Toronto, Ontario -- This week's Tuesday Ticker takes a closer look at the health of Canada's automotive aftermarket.
After a rough year hampered by uncertainty around the shifting economic policies of the U.S., aftermarket investors are suddenly being given reasons to feel optimistic.
For one thing, an international investment firm recently announced plans to increase its exposure to Canada's extended vehicle warranty market.
For another, two recently published whitepapers predict the national aftermarket will see exceptional growth over the next decade.
Boyd's Ballast:
One of Canada's largest automotive aftermarket businesses has seen its stock rise by 24.2 percent over the past month.
The Winnipeg-based Boyd Group Services Inc. saw its stock rise from $187.77 to $233.20 over the past month as investor sentiment around Canada's automotive aftermarket reaches new highs.
The improved performance comes a few months after Brian Kaner was named as president and chief executive officer, succeeding Boyd's longtime leader Tim O’Day, who remains with the company in an advisory role.
Growth Expectations:
A new report from Market Research Future analyzing the performance of Canada's largest aftermarket companies is predicting the national aftermarket sector will grow from US$29.7 billion in 2024 to US$43.3 billion in 2035, or by about 3.5 percent each year.
A similar survey from Precedence Research found the global aftermarket value, which was about US$820.76 billion in 2024, is projected to rise to US$1.419 trillion by 2034. During the period, growth will be fastest in North America, which is expected to absorb about 35.05 percent of the total expansion.
According to Precedence's researchers, this growth is going to be driven by increased vehicle customization options, an expansion of vehicle fleet, the growing age of vehicles and greater e-commerce sales.
International investment:
A Japanese general trading company is securing a stake in a Vancouver-based extended automobile warranty provider.
The Marubeni Corp. is investing in the LGM Financial Services Inc., a company that designs and sells automobile extended warranty products and provides warranty claims processing services across Canada.
In a press release, the company announced it aimed to increase its exposure to the Canadian extended warranty market, which is expected to see annual growth above 10 percent each year through 2030.
The move is also meant to help expand Marubeni's North American mobility business value chain. The investment combines Marubeni's automotive aftermarket expertise with LGM's advanced AI-based technology to provide higher value-added services in a market where 40 percent of car buyers purchase extended warranties.
