As we reported last week, last year was a good one for the heavy-duty aftermarket.
During a presentation Monday at Heavy Duty Aftermarket Dialogue before Heavy Duty Aftermarket Week (HDAW) in Las Vegas, John Blodgett and Ken Griswold of MacKay & Company announced the United States and Canadian aftermarkets grew by 3.1 and 9.2 percent, respectively, in 2017, and both markets appear well positioned to maintain that strength in the immediate years to come.
Going back to last year’s Aftermarket Dialogue, Blodgett says MacKay & Company data estimated the U.S. aftermarket in 2016 at $30.2 billion and predicted 2017 at $30.6 billion. He says both numbers were actually lower ($29.5 and $30.4 billion) but the year-over-year improvement was stronger than the original expectation. The company’s numbers were similar for Canada, with 2016 finishing at $3.9 billion and 2017 clocking in at $4.2 billion.
In both countries, the year-over-year improvements were significant and immediate. Dealer parts sales gained 7.6 percent year-over-year in January and kept up that hot stretch for the entire year, never having a single month fall behind 2016 pace. At independent stores the story was similar. January was an increase of 3.6 percent year-over-year and again each month in 2017 was better than the prior year.
Along those lines, the duo says MacKay & Company’s Aftermarket Index shows the U.S. aftermarket was up 4.7 percent in 2017 through November and 12.1 percent in Canada. Compared to flat and down years in the U.S. and Canada with the Index the last two years, the aftermarket outperformed in all markets in 2017, Griswold says.
Monday’s MacKay & Company presentation also zeroed in on the commercial truck population. Blodgett says the new truck market exploded in 2017 at a rate well ahead of last year’s projections, and in the U.S., he expects that boom to continue for 2018. Forecasting out from there, MacKay & Company peg the new vehicle market for both countries to run slightly ahead of 20-year averages. That jump should help vehicle utilization as well.
Class 6-8 fleet utilization has bounced between 82 to 84 percent since 2010, but MacKay & Company says early 2017 estimates are trending up to 85.6 percent, with even higher numbers potentially on the horizon.
Together, numbers like this show a potential for more aftermarket growth through the remainder of the decade. MacKay & Company is forecasting the U.S. aftermarket at $30.8, $31.6 and $32.8 billion through 2020. Through 2022, that forecast features a 2.8 percent compounded annual growth rate (CAGR) for the U.S. and 4.4 percent in Canada.
Monday’s industry forecast discussion also included a presentation by Bob Dieli with RDLB Inc.
Looking at the industry as it relates to Truckable Economic Activity (TEA), Dieli says the current economic growth has been led by consumption, which is why there is a difference between his TEA and the Enhanced Aggregate Spread (EAS) data. Comparing the two indexes, Dieli says EAS outlook for 2018 shows the economy should remain in its expansion phase and TEA growth will remain positive. He also says the composition of TEA growth is expected to continue to change.