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Tuesday, April 02 2019
Three Macro Trends Driving the Automotive Aftermarket Industry

By Adam Robinson, Director of Marketing & Digital Marketing Consultant at Cerasis

The automotive industry and automotive aftermarket industry has recovered, and as new light vehicle registrations continue to grow, it is important for the aftermarket to be aware of emerging trends happening on the roads today that will affect repair opportunities for years to come. Here are some quick insights into the trends driving the automotive aftermarket industry.

One: The Average Age of Vehicles Continues to Climb—At Least for Now

The increasing age of the vehicle population has been a positive aftermarket trend for a long time, and the trend has accelerated greatly over the past six years. Today, it stands at a record-high 11.3 years for passenger cars and light trucks combined, representing a 14 percent increase since 2007. For the five years prior to the recession, average age rose only four percent.

Some wonder why pickup trucks tend to lag behind cars in average age. Light trucks are more likely to accumulate wear and tear than are passenger cars. Individual owners use them for towing, transporting heavy loads, and off-road fun. Many more pickups are also used in commercial situations and get exposed to high levels of use and abuse.

Over the next several years, however, the rise in average age will slow down again. The market will begin to feel the impact of the 40 percent drop in new registrations when the industry bottomed out at 10.3 million units in 2009. We see average age reaching nearly 11.4 years by 2015, and then the rate of growth will taper off. The acceleration in average age will slow to levels not seen since before the recession. Average age will not reach 11.5 years until 2018—as the vehicle population adjusts to the low number of 2008–12 model year vehicles.

New to five-year-old vehicles will grow 41 percent over the next five years. Six to 11-year-old vehicles will decline 22 percent.

While not an encouraging trend for the aftermarket, there are definite positive signs. The overall vehicle population continues to grow. We see the U.S. light vehicles in operation (VIO) growing by five percent over the next five years—hitting 260 million vehicles by 2018. Vehicles are also lasting longer. Over the next five years, vehicles 12 years and older will increase nearly 12 percent. Vehicle quality continues to improve, people are keeping their vehicles longer, and the scrappage rate continues to decline.

The aftermarket must be aware of the potential impact to the type of repairs it will see over the coming years. In general, 6 to 11-year-old vehicles represent more do-it-for-me (DIFM) type repairs. Older vehicles may drive more do-it-yourself (DIY) and routine maintenance, but also require larger powertrain and suspension repairs.

Two: OEM Globalization is Quickly Becoming the New Norm
Growing global vehicle registrations continue to pressure OEMs to accelerate the need for utilizing global platforms and modular architecture. Global new registrations will set a record in 2013 at just over 74 million units. In 2014, the number will be over 77 million. Looking at total global vehicles in operation, the number broke one billion units in 2010. By 2020, the world will stand at 1.3–1.5 billion vehicles.

This rate of growth translates into expanded global production and a need for OEMs to manage costs. They are accelerating the use of global platforms and looking to produce more units per platform. Among the top-12 global manufacturers, the number of platforms will drop from 212 in 2012 to 147 by 2020. As a result, the number of vehicles produced per platform will grow. Across the same 12 OEMs, it will increase 81 percent. OEMs have also been introducing modular architecture. By standardizing the architecture of the engine compartment, underbodies, and driver cockpit, manufacturers achieve greater flexibility and can utilize standardized components.

Fewer platforms, more vehicles per platform, and the increasing use of modular architecture will lead to the use of similar components and the ability to market the same aftermarket product in various regions around the world—a major opportunity for the global aftermarket supplier.

Three: OEM Technology Advances Continue to Provide the Automotive Aftermarket Industry Both Challenges and Opportunity
These advances are coming in several different ways. Gas and Hybrid Cars Continue to increase Market Share. Through August, gas and electric hybrids represent 3.6 percent of all new registrations—an all-time high. Diesels were right behind at 2.9 percent. Electric vehicles, while on the rise, still represent only 0.3 percent. Over the past five years, however, diesel registrations have remained flat while hybrids have increased their share by 64 percent. One reason for this is simply the number of hybrid models now available. The consumer has 45 different hybrid models to choose from today. Between 2008 and 2013, the number of models with diesel engines increased 21 percent while the number of hybrid models increased 125 percent. Because not all makes and models offer these powertrain options in every vehicle and trim level, their popularity may be limited because of the lack of universal availability. Nonetheless, while OEMs are investing in various options, the internal combustion engine remains the leading candidate for clean, efficient propulsion for at least another decade. However, the automotive aftermarket industry must prepare for new technology surrounding this traditional powertrain. There will be increased use of gasoline direct injection and turbochargers. Start-stop capability, cylinder deactivation, and all-wheel drive disconnect are all coming on strong.

OEMs continue to increase the interval between recommended oil changes.

They are using technology—the oil service indicator light—to replace standard recommended maintenance intervals.

While most vehicles on the road have some type of oil service indicator light, the issue is how often OEMs are using the light as the only means of recommended service. Today, 52 million vehicles in the U.S. use the oil service indicator light as the recommendation for when to change the oil. This represents 21 percent of the total VIO and has grown at a compounded annual rate of 14 percent over the past five years. New powertrain technology and the growing use of synthetic oils have extended oil change intervals as well. The average recommended interval for all light vehicles now stands at over 7,500 miles.

What does this mean to the independent aftermarket? Most repair opportunities are discovered during routine maintenance. Oil changes are, by far, the most common service opportunity for vehicles of all ages. This lengthening of intervals has the potential to affect repair opportunities in two ways.

By recognizing these trends early, the aftermarket can innovate and develop ways to communicate with the driver in much the same way the OEMs are planning.

The aftermarket certainly has what it takes to not only adjust to these coming trends, but take advantage of them as well. This industry has always proven its ability to react and innovate in the face of change. Leverage those strengths to their fullest, and the automotive aftermarket industry will continue its legacy of success.

Issues Facing Automotive Aftermarket Industry in 2020
Of the many insights in AASA’s recent landmark study, Automotive Aftermarket Industry Outlook 2020, the biggest issue identified facing aftermarket suppliers – and their ability to survive and thrive in the future – was the lack of a level playing field along the aftermarket value chain. Key findings of Aftermarket Outlook 2020 included that, though the market itself isn’t expected to see radical changes, business and relationships along the value chain have and will continue to change dramatically.

Full service automotive aftermarket suppliers have seen low-cost country competition, incredible concentration among our customers, eroding margins and a shift of power downstream to the channels – as have manufacturers in many other industries in the post-Walmart era. Many aftermarket manufacturers have not responded effectively to these shifts and need to find new ways to create value in order to be able to deal with changed channel partners as peers. The alternative is a decline in relevance and returns for aftermarket suppliers, analogous to the devastation seen among OE suppliers in the last decade.

As the Aftermarket Outlook 2020 study found, aftermarket suppliers face many issues in the next decade. The graphic below captures just some of the many dynamics and change agents at play in the aftermarket industry. These include:

  • the impact of the Internet,
  • manufacturer versus channel brands,
  • OES versus independent repair shops, especially in an era of increasingly complex vehicles, and
  • new regulations, including fuel economy and safety.

The Aftermarket Outlook 2020 study covers each of the issues in more detail. However, as the study progressed, three key trends “popped” as the most important ones facing manufacturer executives:

  1. Parts complexity – The industry is seeing a massive increase in parts complexity, both in the number of vehicles and parts and the technical sophistication of those parts.
  2. Channel consolidation – During the last 10-15 years, channel partners have responded to market pressures and consolidated massively, changing the balance of power in the industry.
  3. Low-cost countries – Low-cost country imports have had a tremendous impact on traditional North American suppliers, eroding the addressable market; conversely, the emerging markets these parts come from represent a tremendous growth opportunity.

As AASA and Booz & Co. discussed these findings at the 2011 AASA VisCon with aftermarket executives, it became clear that there was a single overarching issue that tied the other issues together of most importance to manufacturers: the lack of a level playing field across the aftermarket value chain.

A Winning Aftermarket Aftermarket Industry Model
So what does all of this add up to in the automotive aftermarket industry? What does Aftermarket Outlook 2020 and follow-up analysis in the industry reveal as a winning automotive aftermarket industry model? A summary of key elements is seen in here:

Those in the Automotive aftermarket industry will know they’ve arrived when they experience:

  • Discussions with retailers as equals
  • Improved profits across the aftermarket value chain through value creation, not value migration
  • Halt or reversal of the erosion of full-service suppliers’ market share by low cost country competitors

Achieving these objectives is not only necessary, but possible for the automotive aftermarket industry. 

Bio: Adam Robinson oversees the overall marketing strategy for Cerasis including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness - all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:39 am   |  Permalink   |  Email
Tuesday, April 02 2019
Wind Energy Powers Through a Successful 2018

By Celeste Wanner, Senior Analyst, Research and Analytics, American Wind Energy Association

Innovation and Enthusiasm Spur a Year of Significant Wind Gains

2018 was a monumental year for wind power in the United States, with exciting growth, demand from new customers, and continued technological advances. The fourth quarter alone was the third strongest quarter ever for capacity installations with 5,944 megawatts (MW) added, more than all the wind installed in Kansas, the country’s fifth largest wind state. In total, the industry commissioned 7,588 MW of new wind capacity in 2018, bumping the U.S.’s installed capacity to 96,488 MW. More wind deployment and innovations continue to drive costs lower, attracting the attention of new corporate buyers, while new horizons offshore present lucrative opportunities for American businesses.

Among the many innovations making debut appearances in the American market was the introduction of the first four MW land-based wind turbines with orders announced by both Senvion and Vestas. This is nearly twice the capacity of the average turbine installed in 2017. It’s a notable stride in achieving great scale and efficiency by offering developers more options for customizing wind farms to match the unique wind resources of their project site.

As the U.S. wind industry continues to grow and mature, wind increasingly delivers enormous benefits to every state across the country. U.S. wind projects offer low-cost, reliable electricity, new manufacturing and technician jobs, plus millions of dollars in land lease payments and investment in communities nationwide.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:20 am   |  Permalink   |  Email
Tuesday, April 02 2019
Shovel Ready and Certified Sites Add Long-Term Success for Companies

By Lisa A. Bastian, President, Bastian PR

As time slices through 2019, shovel-ready or "certified" site programs of all kinds continue to be key economic development tools fast-tracking the creation (or expansion) of manufacturing or industrial facilities for America's corporate citizens. When done right, these programs don't discriminate by size, but have proven to add long-term value and an attractiveness cachet to both communities large and small.

Typically these sites are certified by either their home states and/or by an outside consulting firm retained by the states and the communities housing the sites. They are prepared and marketed to be either an industrial site ready for a distribution, warehousing or manufacturing or a research/technology park site, suitable for R&D science and technology type organizations and related support companies.

While factors vary, in general shovel-ready properties are promoted as land that has had its planning, surveys, zoning, title work, soil analysis, public infrastructure engineering and related work completed before becoming officially certified. Environmental clearance is especially vital to this process. Before that can be achieved, usually studies are conducted to focus on archeological, geotechnical, endangered species, wetlands, historical and/or other related environmental concerns.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:08 am   |  Permalink   |  Email
Tuesday, April 02 2019
Reframing Retail as a Community Asset, Not a Liability

By Alexandra Tranmer, Project Manager, Camoin Associates

The transformation of the retail industry continues into 2019. Beta-testing drone deliveries, cashier-less grocery stores and sampling new paint colors through augmented reality are just a few of the strategies that retailers are using to expand their market share and reach their coveted consumers. Yet, beyond using tactics like experiential retail and re-evaluating consumers’ purchasing preferences, retailers, and perhaps community builders at large, continue to grapple with how the right retail mix can be leveraged as a complementary asset to residents and other businesses. Although Credit Suisse predicted that 20-25 percdnt of U.S. malls will close between 2017-2022, the demand for retail as an amenity that contributes to the development and competitiveness of other markets is strong. While retail is certainly still a challenging sector for small business operators, chances for success are greatly improved when retail is integrated into the fabric of our commutes, daily lives and work patterns. This article will explore how retail is positioned as a critical component of development in large metro areas and smaller cities, and the role of the economic developer in coordinating the multi-disciplinary teams that are necessary to lay the groundwork for retail success. 

Yes, retail remains in a transformative state. Yes, eCommerce has redefined the public’s expectations of how and where they can purchase everyday goods. Ecommerce sales however only comprise about 10 percent of total retail sales. The 2018 3rd Quarter U.S. Retail Sales report from the U.S. Census reports that total retail sales reached $1,340.2 billion, an increase of 0.9 percent from the 2nd quarter of 2018.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 09:19 am   |  Permalink   |  Email
Tuesday, April 02 2019
A Retrospect and Forward-Thinking Overview of Freight & Transportation Trends in 2019

By Adam Robinson, Director of Marketing & Digital Marketing Consultant at Cerasis

Understanding the state of overall supply chain management is a massive undertaking. It involves countless hours of research, continuous review of leading supply chain experts, consideration of technologies, capabilities from around the globe and much more. The internet is an invaluable resource for shippers and carriers, especially those of smaller size, looking to make a splash in the global supply chain. Unfortunately, the path to understanding this behemoth of information is riddled with rabbit holes, thorns, and even sharp objects. Instead of trying to make sense of the lot by yourself, we’ve taken the initiative to put together these freight and transportation trends to know and use in making supply chain management decisions throughout the coming year.

In this article, we’ll take a closer look at the end of 2018 and move forward into 2019 with general trends affecting the freight and transportation industry. 

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 09:13 am   |  Permalink   |  Email
Monday, April 01 2019
Aerospace and Defense: A Billion Here, A Billion There

By Michael D. White, author and freelance writer

Like industrial fraternal twins, the aerospace/defense industries are related, yet, as the name suggests, serve two separate and distinct markets − aerospace, which largely comprises the production, sale, and service of commercial aircraft, and defense, which supplies the nation with the military land, sea and air systems critical for its well being. 

Falling in the narrow crack between the two are the space vehicles, mainly satellites and drones, utilized for both military and commercial use. 

A&D is the leading net exporting industry in the U.S., generating a net trade surplus of $86 billion in 2017, according to the Virginia-based Aerospace Industries Association. 

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 01:49 pm   |  Permalink   |  Email
Monday, April 01 2019
The Workplace Reimagined: Autonomous Vehicles Poised to Reshape U.S. Office Market by 2030

By Mike Consol, Editor, Real Assets Adviser

By disrupting the way employees commute to work, autonomous vehicles are expected to fundamentally reshape the U.S. office market by 2030, according to a report from CBRE. Most significant, the primacy of commercial real estate’s traditional decision drivers—geographic location and access to talent—may decrease as the importance placed on the workplace experience and building amenities grows.

Based on extensive and proprietary research, including interviews with leading experts in the autonomous-vehicle space, CBRE’s report predicts autonomous vehicles could account for between 11 percent and 27 percent of vehicle miles traveled by 2030. Factors considered in CBRE’s analysis include the rate at which the cost per mile for self-driving cars decreases compared with personal cars, the time it takes to develop software capable of navigating both inclement weather and complex urban roadway layouts, and advances in vehicle manufacturing capacity.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 08:40 am   |  Permalink   |  Email
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