Essential Industry Keeps the Country MovingBy Antonio Martin López Díaz | Wed, 03/30/2022 - 15:00
Despite the adverse situations that we have been experiencing in the last two years for reasons we all know, the automotive aftermarket in Mexico has remained afloat thanks to the fact that mobility in the country has been increasing, which brings with it a greater number of kilometers traveled, which translates into greater vehicle wear and, therefore, requires both preventive and corrective maintenance. Together, this has helped us keep sales of spare parts at acceptable levels.
During 2021, the price of spare parts increased 30 percent on average, generated mainly by two factors: the constant rise in the price of steel, an essential raw material for auto parts, and the lack of cargo containers, which raised the cost of freight for much-needed imports of auto parts by 500 percent, in the best of cases, greatly affecting the selling price. We at ARIDRA believe that this price increase will continue during the first half of the year due to the factors already mentioned. But we can add another: the armed conflict in Ukraine, which will undoubtedly have a negative impact on the chain of supply. We'll see over time how big the impact will be.
Despite this, the spare parts business in Mexico has good prospects. Last year, it grew 12 percent and the value of the market's operations in 2021 reached US$30 billion, approximately. According to data from PIFA Consulting, it is expected that by 2022, the aftermarket will be growing between 6 and 8 percent. Fuel consumption is forecast to grow by 8 percent.
The number of vehicles in operation according to figures provided by IDF and IHS Markit, total 33.3 million units, from 1961 to 2022, with an average age of 15.8 years. This makes Mexico’s vehicle fleet one of the oldest in the world.
Of that total fleet, 59 percent are cars, 32 percent are trucks, 6 percent are vans, and 3 percent are medium and heavy trucks (motorcycles are not included in this statistic). These figures allow us to extrapolate that the spare parts business will maintain an interesting dynamic over the next five years.
On the other hand, in the last three years, there has been a phenomenon in Mexico that sooner or later will affect our market. I am referring to the fall in the sale of new units in the domestic market. There are those who may think, with reason, that the aftermarket benefits from this scenario, since the owners of used cars have to repair what they already own; however, we consider it to be a mirage, since those new units that were not sold will never reach our market, which will obviously have some impact on the sale of spare parts in the next three to five years.
To mitigate this circumstance, a factor that was not considered has come into play: Given the fall in sales of new vehicles, the vehicles in operation are aging at a higher rate, which obviously stimulates the maintenance of already circulating units, which is obviously paradoxical.
Another interesting aspect related to the vehicle fleet is the marked tendency of the Mexican market toward cars of Asian origin. In the last five years, 52 percent of the sale of new units corresponded to brands from Asia, 27 percent to American brands and 21 percent to European brands.
There is no doubt that the aftermarket in Mexico will continue to be an attractive business in the immediate and near future but some actions will need to be implemented. Those who invest in technology, in the implementation of e-commerce, advanced storage techniques, electronic cataloging, creative marketing and training strategies, among others, will have a better opportunity to continue growing the profitability of their business. If they do not adapt to this new reality, I am very much afraid that they will be doomed to disappear sooner or later. For us at ARIDRA, the association that has grouped the aftermarket in Mexico for 78 years, the keyword to be successful today and always is: Innovation. There's nothing more.
He who has eyes let him see, and who has ears, let him hear.