The global automotive aftermarket industry is expected to reach $722.8 billion by 2020. Today’s consumers are keeping their vehicles longer and are more aware of the importance of preventive maintenance and scheduled servicing to maximize the lifetime value of their vehicles. This rising demand for aftermarket parts and services is spurring new growth and revenue opportunities for a wide range of businesses operating in the automotive aftermarket industry.
The typical car on the road in the U.S. is a record-high 11.5 years old, according to a new IHS Automotive survey. However, while cars on the road may be aging, consumers are continuing to purchase new vehicles. In 2015, U.S. car sales hit a record high. Auto makers sold 17.5 million cars and light trucks, a 5.7% over the previous year.
Although Americans may be buying newer vehicles, don’t let these numbers fool you into thinking the aftermarket is stagnant or declining. Older vehicles are simply lasting longer. According to a 2015 article by USA Today, “The number of vehicles on the road that are at least 25 years old is about 14 million. That’s up from about 8 million in 2002. Those are vehicles made in 1990 or earlier. Meanwhile, the number of vehicles that are 16 to 24 years old is 44 million. That’s up from 26 million in 2002, according to IHS.”
Trends and Statistics:
- The average age of the U.S. vehicle fleet has increased 17% in the last ten years.
- The average length of vehicle ownership for new and used vehicles has increased 60% in the last ten years.
- 75% of aftermarket auto repair is performed by independent auto repair shops, while 25% of the business lives with dealerships.
- There’s a trend toward large franchise auto repair businesses, which have smaller shops rolling up into them. That’s a good opportunity for profitable businesses on the service/seller-side.
- The aftermarket world is going online, and the marketplace is changing. Parts are being sold online, service is being sold online.
Opportunities for the Aftermarket
In research conducted by the NPD Group, key trends in the auto care market were evaluated. Aftermarket opportunities for drivers of aging vehicles included maintenance such as the following:
Drivers of newer cars are looking for appearance products:
Currently, repair shops dominate most major repair oriented services:
Consumers offer a variety of reasons for choosing to do business with certain service providers. For example, when selecting an oil change outlet, consumers cited coupons and offers as the deciding factor when choosing to use a tire shop and warranties or knowledge of service history when choosing to use a dealership.
Demographics also play a role in types of services used. For example, millennial consumers are more likely to have had most vehicle services performed:
With so many lucrative opportunities to service today’s vehicles, here is a look at 4 ways to get in front of consumers looking for parts or service.
Target Consumers by VIN
Acquire a third-party marketing list to target consumers based on demographics, vehicle age, and more. Example types of data include:
- Make, model and year as derived from VINs
- Insights such as engine size, fuel type, drive train, wheel size, engine block, and engine cylinders
- Vehicle owner details and demographics including emails and phone numbers or insights into income, age, hobbies, and lifestyle.
Reach Out to New Movers
Using new mover marketing strategies can boost both your customer acquisition and retention strategies. New mover targeting allows you to know when your customers move so you can retain them at another location and can also be used to welcome new prospects who have just moved to your area, before they go somewhere else.
85% of movers use the first vendor that contacts them, so be sure to get your offers in front of new consumers to the area before your competition has the chance. According to research, within the first 6 months of relocating, 54% of new movers are in market for auto repair services and 49% for auto parts.
Ramp Up Your Digital Presence
One of the first places a consumer will head to search for parts, distributors, and auto services is online. You need to make sure you are found online with a robust digital presence. Your website should be at the center of digital experience for your customers and prospects with the majority of your digital content driving traffic to your website.
Email content, videos, and social posts are all high drivers of website traffic. Website landing pages are still one of the top ways prospects provide information or show interest in your products and services. So be sure to continually optimize your website with fresh content and continually share to third-party sites. SEO is also an integral component of an integrated digital marketing strategy.
According to research by Google titled “Understanding Consumers’ Local Search Behavior”, 4 in 5 consumers use search engines to find information before making a purchase decision. And of course, the higher you rank on sites such as Google and Yahoo, the better the results. 53% of searchers click on the first organic result, with 25% clicking on the second and third results.
Websites, content, and marketing messages must also be optimized for mobile. When a consumer visits a page that is not mobile-friendly, they will quickly leave in search of a competitor who can deliver an optimized mobile experience.
E-Tailing in the Aftermarket
One of the biggest trends gaining more and more momentum is e-tailing. For those companies selling parts, purchasing online is highly appealing to many consumers today. While many companies sell stock at brick-and-mortar locations, e-commerce sales are on the rise.
For the DIY segment, price, ease of purchase/convenience, and home delivery are the top three reasons for consumers to purchase an aftermarket product online. To appeal to this segment, target consumers with special coupons and offers and be sure your site is optimized for an easy online shopping and check-out experience. Providing a good online customer experience to this segment will encourage repeat purchases and continued brand loyalty.
However, e-commerce is not for every consumer. For the “do-it-for-me” (DIFM) segment, many service professionals prefer going to a brick-and-mortar location due to the “established relationship with store. For both audiences, be sure to analyze your data to really understand who your audience is in order to target them with personalized offers. Analyze past purchase data, append missing demographics or firmographics, and ensure that email addresses and phone numbers are up-to-date.
By providing a meaningful and personalized experience, both offline and online, you can maximize customer lifetime value, procure new business through referrals, and boost customer retention.
As vehicles on the road continue to age, there will be an ever-growing demand for parts and services. Be sure to get your brand in front of these consumers with the most targeted and relevant offers. And next time a driver is in need of an oil change, new tires, or new transmission, you can ensure your business is the one servicing the vehicle.