Inflation, Labour & the Future

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Alana Baker, Senior Director, Government Relations, Automotive Industries Association of Canada. Photo AIA Canada

Many sectors of the economy, including the automotive aftermarket, have been significantly impacted by inflation, rising energy costs, and interest rates—tight labour supply and ongoing supply chain disruptions.

Add to that the scarcity of both new and used vehicles and it represents a very complex and difficult-to-navigate situation.

Yet some of these trends point to some favourable conditions for the aftermarket. AIA Canada data shows that Canadians are keeping their vehicles longer and we’ve seen the average age of cars and trucks in operation increase over the last two years. This bodes well for our members as Canadians will need to continue investing in vehicle maintenance and repairs.

Budgetary impacts

On the flip side, currently inflationary pressures and rising energy costs—including gasoline prices—are having a significant impact on both the wallets of consumers and also businesses that support and serve them. In the case of the aftermarket, that increasing cost of living could also have a negative impact–causing consumers to rein in spending; resulting in them driving less to save money.

If we see fewer kilometres being driven this will likely mean fewer vehicles in aftermarket service bays due to less demand for service and maintenance. Also, if the growth in interest surrounding electric vehicles continues, fueled by high gasoline costs, we could also see service and maintenance requirements change faster as more consumers gravitate towards them as their preferred mode of transportation.

And while many of these consumers might choose to have their EV serviced by a franchised dealer, at least initially, longer-term, more of these vehicles are expected to end up being serviced by independent service centres, so that is something to keep an eye on.

Tight labour conditions

While parts shortages and supply chain disruptions continue to persist, another growing concern for the aftermarket is very tight labour conditions. We are seeing many people in the industry reaching retirement and fewer and fewer apprenticeships being taken by younger people to replace those leaving the workforce. Because of the advances in vehicle technology, when compared to other red seal trades, automotive service technicians face the largest amount of change in their workplace. And, current application numbers (along with existing skills training) are just not enough to keep pace with the emerging vehicle technology and skills demand that we’re seeing before us. 

Servicing a modern vehicle involves working with digital tools, updating vehicle software, and calibrating and aligning sensors that support the vehicle. These high-tech vehicles require people with high-tech skills to work on them. Increasingly, we’ll need to attract talent with both an aptitude for the technical sophistication of today’s vehicles (especially when we consider electrification and looking towards the future), plus a desire to provide great customer service.

Therefore, as an industry, we must continue our efforts to promote the aftermarket as a modern and forward-looking innovative sector that delivers outstanding service and value to Canadian vehicle owners. This means collaborating with the government and looking beyond traditional labour pools while at the same time actively making investments in recruitment, training, technology, and infrastructure to ensure our industry continues to remain a major driver in the Canadian economy both today and tomorrow.   

Alana Baker is Senior Director, Government Relations, for AIA Canada. You can reach her at [email protected].


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