1272 Wellington Street West, Ottawa ON K1Y 3A7 Telephone: 800.808.2920 Fax: 613.728.6021 Email: info@aiacanada.com www.aiacanada.com The information presented in this publication was collected and analyzed by DesRosiers Automotive Consultants Inc. for AIA Canada. For more information, please contact: DesRosiers Automotive Consultants Inc. 80 Fulton Way, Suite 101 Richmond Hill, ON, L4B 1J5 Telephone: 905.881.0400 Fax: 905.881.7456 Email: info@desrosiers.ca www.desrosiers.ca AIA would like to thank the volunteer members of the 2014 Market Research Committee for their assistance and guidance in producing the 2014 Outlook Study: John Grant James Bliss Carey Browning Francois Cadoret Linda Donnini Keith Gordon Rui Martins Rolf Muench Andrew Ross Gord Sadler Sam Sgro Marc Therrien Chris Thorne John R. Watt Wakefield Canada Inc. Fountain Tire Canadian Tire Corporation NAPA Auto Parts Uni-Sélect Inc. Delphi Product & Service Solutions Automotive Aftermarket E-Learning Centre Ltd. Osram Sylvania Limited Business Information Group CARQUEST Canada Ltd. Robert Bosch Inc. Veyance Technologies Canada NAPA Auto Parts J. Watt Consultant Automotive Inc Published December 2014 Copyright 2014 All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, by any means, photocopying, electronic, mechanical, recording or otherwise, without the prior approval in writing from the publisher. ISBN 978-0-9940072-0-9
The Automotive Industries Association of canada would like to gratefully acknowledge the generous financial support from the following sponsors:
EXECUTIVE SUMMARY The Canadian automotive aftermarket industry employed approximately 403,800 Canadians in 2013, accounting for nearly half of those employed in the Canadian automotive sector. Employment in the aftermarket is distributed throughout every jurisdiction in Canada and has been significantly more stable than seen in the original equipment sector of the automotive industry. From a macroeconomic standpoint, the overall Canadian economy has shown moderate growth since the recession of 2008/2009. Real gross domestic product (GDP) grew at an annual rate of 1.8% in 2013, representing a slowing rate of growth when compared to the 3.2% and 2.5% rates observed in 2010 and 2011, respectively. Unemployment has seen a gradual decline since its series peak of 8.3% in 2009. The 2013 unemployment rate of 7.1% shows slow recovery since 2011 and is predicted to decline to pre-recession levels, reaching 6.4% in 2015. The new vehicle sales market has witnessed record performance levels in recent years. The 1.74 million light vehicle sales recorded in 2013 represent an all-time sales record for Canada. Moving forward, new vehicle sales are expected to surpass 1.8 million for 2014 into 2015. Used vehicle sales decreased by 2.5% in 2013 (2.80 million units) from 2012 (2.87 million units). Sales of used vehicles in Canada peaked in 2011 with a total of 3.03 million units, and the recent drop in used vehicle sales can be partly attributed to the spike in new vehicle sales. According to DesRosiers Light Vehicle Study (LVS), which probes the vehicle maintenance habits of 4,500 Canadians via an online survey, the incidence of repair for most parts categories in 2012 was consistent with or slightly lower than the incidence reported in 2010. Cabin air filters make up one of the fastest growing categories, mainly due to the fact that the first wave of vehicles with this newer design feature are entering the older age brackets. For the industry as a whole, DIY rates for the vast majority of vehicle parts categories have gradually declined over the past decade. This trend is driven by the increasing complexity of vehicle systems that require specialized equipment and professional expertise for maintenance. Canadian Tire led the DIY parts retail market in 2012 with a 46.7% share, the highest market share recorded in recent years. In the professional service market, new car dealers were the most popular choice, as indicated by their 36.6% market share in 2012. Independent repair outlets closely followed with a 32.2% share of the DIFM market in 2012. The overall Canadian light vehicle aftermarket (excluding collision) was worth an estimated $19.14 billion in 2013 and is expected to grow in the coming years. The aftermarket is expected to grow to $19.44 billion in sales in 2014 and reach $21.40 billion by 2017. This upward trend in the aftermarket s size is driven by a variety of factors including the increasing life expectancy of
vehicles, the expanding Canadian vehicle fleet, and the aging of the record volumes of new vehicles sold in recent years. The total size of the aftermarket with regards to DIY vehicle parts reached an estimated $2.76 billion in 2013. The service industry segment, which includes both parts and labour, reached an estimated $16.35 billion in 2013. The aftermarket s growth will be impacted by a number of variables including the geographical distribution of Canada s vehicle fleet, the average age of the vehicle fleet and the composition of Canada s vehicle fleet. One of the key challenges that will affect the Canadian aftermarket in coming years is the weakening of the Canadian dollar. The Canadian aftermarket relies heavily on imported products to meet consumer needs, and as such, is susceptible to exchange rate fluctuations. Technology has always played a key role in shaping the automotive industry. Looking at the current automotive sector, the imperative for greater fuel economy will likely play the most pivotal role in shaping the vehicles that will be developed, sold and serviced in the coming years. The strict targets outlined in the U.S. mandated Corporate Average Fuel Economy (CAFE) will become the guiding factor impacting future technological change in vehicles. Though the strategies to be used by vehicle manufacturers to meet these goals remain unclear, the adoption of lightweight materials, the use of alternate powertrains, and improved efficiency from gasoline engines will have strong effects on the service and repair industry in the near future.