Automotive Aftermarket Demand in North America to Reach US$56 Billion in 2008

CLEVELAND--Oct. 2, 20045, 2004--The North American aftermarket for light vehicle components and parts is projected to increase at an annual rate of 3.2 percent, reaching US$56 billion by 2008. While this rate is a deceleration from historical trends, some segments of the market, such as electronics, will experience much faster growth. "The slowing of aftermarket revenue growth is the direct result of product improvements made by the original equipment manufacturers (OEMs) of light vehicles," states Freedonia Group Automotive Analyst, Lance Ealey. Vehicle quality and durability improvements have overwhelmed other factors such as miles traveled per year, the industry trend toward higher prices resulting from the shift to modules, and higher levels of electronics content. However, opportunities will result as more of these vehicles reach prime aftermarket service age, which will boost or at least maintain demand for aftermarket products going forward.

The largest product category in the aftermarket will continue to be mechanical products, which include non-electrical/electronic engine hard parts and chassis, drivetrain and suspension parts and components. However, growth will be limited by the improved quality of these already highly durable products. Electronic parts and components will witness the highest annual growth, a direct result of the continued transformation of the automobile from a mechanical machine with electronic enhancements into a software-driven device. Solid demand for auto entertainment equipment will continue, driven by both the advent of satellite radio and increased on-board video installations. Growth in the exterior and structural parts category will continue, driven by tire replacement rates and demand for wiper blades and refills.

The dominance of professional service providers -- the so-called do-it-for-me (DIFM) market -- will continue to grow, with new vehicle dealers showing continued strength as they pursue additional shares in the lucrative parts and service market. The do-it-yourself (DIY) segment of the aftermarket will continue to lose share to DIFM providers as vehicles become increasingly difficult to diagnose and repair and because of aging populations in the US and Canada.