The aftermarket modification industry has been thriving in the past few years. Enthusiasts spending on Wheels, Styling modifications and Tuning has been steadily growing over the years. The pandemic accelerated this spending by people armed with stimulus money and no ability to spend on travel. However, 2022 has been a tough year for the Automotive aftermarket.
“We’ve got 40% less staff now than we did at the beginning of the year” – Steve Hamilton
Steve Hamiltion, the founder of SD Wheels, Fitment Industries and multiple aftermarket wheel and modification companies outlines their drastic drop in sales since the boom of 2020 and 2021. Steve’s companies have been growing 40-50% year on year since the inception of SD Wheels in 2003. However, 2022 was the first year where that growth was flat.
Why is this happening?
Reduction in new car deliveries. Due to the global chip shortage and halt in production of cars during the pandemic has led to a decline in new car deliveries. Manufacturers have had to increase delivery times, reduce available options and delay model releases to account for the shortage.
Economic Uncertainty Developed economies account for the majority of the aftermarket spending. High inflation, layoffs and recessionary concerns mean customers are more careful with their spending. Modifications are usually a want, not a need, so as economic conditions worsen, wants are the first areas to feel the impact.
Supply Chain Issues The war in Ukraine and political tensions among the Eastern and Western superpowers has meant the supply of materials and products has suffered. The cost of manufacture and transport has skyrocketed leading to an increase in the price of modifications. This combined with the rising cost of energy and living, it has become a whole lot more expensive to modify your vehicle.
What Next? Automotive aftermarket is feeling the effects, just like every other industry. In the short term, companies are likely to struggle with sales and expect a decline compared to previous years. The industry is likely to face consolidation with a few exceptional companies likely to survive. However, as the economy recovers and disposable incomes grow alongside an increase in chip production, the demand for aftermarket modifications is likely to see growth. A lot of the growth may be led by EV’s as they become more commonplace. Brands and Retailers will have to adapt to new conditions and change the way they strategise product development and marketing efforts as aftermarket modifications take a back seat in most people’s budgets.
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