A bit of good news to add to our post last month that sales of auto parts for 2011 will show an increase over 2010: Our market research shows the amount of auto parts purchased as a percentage of personal income has reversed a downward trend of more than 10 years.
In 2010, retail sales of auto parts represented about half a percent of personal income (0.0513% to be exact). Preliminary numbers for 2011 show the first increase in that percentage in more than 10 years, to levels not seen since 2008. We’re projecting just over 0.052% of personal income was spent on auto parts in 2011. And while the difference between 0.0513% and just over 0.052% may sound trivial, that represents nearly $1 billion in additional retail sales dollars of auto parts and accessories in 2011!
Personal income includes household income from things like employment, dividend and interest income, rental income or social security. Auto parts sales includes retail sales of automotive replacement parts, performance parts and accessories, tires and wheels.
Both personal income and auto parts sales are expressed in nominal dollars.
A large part of the increase in household spending is related to how long people are hanging onto their cars. The average age of a registered vehicle in the US has increased to 10.8 years due to soft economic conditions, according to new data from Polk. An aging fleet of vehicles in the United States means Americans are buying more auto parts for repair and maintenance. So, to call this good “economic” news is a bit like the tail wagging the dog; we probably would not see an increase in personal income spending on auto parts if the economy were more robust and the average age of cars was not increasing. Readers of this blog will know that 2009 was a disaster for the automotive aftermarket; while the Great Recession was in full force in 2008 for most of the economy, it didn’t hit the automotive aftermarket until June 2009 and it depressed sales of auto parts through much of 2010, even after the recession was declared over.
We’ll continue to monitor economic conditions for the automotive aftermarket throughout 2012, so check back.