Opportunities for vehicle service and maintenance are derived historically from growth in vehicle miles traveled (VMT) across the U.S., and while that number took a hit this year as non-essential businesses temporarily shuttered in the spring and some companies have their employees working from home, the VMT is slowly recovering.
That's the assessment of Todd Campau, associate director, automotive solutions, IHS Markit, who participated in another AAPEX webinar Oct. 20.
"At the start of the year I would have told you we were in great shape, that there was a very positive outlook. We've had five years of healthy growth after seven years of sustaining or declining miles and 2019 was the sixth consecutive year where we had over 3 trillion vehicle miles traveled in the United States," he said.
Then the pandemic hit.
Miles traveled dropped 40% in April, compared with the year-ago period, after several states imposed shutdowns of non-essential businesses.
Mr. Campau said he believes April was the trough of the trend and that VMT will continue to increase.
IHS Markit estimates VMT is down 330 billion miles from 2019, a 15% drop.
"We seem to be at a point where we may be settling into a new normal, so to speak, and if we continue to stay here, at about 11% down over 2019, we're going to finish 2020 at about 14% down or 2.8 trillion miles traveled for 2020," Mr. Campau said.
"Driving behavior and driving patterns have been permanently impacted by COVID," Mr. Shipley said, adding that some analysts believe 10% of miles driven have gone away as some commuters will be working from home permanently.
Previously, the largest year-over-year drop in VMT over the past 30 years was during the Great Recession in 2008 — and that drop was only 1.8%.
"So this will be eight to 10 times worse for vehicle miles traveled," Mr. Campau said.
The gradual increase in miles traveled during the past few months was not necessarily generated from commuter travel but rather from increased recreational travel for vacations, he noted, as many people are wary of traveling by plane.
"2020 saw the return of the good old-fashioned road trip," he said, and relatively low gas prices have helped.
"So maybe the one bright spot in vehicle miles traveled is gas prices have stayed low and they have sustained low.
"And typically when gas prices are below $3 a gallon, which is now perceived to be reasonable, vehicle miles traveled is typically growing," he said, predicting that fuel prices will increase only slightly through the next decade.
Messrs. Campau and Shipley discussed several other trends impacting the automotive aftermarket:
As consumers stayed home more this year, e-commerce retail sales spiked, increasing more than 20% versus a year ago.
"Online sales have shot through the roof. They have literally doubled for what we track for retail," NPD's Mr. Shipley said.
He attributed this to some older people's fear of going into stores during the pandemic and discovering the convenience of home delivery.
He also attributed the trend to people who found more time on their hands this year and they started doing more DIY projects, including maintenance work on their vehicles.
This has reversed a trend as of a year ago when the DIY automotive market was slowly declining as the DIFM market gained traction.
According to an NPD survey, 28% of respondents said they are doing more vehicle work themselves, while 13% claim to be doing vehicle work they had never done before.
On the flip side, 28% of consumers said they are not buying auto parts because they said they are not driving as much; almost half said they don't have a need to buy parts.
He noted that consumers used their federal stimulus checks, courtesy of the CARES Act, to pay off debts, buy daily essentials or to put towards discretionary expenses, such as home/garage projects.
Year-to-date as of October, sales of automotive products increased nearly 7%, compared with the 2019 period, with items such as batteries or tires/wheels increasing 12% and 8%, respectively, while washer fluids dipped nearly 12% in sales, according to NPD.
In another NPD survey of consumers in early October, 41% said they still hadn't returned to their pre-COVID shopping behavior.
Overall, Mr. Shipley said things are trending positive for retail, but not evenly across the country — some areas have increased sales while other areas are down.
He said there is a continued opportunity for brick-and-mortar stores to implement no-contact services and conveniences so customers will feel more comfortable walking into the store or using the business' services amid the pandemic.
According to an NPD survey, only a third of consumers said they feel comfortable going into stores.
New vehicle sales
Another trend that offers a boost to aftermarket sales is the drop in new vehicle sales this year.
2019 was the seventh best new-vehicle sales year on record, at 17.1 million units, and continued a record streak of five straight years of greater than 17 million units sold.
However, 2020 vehicle sales, which were expected to decline 1.8% to 16.8 million units before the pandemic, are now predicted to total only about 14.3 million units, Mr. Campau said.
Vehicle sales have rebounded better than originally predicted, prompting IHS to forecast sales will increase over the next two years and surpass the 16 million unit plateau in 2022.
The past five years of 17-million-plus vehicles sold feeds the pipeline of out-of-warranty vehicles down the road for the aftermarket, he said. And the pipeline will include a lot more light trucks, SUVs and CUVs.
At year-end 2019, seven out of 10 new vehicles sold were light trucks, including CUVs and SUVs
"It appears the pandemic is not going to change this trend anytime soon. It actually may accelerate it," he said.
"We're at a point now where three out of every four vehicles sold is a light truck right now. And we did not expect to see that until the mid-2020s, but it looks like that's where we're going to end 2020 at, with both domestic truck and import trucks outperforming to claim that 75% share."