2021: a phased recovery year for the automotive aftermarket
How has COVID-19 affected Aftermarket sector? After a year since pandemic began, it is interesting to carry out a sector retrospective to assess what have been and what will be the most immediate consequences of the health emergency.
A few months before global coronavirus crisis, Aftermarket sector forecasts were very positive. In fact, in January and February, the sector registered a growth of + 2% compared to the previous year.
“The AfterMarket has invoiced -17% less than was expected in 2020”
However, with the beginning of the Alert State and the cessation of the garages activity, this growth was slowed down. The uncertainty and the decrease of the activity in practically all sectors has caused the Aftermarket in Spain to have invoiced -17% less than expected.
2 reasons to believe in Aftermarket recovery during 2021
From CONEPA (Spanish Federation of Professional Automotive Employers), they emphasize that the generalized state of uncertainty will continue while the pandemic lasts. However, there are certain evidences that invite to recover sector optimism.
1. Car fleet aging will increase the demand for spare parts
According to a study by McKinsey, the pandemic impact on the AfterMarket sector will have very similar effect to the 2008 financial crisis. At that time, the domestic economy contraction caused the purchase of new vehicles to suffer a marked slowdown during several years.
Now, with the first pandemic economic consequences, a drop in car purchases is expected again. This fact will cause an increase in the average age of passenger cars in our country. In fact, it is currently over 12 years old.
The garages and, therefore, the Aftermarket sector will be able to be favored from this automobile fleet aging if the average age of the vehicle is higher, the percentage of cars that must be repaired will also increase.
2. Less influx on public transport
According to a GreenPeace report, as a result of the global pandemic, an increased use of private vehicles and a drop down in public transport have been detected. In part, it is due to preventive awareness measures to avoid contagion.
The most immediate consequence is the usage increase of private vehicles in the city. It can be expected that this mileage increase will make repairs and, therefore, the demand for auto spare parts will be more necessary and frequent.
A phased recovery for the Aftermarket sector
According to the Mckinsey report, the AfterMarket sector will have a gradual and constant recovery during 2021. The pandemic will increase private cars average age and they will be more used during this time of uncertainty.