As we wind down yet another year here at ACG "Smart Parts", it's time once again to look back to see what we have learned in 2022 and take a look ahead to perhaps what we can expect moving forward. One thing for sure is that this past year has been another challenge much like it has been for the past two plus years.
Predicting and forecasting for future events is not a certainty but what is for certain right now is that the automotive parts industry is hotter than ever! Who would think that after all we have been through these past couple of years or so, we would we even make that kind of statement.
Continued Pandemic awareness, rising inflation, employee shortages, on-going supply chain issues, parts backorder situations, new and used vehicle shortages and so on. Most importantly though and in my opinion, is the Lack of Consumer Confidence.
Based on the Conference Board Consumer Confidence Index, and as listed on their web page @ www.conference-board.org., this following statement was just released this past month of November...
"The Confidence Board Consumer Confidence Index decreased in November after also losing ground in October. The Index now stands at 100.2, down from 102.2 in October. The Present Situation Index, based on consumers' assessment of current business and labor market conditions decreased to 137.4 from 138.7 in October. The Expectations Index, based on consumers' short-term outcome for income, business, and labor market conditions, declined to 75.4 from 77.9"...
According to Lynn Franco, Senior Director of Economic Indicators at the Conference Board, she goes on to say...
"The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers' expectations regarding the short-term outlook remains gloomy. Indeed, The Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated"...
So, with all the above said, and once again, how can we even think that 2023 is going to be "Our Year?" Furthermore, and the most important question is...
How Long Is This Going To Last?...
Here's the Good News!...
First and foremost, we are in an "Essential Service Industry", as we operate in the Transportation Industry, much like the Airline Industry, Rail Transit, or perhaps the Food & Clothing Industry and the Healthcare Industry just to name a few.
Even though we are not "Recession Proof", our Automotive Industry is essential to our way of life and must move forward, no matter what the economic situations are. What we do have to do is adapt to these conditions and remain in business and be profitable.
According to hedgescompany.com, we learn even more about how even through these times, our Automotive Parts Industry continues to grow. We learn that even though the economy is not good, our Automotive Parts Industry is "Recession Resistant".
Let's start off with some basic facts as we get into the most recent data that proves our continued growth in these times. You would think with all the "doom and gloom" that we just revealed earlier in this issue, and at some point, something has to give to send us in a downward spiral.
Fact # 1:
The number of Licensed Drivers in the United States are actually climbing as industry analysts predict that we will reach 240 million Licensed Drivers by the year 2025. Miles driven is also up average 1.3% over the last few years, even though some analysts predict that this percentage will drop over the next few years as inflation and prices rise.
Fact # 2:
People are not returning to Public Transportation, or "Ride Sharing" as we witnessed prior to the Pandemic as online Parts Purchases continue to rise at a 9% growth rate as listed in the most recent Compound Annual Growth Rate, (CAGR) numbers. This number also equals forecasts made by The Auto Care Association as their forecasts reveal robust, continued growth through 2023.
Fact # 3:
E-Commerce Parts Sales continue to skyrocket as 2022 hit 38 billion in sales and is expected to rise over 40 billion in the coming year. In fact, it is predicted that E-Commerce Parts Sales, both in first party and third part sales will reach 67 billion by 2030! The Digital Influence on parts sales, both online and offline are up over 2% this year, even with inflation.
Fact # 4:
Personal consumption on parts sales as a percentage of total income has also risen and continues to rise, even with rising fuel prices. Light Duty Truck and SUV sales continue to outsell regular passenger vehicles at a clip of 2-1. Truck enthusiasts especially are spending more and more on optional, non-essential truck parts such as accessories.
Fact # 5:
Used Vehicle Sales are up drastically as New Vehicle Sales drop to the lowest levels in years due to Supply Chain Issues, especially with the digital microchip shortages. This has resulted in record Parts & Service Sales over the last couple of years as these Used Vehicles have required higher maintenance and repair costs.
Fact # 6:
Consumers are keeping their vehicles for longer periods of time as New & Used Vehicle Ownership hits near the double-digit range in years. New & Used Vehicle financing is even pushing payments terms to 6 years or even more. Vehicle Loan Interest Rates are also on the rise, thus forcing the consumer to keep their vehicle through the loan payment cycle, closer to the end of the loan payment period.
Fact # 7:
The Automotive Parts Industry continues to pour in over a trillion dollars each year into our economy at a clip of 3.0% to 3.5% of our overall Gross Domestic Product, (GDP) and continues to grow even higher. These statistics don't even include the revenue generated from the manufacturing of automotive parts that are shipped overseas and around the globe.
Our automotive industry, in my opinion, is just going to keep growing and growing with even newer innovation, technology and the rise of totally Electric Vehicles. As we keep growing, and with each step upward, we will always need our vehicles serviced and repaired, no matter how our vehicles are powered.
Our "need for speed", and our personal choice on how we travel along with our overall passion for the automobile will be with us far beyond my lifetime. Consumer Confidence may drive our personal choices as to what we buy and when we buy, but if you are in an "Essential Service Industry" like we are, they will always buy.
"Will They Buy from You & Could This Be YOUR Year in 2023?"
If you want to learn more about ACG Smart Parts "Eight Habits of Highly Successful Parts Managers", visit our website @ www.smartpartstraining.com, or...just pick up the phone and call me at :
(786) 521 - 1720...After all, not knowing is not worth not "fixing" it...