Ottawa, Ontario — The Automotive Industries of Association (AIA) Canada has released its bi-annual outlook study for 2020, published by Ersnt and Young LLP.
Published every two years, the AIA Canada’s 2020 Outlook Study provides an in-depth analysis of the state of the Canadian automotive aftermarket and presents forecasts and trends that will likely impact the industry in the future.
This year, AIA has included elements of the ‘new normal’ in its report, including disruptors like COVID-19, changing consumer preferences and emerging technologies and markets.
Due to the pandemic, AIA’s report predicts that kilometres driven in 2020 may slip to approximately 240 billion kilometres, down 30 percent from 2019 levels. This reduction is expected to impact the demand for routine automotive maintenance.
While, historically, demand for aftermarket products and services remain relatively resilient in recessionary environments, the aftermarket will need to make some adjustments to accommodate changing consumer preferences in the so-called ‘new normal.’
With new concepts like physical distancing, many industries have turned to list their services online. As a result, automotive consumers are also altering their shopping habits.
“Even before the pandemic…garages and workshops were increasing their e-commerce activity on multi-wholesaler platforms,” reads the report. “In the business-to-consumer segment, BMW and Ford entered the aftermarket space with their own e-tailing presence, with more companies expected to follow.”
Going forward, AIA’s report says the outlook for the aftermarket revenue will “enter a period of uncertainty.”
On a positive note, the pandemic could bring about tailwinds; vehicle owners could hold onto their current vehicles for longer, driving up the average age of vehicles in operation; economic pressures could force consumers to purchase used vehicles, and the general public’s opinion toward using public transit still remains shaky.
Although the pandemic has influenced vehicle sales, AIA’sreport says the number of new vehicle sales today is not expected to have an immediate impact on aftermarket demand. The total number of vehicles in operation is forecasted to reach 29.8 million in 2020.
Total revenue for the core aftermarket business is estimated to have reached $32.2 billion in 2019, while analysis of financial performance data shows that aftermarket businesses in Canada with sales between $30,000 to $20 million averaged a profit margin of 5.2 percent in 2018.
Those interested in purchasing the full copy of AIA’s 2020 Outlook Study can click here.
