CRA Market News – Canada

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Richmond Hill, Ontario – A study released recently, claiming that kilometres-driven would be down 30 percent in 2020 caught the attention of DesRosiers Automotive Consultants Inc. (DAC) and prompted a further investigation into the wild claim. 

Upon further analysis of the study in question, DAC came to see that there were many inaccuracies throughout the study including the claim of kilometres-driven being down 30 percent in 2020, prompting the question as to what is occurring in the Canadian aftermarket in 2020. By examining the best variable in conjunction with kilometres-driven in Canada (domestic gas consumption), DAC noted that gas consumption did fall significantly in April in May but then recovered increasingly well in the following months. As can be seen in this chart

Compared to 2019 it appears that 2020 as a whole in gas consumption (and in turn kilometres-driven), will be down to the numbers of 12-15 per cent, which is a significantly smaller drop than the 30 per cent claimed in the recent study. 

While kilometres-driven is one of the main indicators of aftermarket demand, DAC found other data suggesting that different sectors of the aftermarket may be performing more strongly than the kilometres-driven data suggests – DAC has termed these findings as the “aftermarket paradox”. They have found that retail sales for automotive parts, accessories, and tire stores are showing a robust increase with data indicating an upward trend in June and July compared to 2019 levels; subsequently, year-to-date figures only exhibit a 4.7 percent decrease from the previous year. 

This chart indicates the above.

Andrew King, Managing Partner of DAC commented, “It appears that in certain distribution channels at least, consumers have not cut their vehicle maintenance spending to the same degree as they have reduced their driving – an interesting dynamic and one that has broad consequences for the aftermarket moving forward” 

Article Credit to Collision Repair Magazine.