarket Analytics – Lets Tech Session at AAPEX 2018

Justin Holman (CEO) was delighted to present on the Lets Tech stage at AAPEX 2018.  The topic of his presentation was  “Data Science & Technology for demand forecasting in the Aftermarket”.

Watch the 1 min 44 second summary below featured on AAPEX TV.

https://aapextv.com/list/lg1IwOCf/video/ctKqpal1/lets-tech-sessions-at-aapex-18

For more information or to arrange a demo please contact Shawn Wills, (303) 956 2848, shawn.wills@aftermarketanalytics.com

IA and CEO Justin Holman featured in Aftermarket Business World!

Take a look at the great article and interview by Brian Albright for searchautoparts.com and Aftermarket Business World.

Automotive sector expands investment in inventory analytics

With the number of SKUs expanding and more and more companies moving to an omnichannel model for parts sales, inventory planning and demand forecasting in the aftermarket has become increasingly complex. Companies are turning to advanced analytics tools to help make more accurate and faster inventory decisions. IndustryARC predicts that automotive data analytics market will reach $3.81 billion by 2023, with a compound annual growth rate of 15.4 percent. That growth will be fueled, in part, by the increasing amount of data available from autonomous and connected vehicles or telematics systems.

Read More »

Check out our article in The Green Sheet!

Do you subscribe to the green sheet?? Check out our article below!

Aftermarket Analytics Launches Inventory Analyst 

Not a subscriber? Catch it on page 12 in thier print addition!

The Greensheet Issue #18-18 (Full) _ The GreenSheet (1)

Amazon.com and the Drive to Sell Aftermarket Auto Parts

By now you’ve likely heard the news that Amazon wants a big slice of the aftermarket auto parts pie, and that Amazon has already made deals with some large parts manufacturers — Federal-Mogul and Bosch being a couple of these companies. We have had over a week to digest this news; admittedly it was received with some alarm at first. After all, the thought that this online e-commerce behemoth could chew up and spit out our neighborhood parts stores was a bit shocking.

Many of us, if not nearly all of us, have purchased items from Amazon and may order from Amazon on a regular basis.