SEMA eNews Vol. 11, No. 40, October 2, 2008

ACCESSORIES ONE OF THE FASTEST-GROWTH SEGMENTS IN THE AUTO AFTERMARKET

A new report by the market research company Mintel estimates that the total automotive aftermarket (specialty equipment and “hard parts”) grew 3.5% in 2007 from the year prior. But the firm also expects that growth to stagnate in 2008 and slightly rebound in 2009. That’s the bad news.

The good news? Specialty-equipment accessories are among the fastest-growing segments of the aftermarket. According to Mintel’s “Automobile Aftermarket: The Market—US–August” report, the accessories segment posted a five-year compound annual growth rate (CAGR) of 4.6% from 2002–2007. About 56% of segment sales came from appearance accessories, with another 28% coming from handling and performance accessories.

Based on Lang Aftermarket Annual data, Mintel estimates that total U.S. retail sales of specialty-equipment accessories increased from $12.2 billion in 2002 to $15.3 billion in 2007.

Other significant growth sectors included tire and brake segments, which, according to the report, “benefit from premium positioning and marketing.” Sales of security and detection products also showed high growth with a five-year CAGR of 7.2%.

In-car entertainment (ICE), meanwhile, has suffered since 2002 as consumers move away from CD-based music and toward MP3 downloads and portable players. Total U.S. wholesale sales of in-car entertainment dropped from $5.1 billion in 2002 to $3.6 billion in 2007.

Since 2005, however, the ICE segment has found new sources of growth in the form of mobile video and Bluetooth headsets for in-car cell phone usage. Sales of the former represent about 20% of the segment, according to the report.

GPS navigation systems were not included in Mintel’s ICE numbers, but the category’s growth has been explosive, up from $349 million wholesale in 2005 to $2.4 billion in 2007. The Consumer Electronics Association projects that the category will more than double in the next two years.

The report also cites the changing nature of the aftermarket consumer landscape, noting that the complexity of newer vehicles is fostering the growth of the DIFM—Do It For Me—market. At the end of 2007, parts and labor revenue for the DIFM market was almost four times that of the DIY market.

SEMA market research also shows that consumers have been purchasing more specialty-equipment accessories than in prior years, according to SEMA Market Research Manager Ty Michael. The most current SEMA data, which looks specifically at specialty-equipment sales, shows that the specialty accessories and appearance products market grew to $21.995 billion in 2007 from $15.47 billion in 2002.

Within this product category, sales of video/entertainment/GPS navigation systems skyrocketed 178% over the past five years to $1.526 billion last year. Specialty audio equipment has also risen substantially, jumping 95% from 2002 to 2007, reaching $4.9 billion.

Taken together, specialty mobile electronics have more than doubled in the past five years, increasing from $3.065 billion in 2002 to $6.427 in 2007, largely due to the explosive growth in specialty GPS navigation products.

For more original specialty-equipment market research, visit www.sema.org/research.

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