Covid-19 has caused massive disruption for many industries across the world, with a wide-reaching impact on those in the automotive sector, including parts, accessories and tire sales.
The combination of a sudden decrease in vehicle miles travelled (VMT) and customer footfall, as well as a slow economic recovery, means that aftermarket demand may take years to return to normal 2019 levels.
However, if aftermarket players take steps now, they will improve their business and emerge stronger from the crisis.
According to McKinsey & Company, “the light-vehicle aftermarket has typically been the most recession-resistant part of the automotive industry. Consider the financial crisis from 2007-2009, the US saw GDP drop about 4% and the economic repercussions hit automotive purchases hard. Sales plunged by 42% for new cars, 20% for used cars, but aftermarket experienced only a 1% decline.”
In addition to this, the coronavirus has potentially opened the gates for five more aftermarket-relevant factors that were absent in the 2007-2009 financial crisis, which include: a significant reduction in VMT, fewer collisions, lower retail traffic, a drastic hike in online channels and e-comm volumes, lower use of public transportation as well.
But, despite the challenges and uncertainty, some factors would show promising effects on aftermarket sales and how the world economy might evolve.