Signs of Growth as the Aftermarket Recovers
New Report: As Restrictions Ease, Americans Look Forward to Driving More
As shelter-in-place restrictions are eased, Americans are driving more and are eager to begin traveling again. Among those who have postponed trips, three-quarters reported that they’re eager to vacation within the United States, and a nearly equal number expressed an interest in vacationing abroad.
Americans’ finances are, in the aggregate, healthier than they were during the Great Recession. More than two-thirds of respondents said that their income was unchanged from or better than in the previous year. Consumer response in 2009 was more than 20% lower. Americans also have more disposable income than in 2009.
New-car and light-truck sales slumped in 2020, but consumers are growing more optimistic about the market looking forward. Nearly two-thirds of all respondents thought that now is a good time to purchase a new car.
In-store retail sales rebounded sharply in the month of May, with the automotive retail sector registering a 44% gain over the previous month. Additionally, retail foot traffic had returned to nearly 100% of the pre-pandemic baseline by the end of June.
While the automotive specialty-equipment market has seen an overall decline in sales for 2020, it remains a $40-billion-plus industry with robust consumer support. Among enthusiasts, 57% of respondents reported using the extra time afforded by the pandemic to working on their cars and trucks.
Despite the COVID-19 disruption, consumers are more confident, optimistic and in a better financial position today than they were during the Great Recession of 2007–2009. They are shopping more and, as restrictions ease, returning to in-store retail. In May 2020, retail sales at motor vehicle and parts dealers jumped 44% from April—the highest increase ever recorded. Additionally, most consumers think that now is a good time to consider buying a car.
In the SEMA “State of the American Consumer—July 2020” report, the SEMA market research team explored the current state of consumers within the United States and their outlook for the future. Using data as of July 2020, this quick snapshot looked at how consumers are emerging from the COVID-19 shutdown.
- On the whole, Americans are looking forward to getting back on the road again as stay-at-home restrictions are eased. Fully 75% of Americans reported being eager to travel within the United States, and a similar number expressed an eagerness to travel outside the United States, according to a survey conducted by Directions Research. In a similar vein, 59% were planning to travel by car within the next three months, and more than a third (37%) anticipated travel for work by either train or airliner over the same period.
- Americans are slowly returning to retail stores. Total in-store retail sales increased 17% in the month of May, a record one-month gain over the previous month, and total automotive retail sales jumped 44% over April levels, according to the U.S. Census Bureau. Retail foot traffic, while still down from its pre-pandemic levels, was within 90% of the pre-pandemic baseline by the end of June, according to a study conducted by the NPD Group.
- Consumers report being in a better financial position than they were during the Great Recession. Nearly 70% of Americans reported in May that their current financial position was either better than or unchanged from the previous year, according to a recent survey conducted by the University of Michigan. By contrast, only 46% of Americans took the same position in 2009, and 84% reported that they expected their financial position next year to be better than or unchanged from this year.
- Americans’ levels of disposable income have risen steadily over the last 20 years, even without counting the added economic boost provided by last spring’s federal stimulus program. In May, total disposable income was $16.2 trillion, according to the U.S. Bureau of Economic Analysis.
- Consumer confidence, while having declined 28% since the first of the year, began rebounding in May and is still higher than it was in 2009, according to a University of Michigan survey. Among the reasons most given by respondents for their concerns were the health of the economy (61%), the uncertainty surrounding the duration of the pandemic (60%), the overall state of public health (57%) and the health and well-being of relatives in vulnerable situations (54%).
- Even amid the disruption caused by the COVID-19 pandemic, automotive enthusiasts continued to work on their cars and purchased aftermarket parts. While specialty-equipment retail sales slumped noticeably during the first half of the year, they are forecast to rebound to pre-pandemic levels by 2023, and more than half (57%) of enthusiasts reported using the extra time afforded by the pandemic shutdowns to work on their cars and trucks.
The latest SEMA market report shows an industry that, while having been severely impacted by the pandemic in the short term, has begun to show signs of growth again and continues to enjoy healthy levels of consumer support. Takeaways include:
- Consumers are eager to travel again and are getting back on the road and driving more.
- Consumers are in a better financial position today than they were in 2009. They are also gradually returning to retail stores.
- Consumer confidence has dropped from the previous year, but it still remains higher than during the Great Recession and is on the rebound.
- Consumers increasingly believe that now is a good time to consider purchasing a new car.
- While an overall sales drop-off is expected for the remainder of the year, the automotive specialty-equipment market remains robust and is forecast to return to pre-pandemic sales levels within the next three years.
Download the Report
To learn more, download the new SEMA “State of the American Consumer—July 2020” report at www.sema.org/research.