Navigating the Shift

The Impact of Prolonged Car Ownership on the 2024 Automotive Aftermarket Parts Industry.
White Striped Vintage Car Driving Instagram Post (1)

In the constantly evolving automotive industry, one trend is seemingly sticking around — consumers are holding onto their vehicles longer than ever before. 

The presence of aging vehicles on our roads is directly related to the challenging economic realities facing U.S. households:

  • The jump in prices of new vehicles has placed a strain on consumers' budgets, with the average cost of a new car steadily climbing over the years.
  • The average monthly payment on a new vehicle was $726 in 2023, while the average loan interest rate increased from 5.26% to 7.03% between 2022 and 2023.
  • As a result, many find it financially impractical to trade in their vehicles as frequently as they did in the past. 

In addition, economic uncertainty brought about by the pandemic, political tensions, and rising fuel prices has further incentivized consumers to prioritize longevity over a shiny new car. Finally, the rising cost of living has compelled households to tighten their belts and reassess big expenditures — like brand-new cars

As a result of our changing finances, consumers are opting to extend the life of their vehicles with regular maintenance and repairs, rather than investing in costly replacements. This shift in buyer behavior, no doubt, comes with complications for the automotive aftermarket parts sector, which is projected to reach a valuation of more than $542 billion by the end of 2032 as a result of this trend. 

As cars age and remain in circulation for longer periods, the demand for replacement parts inevitably surges. From brake pads and filters to suspension components and electrical systems, the need for aftermarket parts to keep aging vehicles roadworthy has never been greater.

Consequently, aftermarket suppliers are finding themselves in a position of needing to stock countless low-selling parts for much older vehicles and cater to many vehicle makes and models. The pressure to stock everything is further compounded by the quick pace of technological advancement in the automotive industry, which consistently introduces new components and systems with each model. 

To effectively serve the needs of consumers with aging vehicles, aftermarket suppliers must navigate the automotive supply chain with great precision—striking a delicate balance between stocking a comprehensive inventory of parts and avoiding excessive overhead costs associated with obsolete stock. They must also leverage a network of suppliers and distributors to source hard-to-find parts for older vehicles, ensuring a reputation of reliability for customers. This all requires a great understanding of market dynamics and predictive analytics.

So, how are automotive suppliers expected to stock everything, across vehicle ages, makes, and models?

Automotive parts distributors manage inventory with an ERP system, which helps them forecast supplies based on demand. However, an ERP system alone isn’t sophisticated enough to help navigate the complexity now facing the automotive afterparts industry. Why? Because the countless number of parts they need to stock for aging vehicles are very low-selling SKUs — which are typically handled manually. Most ERP systems, by design, assume at least 20 sales each year. However, this isn’t the reality for the automotive aftermarket sector. 

For this reason, automotive parts distributors are complementing their ERP systems with digital technologies like Thermostock. When an ERP system can’t accurately forecast this vast volume of low-selling SKUs, Thermostock steps in to closely monitor every single SKU regardless of how infrequently they are sold. This is helping distributors optimize their inventory for maximum profitability, preventing out-of-stocks and dead stock so that customers always have what they need. 

Thermostock works in tandem with an ERP system to automatically identify low-selling parts, providing critical data to help buyers make critical decisions. With these insights, distributors can automate min/max levels, set specific inventory policies, and even rebalance inventory across warehouse locations depending on where the demand is coming from.

The automotive aftermarket parts industry is poised for continued growth in 2024 and beyond, and distributors must prepare with the proper inventory technologies to meet customer needs. As consumers continue to prioritize the longevity of their vehicles, aftermarket suppliers must continue to differentiate themselves through superior customer service — which is directly related to parts availability. By leveraging data-driven insights, aftermarket businesses can be seen as indispensable to consumers seeking to maximize the lifespan of their vehicles.

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