Purchased Service is DIFM Growth Engine

The Do-It-For-Me (DIFM) light vehicle aftermarket in the U.S. has two major segments: products and purchased service. Purchased service is the labor cost of product installation and diagnostics performed by automotive technicians.

Purchased service generated over half of total car and light truck aftermarket product growth (products and purchased service) during the five years prior to COVID19. Over the next five years, Lang Marketing expects that the purchased service share of light vehicle product growth will increase.

DIFM is the Dominant Aftermarket Driver

DIFM products and purchased service generated over 85 percent of light vehicle aftermarket growth between 2011 and 2021. During this period of DIFM aftermarket dominance, purchased service (product installation and diagnostics) climbed at a faster annual pace than DIFM products.

DIFM Product Growth

DIFM products (products installed by automotive technicians) increased by an estimated $16 billion at userprice between 2011 and 2021.

Preliminary findings by Lang Marketing indicate that DIFM products and purchased service generated over 90 percent of the 2022 aftermarket product growth, at userprice. More details will be available in a few months.

Products Climb by 22 Percent

Lang Marketing estimates that the 2021 DIFM product volume was nearly 22 percent higher than 10 years earlier. This represents a 2.0 percent average annual growth.

While DIFM products recorded a strong growth rate over the past 10 years, light vehicle purchased service climbed even faster.

Light vehicle purchased service soared from $53.9 billion in 2011 to $71.1 billion in 2016 at user-price.

Lang Marketing estimates that light vehicle purchased service topped $83 billion in 2021.

Purchased Service Outpaced DIFM Products

Purchased service for light vehicles averaged 3.5 percent annual growth over these ten years.

Light vehicle purchased service climbed at a threequarters faster annual pace than DIFM products between 2011 and 2021.

Growth Share of Total Market

The total light vehicle aftermarket in the U.S. (DIFM & DIY products plus purchased service) surged by over $46 billion between 2011 and 2021.

Car and light truck purchased service accounted for 52 percent of this gain, and products (DIFM and DIY) were responsible for 48 percent of light vehicle

aftermarket growth.

Preliminary findings of Lang Marketing indicate that purchased service exceeded DIFM and DIY product volume growth during 2022.

DIFM Market Growth Share

The DIFM market (DIFM products and purchased service) generated over $40 billion of light vehicle aftermarket growth between 2011 and 2021.

Lang Marketing estimates that purchased service growth expanded the DIFM market by 60 percent between 2011 and 2021.

Purchased Service Growth Factors

Three factors have boosted the annual growth of purchased service: diagnostics, pricing pressure on parts margins and the cost of tools and equipment required by the growing complexity of vehicle repair.

Increased Diagnostics

Vehicle complexity has increased the need for more diagnostics to determine the repairs and parts required. For many repair jobs, diagnostics exceed product installation in the amount of purchased service required by automotive technicians.

Parts Pricing Pressure

The internet has increased the visibility of parts costs to consumers and boosted their sensitivity to parts prices charged by repair outlets. To counter this pressure on repair parts’ gross margins, many outlets are increasing charges for purchased service.

Cost of Tools & Equipment

Increased diagnostics and the growing complexity of vehicles require repair outlets to purchase additional and more expensive tools and equipment. To offset rising tool and equipment costs, many outlets are increasing the hourly rates charged for the work of automotive technicians.

Next Five Years

Lang Marketing expects that factors boosting purchase service growth will intensify over the next five years.

Diagnostics will become more pervasive and expensive. The visibility of parts costs to consumers through the Internet and other sources will increase downward pressure on prices that repair outlets can charge for parts.

Purchased service will increasingly be used to maintain gross margins threatened by parts pricing pressures and to offset the cost of tools and equipment needed to perform the increasingly complex vehicle repairs.

Accordingly, Lang Marketing expects that purchased service volume will increase at about twice the annual growth pace of light vehicle DIFM products, at user-price, from 2023 through 2027.

Six Major Takeaways

• The purchased service is the cost of product installation and diagnostics performed by automotive technicians.

• DIFM products and purchased service generated over 85 percent of total light vehicle aftermarket product growth between 2011 and 2021.

• Preliminary findings by Lang Marketing indicate that DIFM products and purchased service accounted for over 90 percent of light vehicle aftermarket product growth in 2022.

• Purchased service averaged 3.5 percent annual growth in the light vehicle aftermarket between 2011 and 2021, stronger than the 2.0 percent average annual increase of DIFM products.

• Purchased service has increased its annual growth rate for three primary reasons: the increased need for diagnostics, growing pressure on parts pricing, and the requirement for additional and more expensive tools and equipment to perform increasingly complex vehicle repairs.

• See the 2023 Lang Aftermarket Annual for a 10-year analysis of the growth of DIFM products and purchased service in the light vehicle aftermarket.

ICE Aftermarket Outpaces VIO & Mileage

Car and light truck product sales in the U.S. from 2019 through 2022 increased much faster than the growth of vehicles in operation (VIO) and light vehicle annual mileage. This was the result of increased aftermarket product use per mile.

Greater product use per mile, especially among older vehicles, will generate the continued aftermarket product growth of Internal Combustion Engine (ICE) cars and light trucks as they dominate the older vehicle age groups in the U.S. through this decade and for many years beyond.

Aftermarket Growth Factors

Factors driving car and light truck aftermarket product growth have shifted during the last three years. Traditionally, light vehicle aftermarket product use was driven primarily by the increasing number of vehicles in operation (VIO) and the corresponding mileage growth.

VIO Growth 2019 Through 2022

The situation changed from 2019 through 2022. Despite record-high automotive sales from 2016 through 2019, the new car and light truck annual volume faltered over the next three years. Accordingly, the VIO gain averaged less than 1.5 percent annually over these seven years and even less over the next three years

Following a 2.5 million gain during 2020, the car and light truck VIO was not much higher in 2022 than two years earlier. From 2019 to 2022, light vehicles averaged less than 1.0 percent annual growth.

Mileage Growth

In 2020, light vehicle mileage suffered a double-digit plunge from the onslaught of COVID-19, followed by a sharp rebound in 2021. Light vehicle mileage climbed moderately in 2022, but annual miles rose less than 1.0 percent from 2019 through 2022.

Lower Mileage Per Vehicle

Annual light vehicle mileage recorded lower growth than the VIO from 2019 through 2022. The average car and light truck traveled approximately 150 fewer miles last year than in 2016, the result of light vehicle mileage climbing at a rate less than one-half the mileage growth over the previous seven years.

Recent Aftermarket Growth

While final results for 2022 will not be available for a few months, preliminary findings by Lang Marketing suggest that average product volume per mile rose significantly from 2019 through 2022. This resulted from three factors: the rising average age of vehicles, the population growth of older cars and light trucks and the increasing share of light vehicles represented by light trucks.

Higher Vehicle Age

Lang Marketing estimates that the average age of all types of vehicles (cars, light trucks, domestic nameplates and foreign nameplates) climbed significantly from 2019 through 2022, prompted by the downturn in new vehicle sales and the increased durability of vehicles in operation.

More Older Vehicles

The number of older vehicles among all types of cars and light trucks increased last year, boosting overall vehicle average age. Since older vehicles use more aftermarket products per mile than younger models, the aging vehicle population and the increasing average age of cars and light trucks in operation were significant factors in generating aftermarket product growth over the past several years.

Light Trucks Ring Up More Parts

Light trucks average greater annual product use per vehicle than cars. This reflects expensive replacement parts (especially drivetrain components) that are unique to light trucks, the greater use of accessories on light trucks, and the higher prices of some light truck components than comparable car parts.

With their increasing share of the light vehicle population and miles driven, light trucks are boosting product use per mile.

ICE Aftermarket Future Growth

The ability of the aftermarket to generate product growth from increased product use per mile and the expanding share of light trucks in operation is good news for Internal Combustion Engine (ICE) aftermarket volume in the coming years. Virtually all light trucks and vehicles in older age categories will be fossil-fueled for a long time.

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