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Letter to the Editor

U.S. Aftermarket Part Sales on the Brink of New Growth Says Motor and Equipment Manufacturers Association

RESEARCH TRIANGLE PARK, N.C. -- New statistics from the Motor and Equipment Manufacturers Association (MEMA) reveal that aftermarket product sales in the United States reached $136.6 billion in 2000 -- a modest 1.6 percent increase from 1999 levels. But despite this modest increase, brighter days are ahead for aftermarket component manufactures and eventually reaching 155.1 billion in 2003, according to MEMA.

"The $136.6 billion in aftermarket parts represents nearly 13 percent of the entire $1 trillion world automotive products market," said Frank Hampshire, MEMA's director of research. "These numbers prove that the aftermarket industry certainly plays a major role in the health of the North American, as well as global economy."

The U.S. aftermarket figures account for 47 percent of the global aftermarket vehicle parts market, which totals more than $291 billion. When added with the $753 billion global OEM parts figures, the world vehicle market parts total reaches more than $1.045 trillion. Hampshire noted that the global OEM vehicle part total rose 6 percent in 2000 from prior year totals.

The rise in new vehicle sales that followed the end of an economic slowdown in the early 1990s gave rise to a frenzy of car and light truck purchases that included both new and used vehicles, according to Hampshire. "For most of these car buyers, the vehicles were essentially seen as new and a great deal of time, care and preventative maintenance were given to them -- regardless of the vehicle's age," he said.

"However, like the 7-year itch you might have in a marriage, over time, this romance has faded," he added. "As a result, the artificial bump in aftermarket sales that began in 1993 was naturally followed by a rebound suppression that hit in 2000, causing what some have called an aftermarket slump. In actuality, this slump is simply the expected return to trend-line."

The perception of a slump was escalated by other factors such as the early onset of winter and higher than usual fuel prices which caused a decrease in the number of vehicle miles traveled in 2000. For the year, cumulative miles driven reached 2.68 trillion miles -- a 0.1 percent decline from 1999 levels.

The increase in new vehicle sales that began in 1993 created a wave of sales that continued through 2000, Hampshire added.

"The beginning of that wave, which began eight years ago, is about to pass into the prime aftermarket region of vehicles out of warranty and approaching 100,000 miles on the odometer," Hampshire said. "Over the next few years, the boom in new vehicle sales we experienced in the 1990s will result in a healthier aftermarket parts market."

Hampshire predicts that, ultimately, the boom will cause the vehicle population in the prime range to grow by approximately 1.5 million units over the next eight (or more) years. This will result in the aftermarket product sales in the United States rising to $140.7 billion in 2001, an increase of 3 percent. The growth will continue in 2002, rising another 5 percent to $147.7 billion in 2002, followed by another 5 percent in 2003 ($155.1 billion).

Quantifying the aftermarket is a far more difficult undertaking than estimating sales of motor vehicle and original equipment parts, Hampshire noted. "Even the narrowest possible definition of the aftermarket encompasses hundreds of thousands of individual enterprises, ranging from nationwide retail chains to corner garages and parts stores," he explained. "No single comprehensive survey could capture all of these variables."

Estimating aftermarket parts dollar volume involves integrating data from multiple sources. MEMA utilizes a limited sample survey to determine per job parts and labor expenditures, and combines these findings with a consumer survey with an annual sample of 200,000 households to estimate frequency of repair. Multiplying the number of vehicles on the road by survey-derived estimates of costs and service and repair frequencies results in the estimate of total aftermarket volume.

Government estimates of miles driven and commercially available vehicle registration data are also incorporated to provide a model that uses vehicle population, usage and durability to estimate structural demand for aftermarket parts.

"By incorporating these complex factors, we believe we have the most credible and realistic figures in the industry," Hampshire said. "The time and work that go into these reports cannot be taken lightly. Many companies rely on historical data and projections to prepare their strategic business plan and it is our role to do what we can to assist them in managing their business."

Founded in 1904, MEMA exclusively represents and serves manufacturers of motor vehicle components, tools and equipment, automotive chemical and related products used in the production, repair, and maintenance of all classes of motor vehicles. MEMA is headquartered in Research Triangle Park, N.C., and has offices in Washington, D.C.; Kansas City, Mo.; Yokohama, Japan; Brussels, Belgium; Mexico City, Mexico; and Sao Paulo, Brazil. The Original Equipment Suppliers Association (OESA), MEMA's affiliate association that exclusively serves automotive original equipment suppliers, is located in Troy, Mich.

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