The Automotive Aftermarket sector is the largest retail sector in Canada ahead of clothing, food, furniture and pharmaceuticals. The sector encompasses production, re-manufacturing, distribution and retailing of replacement parts, tools, equipment, accessories, chemicals and production for fixing used cars. The sector was estimated at over US$16.7 billion in 2008.
The sector has been growing at a steady rate of 2 to 3 percent over the past 4 years. This growth is expected to continue for a few more years despite the slowdown in the automotive market. The Canadian market offers U.S. suppliers the best opportunities in this sector because of a strong trade relationship and the largest market other than its own.
The best prospects in the automotive sector are in the aftermarket because of the 50 million cars on the road today and the constant maintenance that they require. In other words, while the auto sales market has declined rapidly, the demand for maintenance is still very much there. Thus, the current slowdown in the auto sector will not likely catch up to the aftermarket for a few years. Until then there will still be a strong demand for aftermarket products and services.
On average, each car 12 years or older requires a minimum of US$1,000 in maintenance per year. This figure is important because 43 percent of cars on Canadian roads are on average 15 years old. Much of the market is still in mechanically installed (MI) parts; but also, we are seeing a large increase in the Do-It-Yourself (DIY) purchases and repairs.
Ontario offers the largest aftermarket potential at US$7.1 billion followed by Quebec at US$4.2 billion, the Prairie Provinces at US$3.5 billion, British Columbia at US$2.6 billion and the Atlantic Provinces at US$1.2 billion. There are still many opportunities for new companies entering the market from the United States. The recent depreciationof the Canadian dollar has lowered start-up costs for firms seeking entry into the Canadian automotive aftermarket industry. Furthermore, the substantial decline in thprice of commodities used in the production of automotive parts has improved growth forecasts for the aftermarket parts industry.