Previous Issues | Current Headlines | Point of View | Obituaries


Point Of View: 2015 Setting Up To Be A Good One For Auto Care Industry

This is the time of the year when we look back at the previous year, and more importantly, looking forward to 2015 – seeking insight into what the year ahead may be like. So, for what it is worth, let’s take a look at the factors that will have influence on our businesses in 2015, and try to at least set up some guide posts for the road ahead.

First and foremost, most supplier and distributor voices give every indication that this will be a successful year for those deriving their livelihoods from the independent aftermarket. The past few years have been relatively good for most of our businesses, and there is little to indicate things going south in 2015. Most surveys of industry leadership shows an optimist viewpoint, and there are significant factors encouraging that opinion.

For example, the dropping fuel prices over the last few months of 2014 have all consumers smiling – and putting a little extra cash in their collective pockets. And those lower fuel prices are expected to continue. Most predictions indicate prices staying well below $3.00 per gallon throughout the coming year, with the average being closer to $2.50 per gallon. That usually indicates more miles driven — a key factor for aftermarket sales, particularly with wear items. And it may also mean consumers may not defer some maintenance items, having more discretionary income to help pay for repairs that might be deferred otherwise. This is all good news for the auto care industry.

Additionally, long-term weather forecasts paint a picture of another harsh winter, with many forecasts indicating an even colder winter than we had in 2014. That means parts failures, with our bays prepared to service the fleet.

And that fleet continues two positive trends as well: both the size and age of the fleet. Auto sales in 2014 continued to soar with an improving economy, reaching 16.5 million vehicles — up 6 percent from the previous year. And, though the sales trend continues to be toward growth, many believe the pace of improvement is likely to ebb over the coming year. As Michelle Krebs, senior analyst for AutoTrader.com, told The Washington Post early this month: “A slowly improving economy, with better employment and wages expected this year, will buoy 2015. While new-car sales likely will rise again in 2015, it won’t be at the pace we’ve seen in recent years. Competition will intensify, and automakers’ pledge to be disciplined in balancing supply and incentives with demand will be tested.” Numerous industry forecasters project that new-vehicle sales will reach about 17 million units in 2015.

As for the age of the fleet, the average age of light vehicles on the road in the United States stands at 11.4 years, according to the most recent estimates from industry researcher IHS Automotive. That figure is expected to hold steady this year and then tick up to 11.5 years by 2017 and 11.7 years by 2019. And, as pointed out by Morningstar analyst Liang Feng in a recent Investor.com article, a rise in new-car sales doesn’t translate into fewer older cars on the road. “Investors have been concerned that new vehicle sales will reduce aftermarket parts demand, but what we are seeing is that even people buying new vehicles are keeping older cars as second vehicles or selling them to someone else. So, you still see demand,” Feng said. “We’ve also seen an increase in the overall used-car market because vehicles are lasting longer.”

There may be other factors — some positive and some negative — that will impact our overall business, and obviously, the fate of any individual business is not so predictable. But, as an industry, without major unforeseen negative changes in global economic situations, things seem to bode well for another year ahead.

_______
Gary A. Molinaro
Publisher

Back To Story List

DASH4 BANNER (2) 2015