While the economic picture has worsened, higher tariffs are increasing uncertainty and global growth is slowing, although it doesn’t yet appear to be enough to push the U.S. economy into recession, according to the 2019 SEMA Market Report.
The overall economy added just 75,000 new jobs in May, but unemployment remained at a 50-year low of 3.6 percent. Likewise, consumer sentiment remains incredibly favorable. May is just the fifth month to see the index breach 100 since the year 2000. Additionally, personal income and consumer spending are both up from last year. However, concerns about tariffs appear to weigh heavily on consumers.
New-vehicle sales bounced back in May, increasing 5.9 percent from April. However, sales remain relatively weak this year. Much of the weakness stems from passenger cars, while sales of new SUVs and pickups are up.
Overall, 2018 proved to be a year of strength, resilience and growth for the specialty-equipment industry. The overall size of the U.S. market grew to $44.59 billion, representing nearly a 4 percent increase from 2017 and continuing a positive, multi-year trend. Despite ongoing trade uncertainty, SEMA projects that the market will continue to grow through the end of 2019 and bring retail sales to a new high of nearly $46 billion.
Where is the industry heading in the future? The answer to this question is neither easy nor clear.
Current growth is fueled by strong overall economic performance, low unemployment rates and high consumer confidence. A strong economy paired with rising consumer confidence means that more people are willing to spend money on discretionary products, such as specialty-automotive parts. Continued growth is dependent on a household sector willing to spend and a business sector willing to invest.
However, uncertainty looms on the horizon, especially around ongoing tariff and trade disputes. Uncertainty affects consumer and business confidence, which inevitably affects the automotive aftermarket industry. Nevertheless, up to this point, demand has and continues to remain strong for industry’s products.
The “2019 SEMA Market Report” is now available from SEMA Market Research. This report provides a comprehensive look at the specialty-equipment industry, including how they’re purchased and installed, information on part buyers, key industry forecasts, vehicle registration data and much more. For more info, visit www.sema.org/research.