NPD sees moderate aftermarket mid-year growth

PORT WASHINGTON, N.Y. — With a nearly 3-percent increase in average selling prices, revenue in the U.S. automotive aftermarket grew just nearly 1 percent in the first six months of this year, while unit/quart volume declined by 2 percent, according to NPD Group Inc.

This trend differs from 2016 when midway through last year the average retail prices were down, yet dollar sales continued to grow.

NPD said it has found this performance to be correlated with the slowdown in the growth rate of miles driven by consumers in the U.S.

In the 12 months through May 2017, miles driven grew by 1.8 percent, equating to an annual increase of almost 55 billion miles; the year prior, it grew at a rate of 82 billion miles.

"Retail price increases, driven by a mix of inflation and product mix changes, are influencing the aftermarket trend so far this year," said NPD's Nathan Shipley, director and automotive industry analyst.

"We are also seeing a link between the industry's performance and miles driven, the latter of which is growing at the lowest rate in over two years. Higher gasoline prices in the first 29 weeks of 2017 factors into this slowdown.

"To put it in perspective, a price increase of just 1 cent per gallon leads to a spending increase of $4 million per day in the U.S. What seems like a little goes a long way, and impacts consumers' inclination to spend within the aftermarket and at retail in general," he said.

Industry performance was off to a rocky start during the opening months of the year, but began to improve in March, with May and June being the best-performing months of the year thus far.

In the first half, the top-performing categories that also outpaced the overall automotive aftermarket were: tire/wheel accessories (+7 percent), wipers (+5 percent), lighting (+4 percent), batteries (+4 percent) and tape (+3 percent).

With the exception of batteries, all of these top growth categories experienced retail price increases of 3 percent or more, NPD said.

"In addition to the miles driven story, there are a number of other factors influencing the aftermarket today with long term results," Mr. Shipley said.

"Aftermarket consumers are slowly migrating towards making non-distressed automotive product purchases online; extended oil change intervals are impacting the number of times a DIY consumer walks into an auto parts store; and Millennials are becoming the new core consumer target. These are the ones that should be top of mind."