Despite the increasingly pessimistic comments on the United States economy from
a number of commentators, new statistics from the Motor and Equipment Manufacturers
Association (MEMA) paint a more upbeat picture.

The latest figures show that aftermarket product sales in the U.S. reached
$US136.6 billion in 2000 – up only 1.6% on 1999.

Although this was a “modest increase”, MEMA predicts brighter days
are ahead for aftermarket component manufacturers and is forecasting sales to
reach $155.1 billion in 2003.

“The $136.6 billion in aftermarket parts represents nearly 13% of the
entire $1 trillion world automotive products market,” said Frank Hampshire,
MEMA’s director of research in a statement.

“These numbers prove that the aftermarket industry certainly plays a major
role in the health of the North American, as well as global economy.”

The U.S. aftermarket figures account for 47% of the global aftermarket vehicle
parts market which totals more than $291 billion. When added to the $753 billion
global OEM parts figure, the world vehicle market parts total is more than $1.045

Hampshire noted that the global OEM vehicle part total rose 6% in 2000 from
the prior year.

Seven-Year Itch

The rise in new vehicle sales that followed the end of an economic slowdown
in the early 1990s gave rise to a frenzy of car and light truck purchases that
included both new and used vehicles, according to Hampshire.

“For most of these car buyers, the vehicles were essentially seen as new
and a great deal of time, care and preventative maintenance were given to them
regardless of age,” he said.

“However, like the ‘7-year itch’ you might have in a marriage,
over time, this romance has faded,” he added.

“As a result, the artificial bump in aftermarket sales that began in 1993
was naturally followed by a rebound suppression that hit in 2000, causing what
some have called an aftermarket slump.

“In actuality, this slump is simply the expected return to trend-line.”

The perception of a slump was escalated by other factors such as the early
onset of winter and higher than usual fuel prices which caused a decrease in
the number of vehicle miles traveled in 2000. For the year, cumulative miles
driven reached 2.68 trillion miles, a 0.1% decline from 1999 levels.

Brighter Days Ahead

The increase in new vehicle sales that began in 1993 created a wave of sales
that continued to the end of 2000, Hampshire added.

“The beginning of that wave, which began eight years ago, is about to
pass into the prime aftermarket region of vehicles out of warranty and approaching
100,000 miles on the odometer,” Hampshire said.

“Over the next few years, the boom in new vehicle sales we experienced
in the 1990s will result in a healthier aftermarket parts market.”

Hampshire predicts that, ultimately, the boom will cause the vehicle population
in the prime range to grow by approximately 1.5 million units over the next
eight or more years.

This will result in aftermarket product sales in the United States rising to
$140.7 billion in 2001, an increase of 3%. The growth will continue in 2002,
rising another 5% to $147.7 billion, followed by another 5% in 2003 to $155.1

Quantifying the aftermarket is a far more difficult undertaking than estimating
sales of motor vehicle and original equipment parts, Hampshire noted.

“Even the narrowest possible definition of the aftermarket encompasses
hundreds of thousands of individual enterprises, ranging from nationwide retail
chains to corner garages and parts stores,” he said.

“No single comprehensive survey could capture all of these variables.”

Estimating aftermarket parts dollar volume involves integrating data from multiple

MEMA utilises a limited sample survey to determine per job parts and labour
expenditures and combines these findings with a consumer survey with an annual
sample of 200,000 households to estimate frequency of repair.

Multiplying the number of vehicles on the road by survey-derived estimates
of costs and service and repair frequencies results in the estimate of total
aftermarket volume.

Government estimates of miles driven and commercially available vehicle registration
data are also incorporated to provide a model that uses vehicle population,
usage and durability to estimate structural demand for aftermarket parts.

“By incorporating these complex factors, we believe we have the most credible
and realistic figures in the industry,” Hampshire said.

To view related research reports, please follow the links

regional report: North America

world’s car manufacturers: A financial and operating review