Posted On September 15th, 2022,

Vehicle owners whose cars are between four and 12 years old are poised to help boost sales in the vehicle service industry, according to a new study.

However, the aftermarket is falling behind in capturing this potential.

The J.D. Power 2022 Canada Customer Service Index—Long-Term (CSI-LT) Study reported that the auto service industry is expected to see ifs market value cross pre-pandemic levels, reaching $10.9 billion in 2022 — that’s up from $6.6 billion last year and $10 billion in 2019, before the onset of the COVID-19 pandemic.

The cause of the “boom” is mostly thanks to the increased cost to service and repair vehicles as the average cost per visit to the shop has gone up.

Dealerships are seeing the per-spend visit in their bays jump from $332 last year to $394 this year, up 19 per cent; in the aftermarket, per-visit spend jumped from $226 to $247, a 9 per cent increase.

J.D. Ney, automotive practice lead at J.D. Power Canada, pointed to a couple of factors. ““In addition to driving more, some owners are catching up on repairs that were put on hold because of the pandemic and others are hanging on to their vehicles longer due to inventory shortages and the high price of used cars,” he said in a statement.

However, consumers are now visiting dealers more than aftermarket shops, reversing last year’s trend.

So not only are dealers seeing customers pay more per visit, but vehicle owners are visiting more often — 1.5 times annually in 2022 compared to 1.1 last year. Dealers account for 47 per cent of all service visits and are capturing the larger share (58 per cent) of industry revenue.

This comes despite gains made last year by the aftermarket. Still, this is a trend seen in this sector since 2019. Average annual visits in the aftermarket fell to 1.2 in 2022 from 1.3 in 2021.

The study found that the number of aftermarket customers who said that all service work was completed right the first time dropped to 95 per cent from 97 per cent in 2019. That’s still better than the dealership service segment which stayed more or less the same at 94 per cent compared to 2019.

And overall economic challenges are indeed having an impact, Ney observed.

“While auto service shops are doing well, they are not immune to other pandemic-related effects such as a tight labour market and the challenges of attracting and retaining technicians,” he said. “While this has not affected overall satisfaction in the short term, we do see some leading indicators in this year’s study, such as a decline in fixed right first time and appointment on day desired diagnostic metrics. Clearly, the automotive service industry in not immune to these larger macro-economic forces.”

Original Article : Aftermarket Sweet Spot Poised To See Growth