Why Its Worth Taking a Closer Look at the Automotive Aftermarket

This article in Yahoo Finance by Sejuti Banerjea is a must read for industry watchers. It neatly sums of the current state of the U.S. automotive aftersales market, including headwinds, tailwinds and ends with a couple of interesting picks from an investment perspective.

But it's worth reading more for a holistic take about the industry, and has some excellent thought-starters, including:

A prospective growth driver for parts makers is the electric vehicle EV market, where government mandate, individual concern and corporate competition is combining to generate significant investment and sales. Parts makers face a challenge with respect to this market, since EVs have fewer spare parts that can be replaced.

This doesn’t mean that there will be fewer opportunities but just that the opportunity will be of new variety. McKinsey’s Automotive Software and Electronics 2030 report says that trends in the autonomous driving connected vehicles, electrification of the powertrain and shared mobility (ACES) market during the forecast period will contribute to a 7% CAGR in automotive software, as well as electrical and electronic components, outpacing the overall growth in the automotive market.

Packaging of EV components potentially expands the TAM for players. According to “supplychainbrain”: “On the surface, it may seem problematic for the aftermarket industry that electric vehicles (EV) and smart cars have significantly fewer parts than internal combustion engine vehicles. However, while they are fewer, they may be lighter, more fragile and more expensive, so it’s critically important to provide consistent, precise protection for these parts, like the protection you’d find from a custom-engineered packaging solution.