Aftermarket activity generally follows a yearly cycle with sales going up in January or February, falling off in early to late spring and then peaking again in early summer, according to market research by the Motor & Equipment Manufacturers Association (MEMA).
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The cycle is revealed in MEMA’s Aftermarket Activity Index and the Installer Liquidity Index, new features in its bimonthly newsletter, Market Analysis. The aftermarket index tracks overall aftermarket sales and how they are affected by the current economy. The installer index reflects the financial health at the jobber and installer level.
The installer index shows that when aftermarket activity is high, installer liquidity is also good. The number of collection days for warehouse distributors is lower than when aftermarket activity is down.
“When the economic picture is looking good, there are typically more sales of both new and used vehicles. This results in greater aftermarket parts sales as used vehicles are upgraded for resale,” said MEMA director of research Frank Hampshire. “When the economy is doing poorly, consumers often hold onto their vehicles longer and have to replace parts as their vehicles age. The aftermarket is not quite as susceptible to changes in the economy as other industries, since people have to drive and repair their vehicles,” he said.
MEMA’s Aftermarket Activity Index shows that sales activity was fairly low in 1998, a year with a record number of job layoffs and stock market ups and downs. In 1999, Internet stocks were fuelling a record economic boom and aftermarket sales activity reached its highest level. Sales were lower in 2000 before the equity bubble burst and oil prices rose, reaching a low point at the time of the presidential election.
Another dip occurred in May 2001, followed by major improvement until a sales drop in January 2002. Sales rose at a lower level in 2002 as the economy continued to falter and then fell below average again in September 2002.
