**Toronto**: The Canadian automotive aftermarket faces significant challenges as it heads towards 2025. Economic pressures and changing consumer behaviours are reshaping the landscape, prompting calls for stronger partnerships between parts distributors and service providers to navigate these shifts successfully.
The automotive aftermarket in Canada faces a complex landscape as it transitions from 2024 into 2025, according to Zakari Krieger, Canadian vice president of Prime CarCare and responsible for the retail business encompassing Speedy Auto Service and Novus Auto Glass. In an analysis published in the January 2025 issue of Jobber News, Krieger outlines the anticipated challenges for automotive service providers (ASPs) and the vital role that parts distributors can play in supporting them.
At the beginning of 2024, mechanical retail service locations were reportedly performing well, buoyed by receding inflationary pressures and steady consumer confidence. However, the situation shifted markedly by the second quarter of the year, as the Bank of Canada maintained a tight monetary policy in an effort to manage the ongoing effects of high inflation. This environment led to disinflationary trends that altered consumer spending behaviours, especially regarding non-discretionary vehicle maintenance.
The automotive aftermarket traditionally benefits from robust economic conditions, marked by increased new vehicle sales. Such conditions typically lead to reduced vehicle ages and increased lease and finance turnover rates. However, 2024 presented an atypical cycle due to sustained periods of elevated interest rates and consumers facing inflated vehicle prices. Consequently, this resulted in diminished consumer confidence and reluctance to invest in necessary vehicle maintenance.
The challenges facing the aftermarket sector were reflected in the performance of publicly traded companies, such as Monro, Inc., which reported a 6.4 per cent year-on-year revenue decline in its second quarter filings. While such experiences are derived from the U.S. market—marked by its own economic distinctions—these data points are noteworthy as they hint at comparative difficulties in the Canadian context, including currency fluctuations and taxation issues.
According to Krieger, these economic hurdles reverberate throughout the Canadian automotive aftermarket supply chain, impacting warehouse distributors, jobbers, and ASPs alike. As Canada heads into 2025, concerns loom over political uncertainties and the Canadian government’s approach to the fluctuating economy and international trade dynamics, notably with the implications of U.S. tariffs and the sustained weakness of the Canadian dollar.
Amidst these challenges, Krieger emphasises the importance of jobbers strengthening their partnerships with ASPs. He states, “Jobbers must help ASPs drive customer experience, encourage investment, and embrace innovation.” Moving forward, industry stakeholders should enhance their relationships by focusing not only on traditional priorities such as fast delivery and competitive pricing but also on value-added services that can improve the operations and sustainability of ASPs.
A notable aspect of this evolving relationship could include performance coaching and training for ASPs, enabling these service centres to enhance efficiency and profitability. Additionally, there is potential for ASPs to explore untapped market segments, including auto-glass and Advanced Driver Assistance Systems (ADAS) services, to foster new revenue streams.
Krieger warns that the industry is likely to see a contraction in the number of service shops as rising operational costs and training demands drive consolidation. This trend underscores the necessity for jobbers to adapt their strategies in relation to ASPs, shifting from a revenue growth focus on automotive parts to fostering trust and advisory roles within these partnerships.
Despite the pressures facing the sector, Krieger maintains that the automotive aftermarket is diversified and resilient, suggesting that these partnerships could yield opportunities for growth and adaptation in a changing market. Through a collaborative and innovative approach, stakeholders can navigate the impending challenges effectively.
Source: Noah Wire Services
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