The 92% Solution

It’s Time for Dealers to Target Every Parts, Tire, and Service Opportunity – Regardless of Vehicle Age

No matter how you look at it, 92% is a large percentage. Now, consider that it represents the share of customer-pay parts and service revenue lost by dealers for one of the largest passenger vehicle age groups and 92% becomes downright staggering.

The question is: Is your dealership going to plug this gaping hole by pursuing customer-pay parts along with tire and service opportunities that have traditionally been dominated by independent aftermarket providers?

Considering that the average age of U.S. light vehicles now stands at 12.2 years – and with total U.S. aftersale revenue expected to top $375 billion in 2023 – the opportunity is massive. Nevertheless, an estimated 68% to 72% of this market is addressed outside the dealer parts, tire and service channel. In fact, industry sources estimate that dealers lose up to 78% of aftersale revenue for vehicles three to six years old and, yes, 92% of revenue for vehicles over seven years of age.

Before you respond with, “It’s always been that way,” or “We’re already doing pretty well with warranty work,” think about the changes taking place within the nation’s car parc (registered passenger vehicle population):

•In 2002, 35 million light vehicles were at least 16 years old. Today that number is 74 million, representing one-in-four cars on the road.

•The share of VIO (Vehicles In Operation) seven years old and above is growing much faster than unit sales of new vehicles.

•The U.S. vehicle scrappage rate in 2022 fell to 4.2%, the lowest figure in two decades.

•Consumers are increasingly confident in vehicle durability and are more likely to invest in maintenance and repairs of an existing vehicle to further extend service life.

These facts help explain why the traditional, non-dealer aftermarket is projected to grow at a nearly 4% CAGR (Compound Annual Growth Rate) through 2027. Moreover, the aftermarket/aftersale category traditionally thrives during economic downturns and other challenging environments (including vehicle supply interruptions), enabling businesses to invest and grow while many of their competitors are retrenching. In short, investing in solutions that eliminate barriers to customer-pay parts and service revenue makes good sense.