More OE shortages, more good aftermarket news

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There are more potential shortage and supply chain issues coming down for automakers and that could mean more good news for the automotive aftermarket, according to an industry analyst.

These days, the chip shortage is getting all the attention. But, according to Todd Campau, global aftermarket solutions associate director with IHS Markit, there’s another shortage that starting to take its toll.

“Now there’s also a potential magnesium shortage that they’re starting to deal with that could lead to an aluminum shortage that could further delay in the supply chain,” he said during the ever-popular 5 Trends in 5 Minutes session at AAPEX in November.

On top of that, there are shops waiting at ports all over the continent trying to get products onshore.

“And all these things are contributing to making it very difficult for new vehicle sales to realize the demand that consumers have,” Campau observed.

“As the ripple effects continue,” he later noted, “and as the challenge gets more stiff and the supply of microchips even gets more difficult, we’re seeing that they’re really running out of levers to pull to manage the demand.”

And this demand will be delayed at least a couple of years, Campau said. There will be pent-up demand from consumers as the delays go on. “And we believe that the chip shortage is not only going to affect this year, but it’s going to affect next year.”

The supply chain is fragile. While the Omicron variant hadn’t yet been discovered during Campau’s talk, he did note that risks like an outbreak or new variant will impact the supply chain.

“With the ongoing shortages with a few more shutdowns, this is how volatile it really is — that if a plant gets shut down or the country goes back on lockdown or other raw materials start to ripple and have issues, it’s really impacting the fleet,” he said.

Fewer new vehicles mean more older vehicles on roads. That means more maintenance needs for longer periods of time.

“[This] is all positive for the aftermarket,” Campau noted. “We do think that it is going to drive average age up. So that’s one of the reasons we think this is good. We’re already seeing an impact on average age from this.”