11
2016–2021 Forecast Assumptions
Forecast Assumptions
Despite getting off to a slow start in 2018,
the economy continues to maintain solid
momentum. Nominal GDP growth for the
year is expected to be 4.8 percent, which
is up from the 4.1 percent growth seen in
2017 . Nominal GDP growth should peak
in 2019 at 5.5 percent before cooling
a bit in the outbound years. Consumer
spending growth will continue to support
the economic expansion, underpinned
by lower personal tax rates and gains
in employment, disposable income,
and home values. Miles traveled growth
slowed in 2017 after two strong growth
years in 2015 and 2016 but continued
strength in the employment market should
contribute to a rebound there.
2018 Aftermarket Forecast 2017 Review 2017 Estimate
(% change)
2016 Final
Result
(% change)
Total Aftermarket
Sales
3.5% 3.1%
New Car
Dealer Sales
2.7% 3.7%
Auto Parts
Stores
3.1% 2.3%
General
Auto Repair
3.8% 2.7%
Source: IHS Markit
Market Trends Influencing the Aftermarket
While recession risks remain present, economic growth should remain slow and
steady going forward. Domestic demand will continue to drive growth.
A confident consumer will ensure that consumer spending remains the driving
force of economic growth. The three month average to start 2018 for the consumer
sentiment index was the highest since 2001. This level of optimism should continue
as the job market remains strong, wages continue to inch upwards and the housing
market keeps improving.
While the savings rate is expected to tick up over 4 percent in 2019 after being at 3.4
percent for 2017 and forecast to remain at that level in 2018, consumer spending
will remain strong as incomes continue to rise. Consumers are expected to increase
spending 4.6 percent annually through the forecast as disposable income will rise just
under 5 percent annually.
The long-term outlook for gas prices remains unchanged. Prices did increase higher
than expected in 2017, partially resulting from Hurricane Harvey’s impact on the oil
and gas industry in Texas, and will continue to rise in 2018 before coming back in
late 2018 and 2019. The rise likely helped slow total miles driven last year.
After growing almost 2.4 percent in both 2015 and 2016, total miles driven increased
just 1.2 percent in 2017. Continued strength in the employment market and rising
consumer spending should get drivers moving again and help get miles driven
growth back up over 2 percent for the year.
New vehicle sales peaked in 2016 and dropped nearly two percent in 2017. While
annual sales should continue to fall each year through the forecast, they will remain
above 16.5 million in 2021. Even with five consecutive years of declining sales, the
volume will remain high enough to keep demand strong and prevent any trough of
aging vehicles similar to what was seen shortly after the 2008 recession.
While vehicle sales peaked in 2016 and will decline going forward, total vehicles in
operation (VIO) shows no sign of slowing. For 2018 VIO should increase nearly 2.5
percent to just under 279 million. Growth will slow going forward but by 2021 there is
expected to be more than 294 million vehicles on the road in the U.S.
The share of sales through the three main channel groups is expected to remain
steady through 2021. The dealer channels are expected to maintain their 30.1 percent
share of all sales. The retail channels are expected to provide 35.4 percent of all
sales with the remaining 34.5 percent handled by the service channels. Within these
groupings there will certainly be channels that outperform. The new car dealer channel
is expected to just outperform the overall market. Within the retail channel, “Electronic
shipping and mail-order houses” will see annual growth at more than twice that of
the overall market, making up for underperformance in the “Automotive parts and
accessories stores” category.
IHS Markit forecasts total sales of the U.S. light duty aftermarket to come in at just
under $296 billion for 2018. That figure will be 3.6 percent higher than the $285.8
billion seen in 2017. Annual growth will cool each year of the forecast, with 2021 growth
expected to be 3.2 percent and resulting in total sales that year of more than $326
billion. The 2021 figure will represent nearly $90 billion in sales growth since 2012.
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