Digital Auto Care Factbook & Lang Annual 2016 - (Page 15)

2014 - 2018 FORECAST ASSUMPTIONS 2015 Channel Forecast Model Review: The most recent Economic Census data was incorporated into the model during the 2012 update. The complete set of relevant data from the study won't be released until 2016. The most significant 'historical' changes within this current forecast refer to the results for 2014. The table below highlights the growth projection for 2014 from last year's forecast for the total aftermarket as well as three of the largest sales channels. The three channels shown make up over 50% of total aftermarket sales. Our previous forecast for 2014 total aftermarket sales growth was 3.1%. Our new forecast has revised that growth upwards, to the current value of 3.5%. The revisions were fairly balanced across the major channels. While new vehicle sales came in above our estimate, total vehicles in operation exceeded our forecast as well. More importantly, the labor force grew faster than expected and combined with lower gas prices to result in an increase in miles driven that was much higher than forecast. 2015 Update 2014 Estimate 2014 Final Total Industry Sales (% Change) 3.1% 3.5% New Car Dealer Sales (% Change) 3.0% 3.6% Auto Parts Stores (% Change) 3.3% 3.5% General Auto Repair (% Change) 2.6% 3.1% Forecast Assumptions: The long-term economic view for the United States remains very positive. Most of the direct benefits to consumer spending from lower gasoline prices have already been injected into the economy. Multiplier effects and the increased buying power from lower inflation will drive a continuation of this growth. Trade impacts and falling industrial investment will restrain GDP growth despite strong underlying consumer demand. Employment growth continues to boom, which may spur interest rate hikes but that is not expected to have a material effect on the economy's 2015 growth momentum. The consumer outlook for the next two years is looking brighter due to elevated levels of consumer confidence, lower energy prices, housing market improvement, and stronger income support. w Market Forces Driving the Auto Care Industry * While 2015 has gotten off to a slow start, full year Nominal GDP growth should reach 4% for the year, and is forecast to average 4.4% annually from 2015 through 2018. Disposable income growth is expected to grow at a similar rate of 4.5% during the forecast period, which is the highest four-year stretch of disposable income growth since ten years prior. * New vehicle sales are expected to come in just under 17 million units in 2015, a level not seen since 2005. That will result in an average of over 16.25 million vehicles sold annually from 2013 to 2015, which is a three-year average not seen since prior to the recession. * By the close of 2014, the 252 million vehicles on the road just topped the pre-recession high of 2009. From 2014 to 2018, the total vehicles in operation should increase nearly 10% to just under 277 million vehicles. * The addition of 25 million vehicles to the fleet will come while the mix of vehicles continues to shift. While vehicles 12+ years old are predicted to increase 15%, those 5-11 years old will decline by 21% as the new to 5 year segment will grow 32%. * The average vehicle age remains unchanged at 11.5 years. * The significant fall in gas prices that began in late 2014 was driven by a combination of over-supply and weakened demand. As a result, gas prices are expected to remain depressed through the forecast period, with the average gas price not expected to return to the $3/gallon range until late 2018. * In the 3 months of November 2014 to January 2015, nominal consumer spending on gasoline fell by $100 billion, resulting in a significant consumer dividend that has helped spur overall consumption. * Total miles driven increased 1.7% in 2014. While miles driven was trending up slightly throughout 2014, when gas prices started to fall the miles traveled figure started to accelerate its climb, with December 2014 and January 2015 numbers each up 5% compared to the previous year. * With gas prices expected to remain low, combined with a steadily increasing labor force, total miles traveled should return to steady growth rates in the 2% range. * With the driving age population expected to increase 1% annually, vehicle miles per capita will finally start to see growth again. * Continued growth in new vehicle sales and rising disposable income should benefit the dealer and retail channels within the aftermarket. * A rising labor force and falling gas prices have been a boon to vehicle miles traveled, but long-term demographic problems remain. The labor force participation rate (those working or looking for work) remains at levels not seen since the late 1970s and while it should increase slightly through 2018, it is not expected to top levels seen as recently as 2012 as baby boomers retire out of the work force. There is also a demographic shift, as those baby boomers are reducing their vehicle fleet and usage at a faster rate than millennials are increasing theirs. The IHS forecast for total US aftermarket sales calls for growth of 3.9% in 2015. Coming on the heels of an upward revision to 2014, the 2015 aftermarket sales is expected to exceed $256 billion. Growth should accelerate further in 2016 before cooling a bit in 2017 and 2018. Total aftermarket sales will reach $284 billion by 2018. The long term growth from 2013 to 2018 will be 3.6% annually. Retail sectors are expected to see the largest growth during the forecast period, increasing at a 4.0% CAGR during the 5-year period. Revenue through the dealer channels is expected to grow at a 3.5% annual rate. The service sector is forecast to top $100 billion in revenue in 2017 and reach $103 billion by 2018. The dealer channel will exceed $84 billion in 2018 while the retail sector will come in at just over $96 billion. 2016 Digital Auto Care Factbook Copyright © 2015 Auto Care Association 15

Table of Contents for the Digital Edition of Digital Auto Care Factbook & Lang Annual 2016

Auto Care Association Market Intelligence Committee
Economic Indicators
Key Economic Indicators
National Debt
Aftermarket Dynamics
Industry Employment
Technician Employment and Wages
What Do Our Members Think?
Auto Care Association – Lang Market Comparison
BCI Summary
State of the Auto Care Industry
U.S. Motor Vehicle Auto Care Industry
Introduction to the Channel Forecast Model
2014 to 2018 Forecast Assumptions
U.S. Motor Vehicle Auto Care Industry
Auto Care Sales History and Forecast 2007 to 2018
Auto Care Sales by Distribution Channel
Auto Care Segmentation
Auto Care Service and Retail Outlets
Auto Care Service and Retail Outlet Analysis
Program Distribution Summary
Retail Distribution Summary
e-Tailing
Financial Benchmarks
Financial Profiles of Select Auto Care Companies
Select Auto Care Transactions
Auto Care Industry
Consumer Profile
Replacement Rates for Motor Vehicle Parts and Jobs
Top 10 Replacement Rate Categories By Vehicle Age
Tool and Equipment
Auto Care Industry Segments
Medium And Heavy Duty Truck Industry
Sales of Replacement Tires
Paint, Body and Equipment
BodyShop Business Industry Profile: 2013-14
U.S. Total Motor Vehicle Population
Vehicle Registrations and Usage
U.S. New Motor Vehicle Registrations
Top 10 Light Vehicle Registrations
Hybrid Vehicles
Vehicle Operating Costs
Miles Driven vs. Gasoline Affordability
Gasoline Affordability and Fuel Consumption
Crude Oil and Diesel Fuel Costs
State Summary Statistics
State Summary Statistics
Global Auto Care Industry
Global Economic and Automotive Data
U. S. Trade Data for Selected Motor Vehicle Products
U. S. Trade Data By Country
Canadian Auto Care Industry
Glossary and Reference
Mexican Auto Care Industry
Chinese Auto Care Industry
Glossary and Terms
NAICS Definitions
Auto Care Data Resources
Auto Care Data Resources
Auto Care Association Market Intelligence
Auto Care Association Market Intelligence
Harmonization of Auto Care Industry Data
2016 Lang Aftermarket Annual
Introduction
Aftermarket Highlights
Executive Summary
Aftermarket Size
Product Sales Analysis
Service Market
Service Market Outlet Performance
Do-It-Yourself Market
Do-It-Yourself Market Outlet Performance
Aftermarket Analysis by Type of Vehicle
Vehicle Age
Distribution Channels
Aftermarket Outlet Analysis
Purchased Service
Vehicle Analysis
Accessories and Specialty Equipment Volume
Market Dynamics
Glossary of Aftermarket Terms
Appendix

Digital Auto Care Factbook & Lang Annual 2016