As we come to the end of yet another year of sluggish economic growth, an interesting trend has emerged in the automotive aftermarket.
After years of lamenting about price-conscious consumers and the relegation of tires and auto parts to nothing more than commodity items, the automotive aftermarket is noticing an increase in demand for higher-priced premium products.
“Premium” has become the new “value” in the minds of budget-conscious consumers who are trying to maintain an optimum level of performance in their aging vehicles, according to research by NPD Group Inc., which tracks retail spending. And there are a lot of aging vehicles out there. The average age of passenger vehicles is edging toward 12 years old, despite a rebound in new vehicle sales.
Many consumers are holding on to a lot of their disposable income in other areas of retail, but when it comes to taking care of their vehicles, they are loosening their wallets and splurging on premium products in some cases, NPD said.
Based on the company's consumer surveys, 71 percent of respondents said that “reasonably priced” is an important attribute in deciding what automotive parts they buy.
But there are other attributes just as important in their purchase decisions, such as whether a product is made with quality materials, whether it increases vehicle gas mileage and whether it improves engine performance.
Just as tire dealers and repair shop owners keep tabs on their return on investment (ROI) when buying equipment and advertising, consumers likewise are keeping ROI in mind when they opt for a premium wiper blade, a longer-lasting oil filter or fuel-efficient tires.
This is a prime opportunity for tire dealers to connect with this consumer mindset when offering replacement parts or upselling.
As NPD analyst David Portalatin said during a recent AAPEX seminar in Las Vegas during Automotive Aftermarket Industry Week: “When it comes to automotive-related products, for the most part, there's a lot more weight behind the quality end of the spectrum.
“So that's an opportunity for you guys to differentiate in the marketplace, to grow your top line dollars, to focus on what's better, what lasts longer, what performs better, what extends the life of the vehicle or has some other attribute around it that gives value to that consumer besides just saving money at the register.”
The old adage—you get what you pay for—is still relevant today.
Consumers are definitely willing to pay more if the parts or tires will save money in the long run, provide better performance and/or help their old vehicles last a bit longer.
And that's where you come in.