Industry Trends to Watch and Plan For
Nov. 5, 2020—The most recent episode in the AAPEX webinar series outlined five key trends that are shaping the automotive industry. The presentation identified vehicle miles traveled, new vehicle sales, new vehicle mix, aging vehicle population, and fleet technology as the five leading trends.
Presented by Todd Campau, associate director of aftermarket solutions with IHS Markit Automotive, the webinar outlined important shifts in the industry that shop owners, workers, and drivers should heed.
Vehicle Miles Traveled
Campau says the number of miles traveled is a key indicator for the aftermarket. With that being said, this year he predicts we will finish 2.8 trillion miles short compared to previous years. The decline is due to the pandemic and the number of people choosing to work from home, self-isolate, and quarantine.
But, this summer saw the return of the good ole fashioned road trip, says Campau. There was also an inverse relationship between gas prices and miles traveled, with prices below $3 per gallon. Despite the unforeseen changes this year has brought, Campau says, “The environment is ripe for increased travel once the pandemic is behind us.”
New Vehicle Sales
New vehicle sales for 2020 were also impacted by the pandemic, but Campau says they are expected to bounce back. From 2015 to 2019, annual vehicle sales remained around 17 million, but as of now, Campau says we are at only 14.3 million.
“We don’t expect this dop in vehicle sales to become a new trend,” he says. The same effect was seen in 2008 after the economic crisis saw a huge decrease, and then “a big rebound, which is what we expect after 2020,” Campau says.
New Vehicle Mix
One of the biggest shifts in new vehicles was the rising popularity of light trucks over traditional compact cars, says Campau.
“Right now, three out of every four cars sold is a light truck, which we didn’t expect until the mid 2020s,” he says. Also notable is the growing difference between imported and domestic car sales. According to Campau, imported light trucks have grown from seven up to 20 percent share.
“It appears the pandemic will not change this trend, but maybe accelerate it,” he says.
Aging Vehicle Population
After the great recession of 2008, drivers were keeping their cars for much longer periods of time, says Campau. As of January 2020, the average age of any vehicle on the road was 11.9 years, a figure he says is shifting due to the rising popularity of light trucks.
When it comes to the aging vehicle population, Campau says drivers are keeping imported cars far longer than domestic vehicles. There was a one percent increase in the number of people keeping their domestic vehicles after 16 years, whereas those keeping imported vehicles longer than 16 years increased by 28 percent.
Technology in Fleet
The final trend outlined by Campau is the shift from conventional combustion cars to platforms that support battery electric vehicles. Campau says it is not a question of “if” we switch to all-electric vehicles but “when.”
It may be further down the line than we think it is, Campau says, with 94 percent of vehicles sold in 2019 being internal combustion engines only.
“We don’t expect to see a huge adoption of BEVs, unless people get really excited about them through companies like Tesla,” he says.
But the anticipation must be on the rise because by 2031, Campau estimates that 61 percent of vehicles on the road will have internal combustion engines and the other 39 percent will be made up by hybrid and entirely electric vehicles.