WardsAuto: Key Regions to Watch for Global Automotive Aftermarket Growth
June 27, 2018—The automotive aftermarket parts industry is expected to see global sales grow by 6 percent over the next seven years as the need for parts worldwide increases, reports WardsAuto.
"The recently released global Pulse of the Online Shopper found most consumers in Canada, Brazil and Mexico make international purchases, while almost half of U.S. shoppers do," Wards writes. "That’s great news for the automotive aftermarket parts industry, which is expected to see global sales grow 6% over the next seven years as the need for parts worldwide increases."
Here are the three regions Wards claims are poised for growth:
One country particularly promising for exporters is Sweden, says Wards, which imports more than $5 billion in aftermarket parts per year and boasts a high vehicle ownership rate for the region (1 vehicle per 2.1 people). Additionally, Swedes spend $1,000 annually per car on parts and accessories, the most in the European Union.
Despite this opportunity, U.S. suppliers only account for 1.1 percent of automotive imports to Sweden, writes Wards. Sellers should take advantage of this gap in the market, especially those who can offer parts that are in high demand in the country. This includes advanced technologies, products for climate (engine heaters, extra lights for the winter), vintage car parts, customization items and truck aftermarket items.
Mexico and South America
For those looking to tap into the Latin American market, there’s ample opportunity in Mexico and South America, reports Wards. Perhaps the biggest opportunity in these regions is in Mexico. The size of the Mexican market, the shared border with the U.S. and the country’s large vehicle-manufacturing industry provides an excellent market for U.S. aftermarket parts. Additionally, auto sales in Mexico have shown consistent growth since 2010.
But it’s not only Mexico that shows promise. For instance, in Chile, 95 percent of aftermarket parts are imported but U.S. suppliers only account for 30 percent of those imports.
Replacement parts are in high demand, especially considering that 43 percent of the vehicles in Chile are more than 10 years old. The combination of the vehicles’ ages and poor road conditions that put excessive strain on vehicles provides a prime market for aftermarket parts. Additionally, American brands are in high demand in Chile, and customers are willing to pay more for quality parts.
The Asia Pacific region also represents a unique opportunity. Wards writes that its UPS Pulse of the Online Shopper study found 42 percent of the region’s online consumers are likely to purchase parts that enhance the performance and aesthetics of their vehicles. This creates a great opportunity for distributors who offer parts such as high-performance automotive chemicals, such as wax and rustproofing solutions, or high-end audio systems.
South Korea is a prime example. South Korea imports $2.9 billion every year in aftermarket parts and is a top-10 market for overall U.S. parts exports. In addition, U.S. auto-parts exports have more than tripled to over $956 million in South Korean since 2009.
U.S. exporters sending goods to South Korea also benefit from the US-Korea Free Trade Agreement, which eliminated tariffs on new or used auto parts and accessories coming from the U.S. This means exporters can take advantage of this open, rapid-growth market without a large cost of entry.