Capricorn Launches industry-first Confidence Index for the automotive aftermarket

How confident do Members feel about their businesses and the automotive industry as a whole?

To mark Capricorn’s 50th anniversary in the industry, we have launched the Capricorn Confidence Index. We believe this is the nation’s most accurate measure of the confidence business owners working in the automotive aftermarket have in the future of their industry.

Incoming Capricorn Group CEO, Brad Gannon, said that with more than 30,000 Members across Australia and New Zealand, Capricorn is uniquely positioned to understand the perspectives of business owners in the automotive aftermarket and to capture how they’re feeling about an industry that keeps more than 20 million motor vehicles operating safely on our roads and in our communities.

“Every year, for the last four years, around 2,000 Capricorn Members from Australia and New Zealand have taken part in our State of the Nation survey, making it the most detailed and insightful survey of business owners working in automotive,” he said.

“The Capricorn Confidence Index is a barometer for the health of the automotive industry. It takes into consideration how confident Members are in the future of their business, how confident they are in the future of the automotive industry, and whether they have plans in place to grow or improve their business over the next 12 months.”

“We have worked with our independent research partners and data experts to develop the Index. Using data from previous State of the Nation surveys, we can see that the Index is relatively stable, with slight improvements over the past few years, which provides us with an assurance that the calculation is a sound and reliable indicator,” Brad said.

What does the Index data tell us?

The good news is the Index data shows that Member confidence has steadily increased over the last four years, from 68.2 points (out of a possible 100) in 2021 to 70.5 points in 2024. This is the combined figure for Australia and New Zealand.

“This growth reflects an optimism among Capricorn Members about their current position and economic outlook.” Brad said.

“The Index doesn’t appear to be very volatile, with minor increases on the post-pandemic turbulence and no decline during the recent inflationary period,” Brad said. “However, Members still face significant challenges and there are opportunities for growth in individual businesses and the industry as a whole—with everything from electric vehicles to artificial intelligence set to change the way we all operate in the coming years.”

Why so confident?

A close look at the data that goes into the Index shows 62% of Members feel highly confident in the future of their own businesses—the highest level in four years.

“The confidence is spread across all business types but is most steadily observed in Members with mechanical or collision workshops,” Brad said. “Micro and small business owners are the most confident and, interestingly, owners of newer businesses are more confident than those who’ve been in the game a long time.”

Members who don’t feel confident about the future of their businesses expressed concerns about increasing cost-of-living pressures, the price sensitivity of customers, cash flow and profitability.

“Members are generally less confident in the industry itself than they are about their own businesses, but in this area, we see sentiment varying a bit,” Brad said.

“Confidence is highest among new Members, mobile mechanics and auto-electricians and lowest among dealerships and collision workshops. It’s likely newer and smaller businesses feel they’re better able to adapt to upcoming changes to the industry.”

Key challenges to confidence in the industry once again included cash flow and profitability, but cappedprice servicing, longer warranties and servicing EVs also featured heavily in the responses.

Time to grow?

The Index takes into account decisions to invest in business growth opportunities, which is a practical indicator of confidence. The data shows seven in 10 Members are planning to grow their business in the next 12 months, which is roughly consistent with the data over the past four years. The main areas for planned improvements are improving business efficiency (68%), increasing profit margins (57%) and employing more staff (44%). New Zealand Members are more likely to focus on upskilling existing staff.

“Unsurprisingly, there’s a strong correlation in the data between feeling confident in both your business and the industry and plans to invest in growth opportunities over the next year,” Brad said. “Of those who don't feel confident in their business, only 56% have a plan in place to grow their business vs 75% of businesses have a plan in place if they feel highly confident in their business.”

Brad said he believes the Index will quickly become the definitive measure of confidence in the automotive aftermarket.

“It’s not just a number; the data in the Index can tell us a lot, and we expect it will be used to drive everything from innovations in Capricorn’s products and services to public policy changes,” he said.

The Capricorn Confidence Index was officially launched in October as a part of Capricorn 50 Years Strong celebrations.

The research forms part of this year’s State of the Nation report, visit cap.coop/SOTN