Value of U.S. aftermarket expected to fall

PORT WASHINGTON, N.Y. (Feb. 22, 2017) — The retail value of the U.S. automotive aftermarket is expected to fall nearly 2 percent this year, based on slowing growth in retail pricing and miles driven, according to the latest NPD Group Inc. forecast.

The decline would follow 2.9 percent growth last year, the market forecasting group said, to an estimated $15 billion.

"Declining retail prices coupled with a slowdown in miles driven in recent months point to a decline in retail dollar sales in 2017," said Nathan Shipley, director and automotive industry analyst for NPD Group.

"I expect that miles driven growth will slow due, in part, to higher gasoline prices, which were 20 percent higher in the first four weeks of 2017 than the same period last year," he added.

Some individual component categories will outperform the forecast, NPD said, which is dependent on how the weather fares and how quickly, and by how much, gasoline prices increase this year.

"As always, extreme weather events are impossible to foresee," Mr. Shipley said, "but help the industry to grow."

The 2.9 percent growth last year was less robust than in recent years, NPD said, reflecting an acceleration in unit/quart growth and a decline in overall average selling price. Macro trends taken into account for the forecast included an increase in miles driven and new car sales, lower-priced gasoline, and unpredictable weather patterns.

"Declining retail prices driven by a push for private-label along with an increase in deeper promotions is behind this dollar/unit retail dichotomy," Mr. Shipley said. "Though the dollar sales growth rate has slowed, a number of factors helped the industry to stay on the plus side in 2016.

"Overall, 2016 had the lowest gasoline prices on record out of the last five years, inspiring consumers to drive more. In addition, new car sales in 2016 unexpectedly set a record by outperforming 2015, benefiting categories such as appearance chemicals and accessories as consumers look to accessorize and maintain that new car appearance."

Category Performance

Batteries ended the year as the top-performing category despite a decline in average selling price, with a 7 percent increase in dollar sales, NPD said.

The unit share of "good" grade batteries grew more than 4 percentage points in 2016 as consumers, incentivized by lower price points, chose to trade down from more premium options.

Motor oil sales grew 1 percent in both dollars and quarts in spite of a 14 percent increase in promotion count, deeper promotions, and strong performance for private label.

Dollar sales of wipers grew 1 percent, and while beam blades continue to steal share from conventional, the premium segment within beam lost share to standard beam blades — a lesser expensive alternative for consumers.

Port Washington-based NPD provides market information on a range of industries such as apparel, appliances, automotive, beauty, consumer electronics, diamonds, e-commerce, entertainment, fashion accessories, food consumption, foodservice, footwear, home, mobile, office supplies, retail, sports, technology, toys, video games, and watches / jewelry.