Insight

Auto parts sales are stalled, but a surge is on the horizon

With COVID-19, people are putting less wear on their cars, cutting demand for parts. But the market may rebound sooner than expected.

Bala Lakshman

Bala Lakshman

Managing Director, Strategy, KPMG US

+1 214-840-4005

Eric Shapiro

Eric Shapiro

Director, Advisory, KPMG US

+1 212-954-3084

Yatin Agarwal

Yatin Agarwal

Associate Director, Strategy, KPMG US

+91-124-6691508

Sales of aftermarket automotive parts are taking a hit. Because of COVID-19, the economy has slipped into a recession, and people are staying home, putting less wear and tear on their cars.

Vehicle Miles Traveled (VMT)—the biggest driver of automotive parts demand—is likely to stay depressed permanently as remote working and online shopping become more prominent features of our society.

The good news is that demand may rebound sooner than expected, as the substantial number of new cars purchased a few years ago reach the prime age for replacement parts. The trick for parts suppliers will be to cut costs to reflect the current drop in demand, and prepare for a pop in demand a year or two from now.