Publisher's Statement - January 2014
Looking ahead at 2014
For 30 years, Parts & People has reviewed the past year and previewed the year to come. Throughout those years, the industry adapted and evolved in response to economic conditions, as well as vehicle, technology, regulatory, and oil price changes. A proven and mature distribution channel plus a world-class supplier chain provided a platform of certainty upon which new development and direction — complemented by the entrepreneurial ingenuity of local and regional, independent business owners — achieved new, effective, form and function.
It is remarkable that many of the parts and service industry’s emerging trends don’t focus necessarily on 2014, but, rather, set sights on subjects such as telematics, the changing make-up of the vehicle fleet, and further OEM advances — emerging trends that will not yet, or only begin to, affect the industry. It’s the beginning of a new cycle, not necessarily an extension of the old cycle.
With that, it appears to be a year based on various paths of continued positioning and preparing for future change as much as it does performing and prospering in the present. The challenge, for many, will be the endurance, innovation, and resources of independent businesses necessary to meet the challenges and opportunities ahead. It will be the collaborating partnerships or alliances which develop that will determine outcomes, collectively and individually.
A new day has dawned, and the results of continued consolidation, technology integration, and cost-of-doing-business uncertainty figures prominently in the preparation and strategic planning needed to create updated business models, which must be tailored to the business climate and approaching trends increasingly visible on the horizon.
The aging fleet vs. new car sales
Vehicle unit sales for 2013 are up, about to exceed 15 million for the first time since 2007. Consensus opinion attributes the growth to new models, technologies, and redesigns. Delayed demand and relative ease of extended, at times questionable, financing must be considered, too.
Arguably, the most critical of the trends is the balance of the aging fleet, said to have increased in age by 14 percent since 2007 compared to the impending shrinking of the sweet spot (vehicles 6-11 years old) from 2014 to 2018, compared again to the continued vehicle sales recovery. Will the aging of the fleet continue long enough to balance the shrinking sweet spot during the next four years? Vehicle quality suggests yes. If not, any positive, collective trend for DIFM will be weakened.
And, will the marketing and available financing for new-vehicle sales exceed the marketing and financing of maintenance and repair of aging vehicles to challenged consumers? Of course it will. A continued recovery of new-vehicle sales will change the dynamics of the vehicle fleet. To what extent aging vehicles are removed and replaced in the fleet is a challenge for the industry to proactively address and influence through its industry associations.
The new year and new cycle will also mark the end for certain business models, many retiring industry veterans, and for those independents unable to bridge or satisfactorily redefine the present into the future. Change we must, but with mixed emotions. Leaders of, and key participants in, this great industry will increasingly step down in 2014 and be recognized for their contributions. When possible, take a moment to thank them, too. Parts & People welcomes announcements and photos regarding the retirement of long-term employees for the People & Places section of the publication.
Have a safe, successful, and Happy New Year.