The Automotive Parts Industry is Booming — Here’s Why
The automotive industry is going through a massive period of change. Electric vehicles are on the rise and are poised to outsell gas-powered cars. That is, if automotive companies can even manufacture them. Since the COVID-19 pandemic, the industry has been plagued with problems. From microchip shortages to shipping issues, it has been hard for the car market to fully bounce back.
Any new cars that are sent to dealerships at the moment are either already sold or sold incredibly quickly due to such massive global shortages. Some automotive companies have even cut down on additional advertising. Mostly, because they have no product to push onto consumers.
But there is a silver lining in this cloud. While the sales of cars themselves have steadily declined, the automobile parts industry is booming. It won’t stop anytime soon as it is forecasted to grow another 3.2% globally over the next five years.
Overview of automotive parts industry
In 2023, the automotive parts industry is projected to reach unprecedented amounts. The light-duty auto parts industry, both parts and service, is predicted to reach $374 billion. While the entire auto care industry, including the aftermarket, may reach up to $497 billion. This sector of the vehicle industry has been steadily on the rise throughout 2022.
The leading automotive parts in the market are vehicle batteries, cooling systems, underbody parts, engine components, filters, lighting such as headlights and taillights, and electrical components.
As the economy and the pandemic are taking their toll on the automotive industry, there are several reasons why the automotive parts sector is rapidly rising.
The technological advances that have been made throughout the automotive parts industry are one factor that is driving growth, especially the advances in 3D printing. Most leading vehicle manufacturers are using 3D printing to create automotive parts like gearboxes, engine components and brake components. Using this way to manufacture parts decreases the overall weight of the vehicle. With 3D printing and the demand for new technology in the form of electric and hybrid vehicles, there has been a high demand for automotive parts.
With the economy wrestling with high inflation rates and recovering from the COVID-19 pandemic, several major car manufacturers have ceased production on any automobiles for the moment. While others have significantly reduced the number of vehicles they are producing. Due to these factors, consumers have decided not to change their cars as often and will rely on replacing automotive parts and completing regular car services to keep their vehicles in tip-top shape. In 2022, the e-commerce American automotive parts market was valued at $38 billion, and that estimation is set to rise this year.
DIY is on the rise
There has also been a steady rise in automotive DIY since 2012. During the pandemic, people had resigned to trying to fix their automobiles themselves with the help of books and YouTube. It seems this new hobby has stuck and gained popularity since then. This is also good for the industry, with independent owners wanting a range of different parts. Not just for repairs but also for upgrades to their beloved vehicles.
As the automotive industry is steadily moving closer to being fully e-commerce, this helps potential automotive DIYers and car garages retrieve vehicle parts more efficiently. Both from the original equipment manufacturer (OEM) and the aftermarket.
Aftermarket sales increase
There have been increased sales on the aftermarket as well as directly with main dealer manufacturers. Consumers have been grappling with vehicle production delays and have turned to the second-hand market for vehicle repairs and upgrades. The American automotive aftermarket was forecast to increase by 8.5% in 2022. It is expected to grow another 5% this year. In Canada, the growth is even higher as sales in the aftermarket increased by 9.6% in 2021. This boost has been propelled by online sales and having a range of different automotive stores at their fingertips.
From all the changes happening, one of the most steadfast parts within it is the automotive parts sector. It has been rapidly expanding over the last few years, and it doesn’t look like that will change anytime soon. With manufacturers reducing or stopping the production of entire vehicles, the retail expansion of their automotive parts could be a saviour for many companies and the industry as a whole.
With many companies ploughing money into developing electric vehicle technology, it is good that at least one part of their business is booming.