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Consumers Keeping Their Smaller Vehicles But Maintain Desire for Luxury, According to Experian Automotive

The mix of vehicles on U.S. roads is moving more toward small to midsize vehicles and vehicles with premium/luxury amenities, according to Experian Automotive’s just-released analysis as of March 31, 2010.
By Shop Owner Staff
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The mix of vehicles on U.S. roads is moving more toward small to midsize vehicles and vehicles with premium/luxury amenities, according to Experian Automotive’s just-released analysis of its AutoCount Vehicles in Operation (VIO) data as of March 31, 2010.

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"In comparison to the first quarter of 2009, the first quarter of 2010 saw consumers holding onto their smaller vehicles longer," said Marty Miller, senior product marketing manager for Experian Automotive’s AutoCount VIO. "At the same time, consumers are also keeping their luxury vehicles longer, especially small and mid-size luxury vehicles. Based on our findings, it’s clear that safety products, creature comforts and the latest technology are still high on the list of today’s vehicle purchaser."

The first quarter 2010 VIO analysis for vehicle segments also revealed:

• While full-sized pickups continue to dominate America’s roads, their volumes dropped 0.3 percent compared to last year in market share and 2.9 percent in volume.

• Mid-range crossover vehicles (CUVs) grew 14.5 percent in volume share with a market share growth of 0.27 percent. The largest volume growth in the VIO market was in the upscale luxury segment.

• SUVs, minivans and small pickups had the largest drop in volume, while traditional cars experienced the largest market share decline.

• Compared to first quarter 2009, hybrid vehicles grew 18.5 percent in volume share; however, this only equates to a growth of one-tenth of one percent in the overall market.

• More evidence that consumers are choosing to keep smaller vehicles longer or have recently purchased those size vehicles is seen in the growth of 4-cylinder vehicles (1.9 percent over first quarter 2009) and the decline of 6-cylinder (1.2 percent) and 8-cylinder (0.1 percent) vehicles.

"What this means for the aftermarket is that today’s manufacturer, retailer and distributor must understand the changing vehicle mix to better anticipate fluctuations in what types of vehicles need to be serviced and what types of vehicles consumers are keeping longer," Miller noted.

Another key finding in the latest Experian AutoCount VIO data shows that the "Detroit 3" manufacturers (General Motors, Ford and Chrysler) have dropped in market share compared to first quarter 2009, while all other top manufacturers grew except Mazda. Toyota had the largest growth volume, followed by Honda with Hyundai closely behind. Hyundai grew 9.3 percent while Ford dropped 6 percent.

"While the combined volumes of GM, Ford and Chrysler represent 62.2 percent of VIO today, the number of total vehicles on the road from these manufacturers slipped over the last year from 64.5 percent in the first quarter of 2009," Miller said. "Those in the aftermarket should take note of the growing presence of Hyundai and other manufacturers in their forecasting and planning."

Other key findings in Experian’s just released AutoCount VIO analysis for the first quarter of 2010 reveal:

• The average age of light duty vehicles grew dramatically (8.3 percent) over the last year from 9.6 years in Q1 2009 to 10.4 years in Q1 2010. Average age is one key factor in determining aftermarket growth, indicating a positive sign for aftermarket manufacturers and retailers.

• Compared to first quarter 2009, light trucks and passenger cars both experienced drops in overall volume (cars by 0.5 percent; light trucks by 0.1 percent). Passenger cars regained the edge in total vehicles on the roads in the first quarter – 50.1 percent to 49.9 percent.

• Front-wheel drive (FWD) vehicles continue to dominate on America’s roads with nearly half of all vehicles using that drive type. Compared to Q1-2009, four-wheel drive (4WD), all-wheel drive (AWD) and rear-wheel drive (RWD) have grown in volume (4WD by 14.2 percent, AWD by 10.3 percent, RWD by 5.4 percent), while FWD vehicles have remained fairly stable.

Experian’s AutoCount Vehicles in Operation provides timely visibility to what cars and trucks are on the road in a local market, helping aftermarket retailers better serve their customers by stocking the right parts. The data is updated within six weeks of the end of each quarter, ensuring that aftermarket organizations have the most timely and comprehensive information available to help better manage inventory levels, efficiently plan for new vehicle introductions, adjust for technology changes, and better assess locations for retail stores and service bays.

For more information on Experian’s AutoCount Vehicles in Operation and other products and services, visit the Experian AutoCount website.

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When Your Shop Is Worth Much More Than You Thought

Although every sale of a shop in which I am involved has its own unique set of circumstances, which makes my job both very interesting and very challenging, Cowden Automotive stands out as particularly memorable because I was able to demonstrate to the long-time owner, Paul Cowden, that his business was worth about three times what he had initially thought.

By Art Blumenthal
Leveraging more than 30 years of experience as both an aftermarket business owner and aftermarket technology executive, Art Blumenthal LLC provides business intermediary and advisory services to both buyers and sellers of industry businesses of all sizes. Art is a member of IBBA (International Business Brokers Association, Inc.). For more information, or to initiate a no-obligation confidential consultation, visit www.art-blumenthal.com.
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Case Study: Owner of San Francisco-based Import Service Shop Delighted to Discover Just How Valuable His Business is to Qualified Buyers
I sometimes share case studies of the clients I have been able to assist in my role as an aftermarket business broker and provider of intermediary and advisory services. I do that when I think the story will provide a reader in similar circumstances with new insights or helpful information.
In the case of Cowden Automotive, Inc., I acted in a consulting capacity assisting the owner and his broker in valuing the business, creating a marketing plan, finding a qualified buyer, and arranging financing for the sale.
Although every sale of a shop in which I am involved has its own unique set of circumstances, which makes my job both very interesting and very challenging, Cowden Automotive stands out as particularly memorable because I was able to demonstrate to the long-time owner, Paul Cowden, that his business was worth about three times what he had initially thought.
Needless to say, delivering that kind of good news to a shop owner is a rewarding experience. Discovering that the sale of his business would result in his retirement nest-egg being substantially larger than he had ever thought was a fitting tribute to someone who had spent his entire working career as a busy automotive service shop owner.

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