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Good Signs for Suppliers

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The automotive aftermarket, according to SEMA, can look forward to good years. PHOTO Laurel et Michael Evans / Unsplash

A recent SEMA study indicates that while 2021 has been a more challenging year for specialty equipment suppliers, the future looks bright.

The Speciality Equipment Market Association (SEMA) is an association of manufacturers, distributors and retailers of automotive aftermarket equipment and parts. It organizes the SEMA show in Las Vegas and its team produces reports on the state of the market.

Its most recent Future Trends report indicates that more than 80% of companies in the industry experienced a moderate to severe negative impact on their sales in 2021 due to supply issues, delays and price increases.

Nevertheless, 2021 will have been a positive year supported by an increase in demand compared to the previous year. Some suppliers have even reportedly achieved historic results.

The SEMA report predicts that growth should continue in 2022, but at a more moderate pace. In fact, the association reports that 74% of its members expect their sales to increase in 2022. They remain cautious in light of supply problems, sluggish sales of both new and used vehicles and rising prices for parts and components. According to SEMA, the most important supply problems are history and the situation should return to normal by the end of this year.

Prices remaining high

However, the association believes that prices for raw materials and components used in the manufacture of specialty equipment will remain high at least through 2023. It explains this prognosis by the sharp rise in transportation costs, including the cost of a sea container, which has increased fourfold compared to October 2019, and the increase in the price of raw materials, such as steel, whose price has more than doubled in the same period.

The report indicates that the U.S. automotive sector has come out of the crisis well, with only a four percent loss in jobs since February 2020.

One of the major findings of this study is that the various government financial support programs, both in the U.S. and here in Canada, have resulted in increased savings for consumers. The scarcity of available vehicles and the rising price of used vehicles are driving drivers to keep their cars longer. This, according to SEMA, will continue to drive sales of replacement parts and accessories.

 

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