DESPITE the fact that car parts sales have increased significantly over the past two decades, less of that growth has gone toward traditional brick-and-mortar retailers.
Auto parts retailers, like those in countless other industries, have had to adapt to the meteoric rise of online shopping. While this shift could be a danger, innovative businesses will grab the chance to carve out a special place for themselves in the booming online auto parts industry.
At the same time, brick-and-mortar and online are not mutually exclusive. From the local small-town brick-and-mortar store to after-market vendors, to major manufacturers, advertising revenue spent on marketing automotive parts is best used considering both.
The influence of mobile auto parts sales
The increase in online sales and the shift to new means of purchasing automobile parts are being propelled by the purchasing power of younger consumers. Generation Z and millennials make up the bulk of smartphone buyers, making this trend even more significant.
Many shoppers now use their mobile devices to shop around and do research before completing their purchases on their desktop computers. Buyers who complete their transactions on a desktop computer typically spend more money than buyers who use mobile devices.
That’s why it’s important for companies selling auto components to create an omnichannel strategy that facilitates customers’ ability to finish their purchases across a variety of devices. A significant decline in sales can result from any sluggishness or technological challenges encountered during the research and buying process. The increase of online sales and the shift to new means of purchasing automobile parts are being propelled by the purchasing power of younger consumers. Generation Z and millennials make up the bulk of smartphone buyers, making this trend all the more significant.
Advertising is still a must
Unless your Tesla, spends next to zero dollars in advertising, advertising is integral to growth and success in marketing auto parts.
Although some businesses have expanded successfully without extensive advertising, these are the exception rather than the rule. Therefore, if you produce or sell car parts and accessories and are interested in expanding your business, the following questions should be considered:
- How should we promote our business?
- Which approaches have the most success?
- What is an appropriate budget for advertising?
The effect of the current boom on used car sales
According to Hedges & Company, the future of the auto parts sector is determined by sales of pre-owned vehicles. Though sales of new vehicles continue to outpace those of used vehicles, the price of new cars has pushed more people toward buying used cars. That means the auto industry must spend more on marketing for both OEM and aftermarket parts.
Just how big is the market?
The US continued to recover from COVID and contended with growing worldwide trade and production interruptions in 2021, but certain enterprises claimed record sales. The specialty-equipment industry thrived in 2021 despite supply-chain instability, delivery delays, product shortages, and fewer new-vehicle sales. As in-person contact restrictions were eased, consumers returned to in-store shopping and automotive events, where they spent more time than normal on their cars.
SEMA (Specialty Equipment Market Association) notes that In 2020, the automotive industry alone will account for 20 percent, or more than $1.2 trillion, of all retail spending in the United States. In 2020, retail will account for more than $6.2 trillion of the United States’ total economic output.
While the share of total retail sales made online is on the rise, it is still relatively low, at about 14% in 2020 (up from 11% in 2019).
The aftermarket market
It is expected that the US light-duty vehicle aftermarket, currently valued at $370 billion (projected 2023) will expand at a Compound Annual Grow Rate of 7% between 2019 and 2024.
The Light, medium, and heavy-duty vehicle aftermarkets in the United States are expected to reach approximately $500 billion in 2023 and around $560 billion in 2026. There are 535,000 unique companies in this sector, including factories, service centers, wholesalers, merchants, and retailers. These companies all use the 280+ million cars, trucks, and buses on U.S. roads today.
Determining advertising budgets
Companies in the consumer packaged goods industry spend an average of 9.1 percent of their revenue on marketing. Brands in the CPG industry market their wares to the general public and to distribution partners who stock, ship, retail, resell, and occasionally set up their products for sale. That’s why it takes so much time and money for CPG firms to find their ideal customers and persuade them to make a purchase.
Does this sound familiar to those in the auto aftermarket?
Automobile aftermarket brands are often manufacturers, though they’re more like retail brands than industrial ones. Tens, hundreds, or millions of people buy their branded goods. Aftermarket brands should be CPG brands, not industrial brands.
The bottom line is that somewhere between seven and ten percent of the total revenue of automotive parts concerns must go to advertising. One great way to spend that advertising money is through Google ads and automotive pay-per-click (PPC) advertising.
Learning from WeatherTech
Compared to WeatherTech, many people believe Husky Liners offers a better product. Unfortunately, consumers don’t always opt for the greatest options. Customers are most likely to purchase an item that they can quickly learn about and use. WeatherTech accomplished just that.
In 2013, WeatherTech reportedly made over $400 million, according to Forbes. Kantar Media estimated their measured media spending for the same time period to be roughly $74M. That’s 18.5% of total money invested in ads. The ongoing purchase of Super Bowl commercial time since 2013 is likely responsible for the growth.
CONCLUSION
It would be a huge mistake to suddenly increase your marketing expenditure from zero to nine percent. How about a 1% increase in the budget to begin with? You could probably come up with that much cash somehow. Do you think you could increase your marketing spend from its current 2 percent to 3 percent? This kind of gradual improvement is what makes all the difference.
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