Lang Aftermarket iReport: COVID-19 increases big channel shift

“A dramatic shift in car and light truck aftermarket distribution is underway. Over $14 billion of products shifted among the five major light vehicle distribution channels between 2009 and 2019, and the onslaught of Covid-19 has produced even more changes in channel volume during 2020.”

“Three major light vehicle aftermarket channels are expanding their product share, while two channels have lost product share over the past ten-years. Lang Marketing projects another $16 billion (or more) in light vehicle aftermarket products will shift among the five major distribution channels from 2020 through 2014.”

— Jim Lang, publisher, Lang Aftermarket iReport

Billions in Distribution Product Shift

From 2009 to 2019, over $12 billion in car and light truck products, at user-price, shifted among the five major distribution channels in the U.S. aftermarket.

Lang Marketing expects even larger vehicle distribution changes will occur over the next five years (2020 to 2024), prompted by product shifts among channels during 2020.

Three Channels Expand Product Volume and Share

Three of the five major distribution channels added approximately $25 billion in product sales between 2009 and 2019: Traditional, Integrated, and Import.

Integrated Distribution Leads Product Growth

Integrated distribution is achieving the greatest aftermarket product share and volume gains.

It is characterized by product ownership (or franchised affiliation) not changing hands from the time products are purchased from Manufacturers to the point of ultimate consumption or sale to an Installer.

Integrated distribution expanded its car and light truck product volume by over $14 billion, at user-price, between 2009 and 2019, as its sales share soared by more than 400 basis points.

Traditional Channel Reverses Its Slide

The Traditional channel (multi-tiered distribution involving Traditional Warehouses and/or Jobbers) ranked second in aftermarket product growth from 2009 to 2019, as it added $7 billion in volume.

This reversed product share slide furthered by Traditional distribution over the previous ten years.

As a result, of its competitive evolution over the past 15 years, Traditional channel currently engages in both two-step and three-step aftermarket distribution, with the former generating a majority of its growth.

Import Channel and Direct Selling Warehouses

The Import channel consists of Import Warehouses and/or Jobbers, which focus on foreign nameplate products. It has achieved the largest percentage increase in car and light truck product share between 2009 and 2019 (soaring more than one-third).

Import channel expansion has been fueled by the rapid rise of the foreign nameplate aftermarket in the U.S. as well as the success of large, direct selling Import Warehouses.

Channel Volume Losers

Two channels declined in distribution share between 2009 and 2019: OE and Specialized.

The OE channel fell significantly in car and light truck product share between 2009 and 2019. However, recently it is regaining some of its previous strength.

Specialized Channel

The Specialized channel consists of distribution focused on a limited number array of products or involvement in an aftermarket segment specializing in certain types of products. Its product share fell by approximately one-fifth between 2009 and 2019.

Historic Product Shift

This historic shift in car and light truck product volume among the five major distribution channels across the country reflects the evolving mix of vehicles on U.S. roads, shifts in product share of DIFM and DIY outlets, as well as changes in the competitive effectiveness of each of the five major distribution channels.

Distribution Changes Caused by COVID-19

COVID-19 has caused significant changes in distribution effectiveness of channels during 2020 and will continue to do so over the next four years.

COVID-19 caused larger changes occurred in the share and distribution channels during 2020, than anything that has occurred in any year since Lang Marketing began tracking aftermarket distribution (more than 25 years).

Integrated distribution surged to a share topping 40% during 2020, significantly greater than its nearly 35% of 2009 car and light truck product volume.

The Import market was the only other channel to gain share during 2020, up by nearly two-fifths, its position in 2019.

Combined, the Integrated and Import channels added 8.5% in aftermarket product share between 2009 and 2020 while the other three major distribution channels declined in 2020 share.

In depth analysis for the great changes rumbling through the light vehicle distribution channels will be presented in the all-new 2022 Lang Aftermarket Annual which is scheduled for release in approximately four weeks.

Six Major Takeaways

• Over $14 billion in car and light truck aftermarket product sales at user-price shifted among the five major distribution channels in the U.S. from 2009 through 2019.
• The Integrated channel generated the largest increase in car and light truck product sales over this ten-year span, up more than $14 billion at user-price, and its sales share increased by over 400 basis points.
• The Traditional channel ranked second in light vehicle product growth, reversing the downward trend in channel share over the previous ten years. It added more than $7 billion in car and light truck product sales at user-price between 2009 and 2019.
• The Import channel achieved the largest percentage gain in car and light truck product share between 2009 and 2019, expanding its product distribution share by one-third.
• The Specialized and OE channels each declined in product share from 2009 to 2-019.
• Lang Marketing projects that even more changes re underway. More than $16 billion in product volume, at user-price, will shift among the five major channels between 2020 to 2014, driven by aftermarket changes caused by COVID-19.

Copyright 2021 by Lang Marketing Resources, Inc.

NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.