Among independent tire dealers and service centers, a booming new car market can be a source of concern about near term industry health. Vehicles today are built better, last longer, and a consumer who has recently purchased a new vehicle won’t likely be shopping for tires in the immediate term. In addition, routine maintenance intervals continue to become longer, requiring less frequent service visits. However, it is important to take a broader view on automotive industry trends to fully understand the likely long term impact on the automotive aftermarket.

Continued New Vehicle Sales Growth

2016 saw a record new car sales year, with 17.55 million units being delivered in the United States. While there is always debate about current year forecasts, most sources, including NADA, indicate likely sales above 17 million in 2017.

Continued Aging of America’s Vehicles

With regard to the automotive aftermarket however, the greatest indicator of industry health lies in the continued aging of America’s vehicles in general. The average age of a vehicle on the road again increased in 2016 to 11.6 years, up from 11.5 in 2015. IHS forecasts indicate that by 2021, there will be a 12% growth in vehicles 12 years and older on the road, and when looking at vehicles over sixteen years old, the anticipated growth rate is staggering. In 2017, there are 62 million vehicles over 16 years of age. However, by 2021, there are expected to be 81 million vehicles over 16 years old—a 30% growth rate among vehicle in this age bracket. By 2021, it is forecast that over 20 million vehicles on the road will be greater than 25 years of age. Anecdotally, it appears that perceptions of vehicle ownership are also changing. According to General Motors, the expanding numbers of millennial automotive buyers are choosing to buy rather than lease vehicles, reporting an expectation of ownership for longer terms. In short, this new generation of car shoppers are purchasing vehicles they plan on hanging onto.

More Cars on the Road

Coupled with aging vehicles, there are simply more cars on the road than there ever have been. In 2016, there were 261.8 million vehicles registered in the US, the continuation of a growth trend resulting in 5.26% more registered vehicles over the past 5 years. In addition, Americans are driving more than ever. Comparatively low gas prices have driven “the return of the American road-trip”, and nationally, length of work commutes continues to grow. The DOT forecasts continued growth in average number of miles driven by Americans annually; with a 23-27% increase anticipated in miles driven over the next 30 years.

Industry Health

While new vehicles sold do not require significant near term aftermarket investments, more vehicles on the road that are older than ever, coupled with increase in miles driven, suggest a healthy long term state for the automotive aftermarket. Aging vehicles need service and tires more frequently than new vehicles, and increased mileage driven leads to increased wear and tear. Thus, while new vehicles may not represent near term opportunity for the aftermarket industry, the enormous number of old vehicles being kept longer and driven farther will feed the aftermarket industry long term, representing continued growth opportunities for independent tire dealers and service centers.